Auto workers at GM, Ford, and Stellantis walking off the job will have ramifications for workers, consumers, and the economy.
First it was the writers. Then it was the actors. Now, it’s the auto workers who are on strike after the United Auto Workers and Detroit’s Big Three — Ford, General Motors, and Stellantis (which owns Chrysler) — have failed to reach a deal in labor negotiations. This one is going to be a doozy as the UAW seeks to wrestle back some of the profits the automakers have been raking in.
After midnight Friday, when the deadline for a new contract passed, some 12,700 workers at a Ford plant in Wayne, Michigan, a GM plant in Wentzville, Missouri, and a Stellantis plant in Toledo, Ohio, walked off the job. It marks the first time the UAW is striking at all three car companies.
“All options remain on the table,” said UAW President Shawn Fine in a speech on Facebook Live on Thursday evening. “National leadership will determine the appropriate targets and timing for further stand-up strike action. This is our generation’s defining moment. The money is there, the cause is righteous, the world is watching, and the UAW is ready to stand up.”
The union hopes the strategy will give it leverage and keep the companies guessing as to what it’s going to do next. It will also help the UAW to stretch out its $825 million strike fund if the strike drags on — which it could, given the distance between the parties — and to escalate if need be.
“I think of it as asymmetrical warfare. If you’re smaller than your opponent, you’re going to fight them asymmetrically. It’s how Americans fought the Revolutionary War,” said Ambrose Conroy, an auto expert and founder of Seraph Consulting. “[The union] can’t go head-on, they don’t have enough cash, they’re the weaker party here. The UAW doesn’t have the hundreds of billions of dollars in profit over the last decade that the Big Three have.”
The UAW strike is going to have important implications for the automakers and workers involved. It’s also going to impact suppliers, supply chains, and consumers, depending on its scope and how long it lasts. At a time when there may have been some hope the car market would finally settle down, this is likely to upend at least parts of it. (If you were excited for car prices to fall in the near future, we’ve got some news for you.) The UAW believes the strikes are worth it.
“The UAW knows it’s really now or never,” Conroy said. “If they don’t make this happen now, then they may not have a good opportunity in the future.”
Just catching up? Here are six big questions surrounding the UAW strikes, answered.
1) Who is striking, and against who?
The UAW represents about 400,000 workers total across a number of sectors, and about 146,000, or one-third of those, work at the Big Three automakers. UAW workers voted overwhelmingly back in August to strike if the union and the Big Three manufacturers couldn’t reach an agreement by the September 14 deadline. The initial three strike locations cover about 9 percent of the UAW’s membership, which is still going to cause a lot of disruption.
The UAW is one of the country’s oldest unions; started in 1935, its official title is the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America. Like many American unions, including the Teamsters, the UAW has dealt with some very serious misconduct over the decades, including a recent bribery scandal involving Fiat Chrysler, part of Stellantis, paying about $3.5 million in bribes to UAW leadership in the hopes they’d acquiesce to bargaining terms favorable to Fiat Chrysler.
Hoping to start fresh and take advantage of increasing labor support and power in the American workforce, the UAW narrowly elected Fain, an electrician and longtime UAW member, in a tight runoff election this March. It was the first time UAW members directly elected their leadership, a change that members voted for in 2021 in the wake of multiple corruption scandals, as the New York Times reported at the time.
“Most people had no clue who he was,” Art Wheaton, director of labor studies at Cornell University’s School of Labor Relations, told Vox. “I had not met him. I had not heard of him prior to him running for president, so it was one of those things where he was under the radar.”
“Now, his persona is trying to shed some of the bad image,” Wheaton said, with Fain prioritizing transparency with membership while leadership is bargaining with the Big Three. “So he’s really gained and solidified this support very quickly through this negotiation process.” — Ellen Ioanes
2) What does the UAW want?
There’s an elevated level of militancy within the UAW right now. Fain is a disruptive figure with a bit of an unorthodox approach. Many auto workers are angry — they signed their last contract in 2019, about six months before the Covid-19 virus took hold. The pandemic would lead to huge profits for their employers, even as their own wages stagnated. They believe now is the time to get back the ground many feel like they’ve given up over the last 20 years.
