Jeronimo Gonzalez
Thu, August 10, 2023
The News
Up to 150,000 hourly workers at General Motors, Ford, and Stellantis are prepared to strike in demand for a 40% wage increase and, as the industry pivots to electric vehicles, guarantees that the contracts at the new plants will be comparable in terms of salary and safety.
The fallout could have massive implications beyond Detroit. President Joe Biden has made his handling of the economy one of the central themes of his reelection campaign, and a protracted auto workers’ hold out — on top of Hollywood’s lengthy strike — could negate that.
We’ve gathered key reporting and analysis on the potential implications of an auto workers’ strike.
Insights
Companies may agree to higher wages because they can afford those, but not to the union’s demands for a shorter work week or the ability to strike over plant closings. “The companies can’t afford anything that puts them in a straitjacket,” said Erik Gordon, a University of Michigan business professor, and with the pivot to EV, automakers will need “flexibility” to adjust or even close facilities. —
Biden and the Democrats are caught between trying to gain the United Auto Workers’ support in 2024 voting efforts, while also addressing the UAW’s concerns over the administration’s push to EV. The union — which has not yet endorsed Biden’s reelection — may cause headaches for the administration that has tried to portray itself as the most pro-labor in history. —
Late last year, an Ohio-based joint venture between General Motors and LG Chem became the first U.S. plant making electric vehicle batteries to unionize. The vote, which had the backing of 694 out of 710 voters, was heralded as a milestone event. Unionizing showed that workers at EV battery plants “want to be part of maintaining the high standards and wages that UAW members have built in the auto industry,” the union’s then-president said.
Companies may agree to higher wages because they can afford those, but not to the union’s demands for a shorter work week or the ability to strike over plant closings. “The companies can’t afford anything that puts them in a straitjacket,” said Erik Gordon, a University of Michigan business professor, and with the pivot to EV, automakers will need “flexibility” to adjust or even close facilities. —
Biden and the Democrats are caught between trying to gain the United Auto Workers’ support in 2024 voting efforts, while also addressing the UAW’s concerns over the administration’s push to EV. The union — which has not yet endorsed Biden’s reelection — may cause headaches for the administration that has tried to portray itself as the most pro-labor in history. —
Late last year, an Ohio-based joint venture between General Motors and LG Chem became the first U.S. plant making electric vehicle batteries to unionize. The vote, which had the backing of 694 out of 710 voters, was heralded as a milestone event. Unionizing showed that workers at EV battery plants “want to be part of maintaining the high standards and wages that UAW members have built in the auto industry,” the union’s then-president said.
GM, Ford Slide as $80 Billion Union Risk Hits Confidence
Esha Dey
Thu, August 10, 2023
(Bloomberg) -- General Motors Co. and Ford Motor Co. were among the biggest decliners in the US stock market Thursday on growing concern that demands from union leaders could send the automakers’ labor costs soaring.
The United Auto Workers are calling for wage increases and other changes that the biggest US car companies estimate would add more than $80 billion in expenses for each of them, Bloomberg reported this week. The demands come just weeks after the Teamsters union reached a tentative deal with United Parcel Service Inc. adding tens of billions of dollars in new costs, which led the courier to cut its financial outlook for the year.
GM shares fell 5.8% Thursday in New York, their biggest daily plunge in nearly eight months. Ford fell 4.5% and Stellantis NV declined 1.8%. GM and Ford were the second- and fourth-biggest percentage decliners on the benchmark S&P 500.
“GM and Ford may be in the penalty box for a while. Wall Street hates uncertainty,” said Morningstar analyst David Whiston. “This is not a normal negotiation both in style and the demands they are asking.”
The so-called Big Three US automakers are mired in tense negotiations with the UAW on a new four-year contract. The union wants a 46% wage increase, restoration of traditional pensions, cost-of-living increases, a shorter work week and better retiree benefits.
Read More: UAW Demands Would Add $80 Billion to US Carmaker Labor Costs
The carmakers have pushed back on many of the demands, but organized labor is having a moment in the US, especially after Teamsters’ success negotiating the favorable new deal last month with UPS.
UAW President Shawn Fain contends the roughly 150,000 union-represented workers at GM, Ford and Stellantis are due a payback for helping the companies recover from the Great Recession a decade ago, which set them up for record profits. On the other hand, the carmakers say they already offer generous pay and benefits, and need to keep wages competitive with lower-paying and non-union rivals like Tesla Inc. as they invest billions into the shift to electric vehicles.
“The ongoing talks with the UAW over a labor agreement always cause concerns for investors because a potential strike would negatively impact operations at the companies, and impact profit outlooks,” Argus Research analyst William Selesky said in an interview.
--With assistance from Catherine Larkin and David Welch.
Bloomberg Businessweek
Esha Dey
Thu, August 10, 2023
(Bloomberg) -- General Motors Co. and Ford Motor Co. were among the biggest decliners in the US stock market Thursday on growing concern that demands from union leaders could send the automakers’ labor costs soaring.
The United Auto Workers are calling for wage increases and other changes that the biggest US car companies estimate would add more than $80 billion in expenses for each of them, Bloomberg reported this week. The