“The UAW has a level of bitterness that we haven’t seen in decades right now,” Garrett Nelson, vice president and senior equity analyst at CFRA Research, a financial intelligence firm.
Initially, the union was asking for a 46 percent raise for members over the duration of their four-year contract, but it’s now come down to 36 percent. Ford and GM are offering 20 percent, Stellantis 17.5 percent.
The union has asked for a 32-hour work week for 40 hours of pay as well as a reinstatement of traditional pensions, improved retirement health care, and guarantees on job security. It has taken aim at the auto makers’ reliance on temporary workers and wants them to be converted to full-time after 90 days of work, with full benefits. The UAW is also seeking to eliminate the two-tiered pay system where new hires are paid significantly less than more tenured workers, in place since 2007.
Part of what these demands are ultimately about is better-quality jobs, said Kate Bahn, chief economist at the Urban Institute, told Vox. “It really struck me, when I was looking at the most recent jobs report, how manufacturing does seem to have longer hours than other hours — the average is just over 40” compared to an average of 37 hours per week across the labor force. That doesn’t include so-called critical status manufacturing drives, like Stellantis’s this past June, when, according to the UAW’s now-expired contract, plants could operate seven days per week for up to three months and require employees to work more overtime hours. Negotiating around working hours and other benefits in addition to salary could put in place longer-term changes in working conditions less dependent on the economy, Bahn said.
There’s been a long-term decline in job quality over the past 40 years, which Bahn attributes to the decline in worker bargaining power. “When workers have less bargaining power, employers take advantage of that and make jobs worse,” she said.
Ultimately, as the industry shifts to electric vehicles, the union says there needs to be a just transition from current manufacturing jobs to battery-powered EVs, and workers are worried the switch to electric vehicles could cost jobs. This kind of aggressive bargaining and push to have worker’s voices heard could help labor have more of a say in that transition, labor advocates say.
The companies are negotiating separately with the UAW. Stellantis is likely to be able to hold out longer than Ford and GM, which means it can play a little more hardball. Still, nobody’s thrilled — both Stellantis and GM put out statements saying they’re “disappointed” with the UAW’s actions, and Ford said it could not agree to the union’s “unsustainable terms.” — Emily Stewart and Ellen Ioanes
3) What led up to this?
Fain and company’s asks might seem extreme out of context, but in order to understand where the UAW is coming from, you have to look back to the union’s 2007 contract and the subsequent auto industry bailout of 2008 and 2009.
“A lot of that Great Recession really hit the auto industry tough,” Wheaton said.
When the US government decided to bail out the auto industry after the 2008 financial crisis, that came with a lot of company restructuring, as well as changes to the union’s 2007 contract framed as cost-cutting measures. “Part of [the government bailout] was restructuring the wages to try to be closer to what the non-union companies were making,” Wheaton said. The union agreed to a two-tiered wage system, in which those hired before 2007 received one wage, and those hired after were paid a little more than half that. The automakers also made more use of temporary and part-time workers, and did away with defined-benefit pensions and cost-of-living allowances, among other union benefits.
It worked at the time, but over the past 14 years the auto industry has seen massive sales and record profits, and workers haven’t been able to share in those successes — and in a way, they’re still paying for the bailout.
“Part of what’s motivating [wage increases] is an interest in the workers sharing in the success that the company has been experiencing, and share in it in a way that seems commensurate with the way that the corporate leadership has shared in that success,” Sharon Block, executive director of Harvard Law School’s Center for Labor and a Just Economy, told Vox. “When you think about it as an increase that represents a fair share of profits from three very profitable companies of late, it may look different.” — EI
4) What is the impact of the strike?
The UAW’s stand-up strike tactics will have a “devastating impact,” Nelson said. “It could really turn into a logistical nightmare for the automakers as it relates to the supply chain, because the automakers will have to adjust their deliveries of parts to the different factories,” he said. “The average automobile contains over 30,000 parts, and the automotive supply chain is one of the most complex of any industry.”
Automakers have inventory to weather the early storm, but that will be depleted over time. GM appears to be in a more precarious position than Stellantis or Ford.
Parts and equipment suppliers will take a hit, too, amid disruptions. “Most major auto suppliers count on the Detroit Three for between 25 and 45 percent of their total net sales, so you could see furloughs of the suppliers, production cuts, and so forth, where it could really have a crippling effect across the industry,” Nelson said.
The longer the UAW and Big Three are at an impasse and the longer the strike goes on, the worse the situation gets for a variety of parties, including car dealers and, of course, for consumers. The car market has been pretty wonky over the past few years — supply chain issues and semiconductor shortages have hurt supply, and people rushing to buy cars during the pandemic upped demand. The price tags on new and used cars had been pretty rich, and even with some prices coming down, rising interest rates have meant pricier car loans. “Consumers are trying to get back to a place where things are a bit more normal,” said Jessica Caldwell, head of insights at Edmunds, a consumer research company. The strikes means they’re going to have to wait.
In the immediate term, many incentives for buyers are likely out the window, as are many special orders on new vehicles. Prices on new vehicles are likely to move higher pretty quickly, as are, eventually, prices on used vehicles. “This goes for more than a couple of months, and all bets are off,” Conroy said.
It’s perhaps not all negative — Wheaton said he believes if the UAW is successful, it could energize union drives across the auto sector. “If you can make big gains at the bargaining table, it will help you as you’re doing organizing drives for more than half of the US market that’s not union for the auto sector,” he said. Higher salaries and better benefits, he argued, could make joining the UAW a more tempting prospect for employees at nonunion manufacturers like Kia and BMW. — ES and EI
5) What does this mean for the economy?
According to a report from the Anderson Economic Group put out in August, a 10-day strike against all three Detroit automakers would cost the economy $5 billion. The fallout may not be that severe, depending on how the stand-up strikes continue to play out, but the scenario still isn’t good.
The UAW stoppage on its own is not enough to create a massive drag on the US economy, though it depends on how long it lasts and whether it coincides with other negative factors.
“If it’s a month or two, then you’ll have a meaningful impact on GDP, let’s say, and jobs in the fourth quarter, but it will be small in the grand scheme of things,” said Mark Zandi, chief economist at Moody’s Analytics.
“We currently have a triple threat on the economy from the strikes of these autoworkers, from the risk of a government shutdown, and from the resumption of student debt payments,” said Greg Daco, chief economist at EY-Parthenon. Combined, they could shave a more significant amount off of GDP.
On a more micro level, the strike will negatively impact Michigan’s economy.
The economy is strong right now, and it’s proven resilient, but we’re not out of the clear. “We have not soft-landed, we are still in the landing process,” he said. — ES
6) What does this have to do with all the other strikes happening?
It’s not like the writers and actors called up the UAW and told them to hop in at the tail end of Hot Strike Summer. Each group has their own set of issues they’re trying to sort out with their respective counterparts. But there are elements of the current zeitgeist that these strikes share.
The labor market is tight and it has been for a while, and workers have a lot of power. (Yes, there are signs the labor market is cooling, but it’s still pretty strong.) It’s also a moment when many workers are seeing just how well their employers have done in recent years without sharing much of the pie.
“Profit margins have come in a little bit, but they’re still well above where they were pre-pandemic, so I think workers see that and they’re asking, well, does that make a whole lot of sense?” Zandi said.
Hollywood studios, while struggling with streaming, are making a lot of money. The same goes for automakers. “The pandemic was a boon for automakers. Prices surged, their profits surged, and real wages of the workers really took a hit,” Nelson said.
Technology is a looming threat that has workers on edge as well — in the case of writers and actors, artificial intelligence, and in the case of autoworkers, the transition to electric vehicles. “There’s a lot of angst here about how things are going to play out,” Zandi said.
It’s worth pointing out here that, despite the headlines, unions have been declining in America for decades. Strikes are hard on workers, including the ones not even doing the striking. The auto workers, like the actors and the writers, have walked off the job in this moment because they see their industry at a turning point, and believe this is the time to take a stand. — ES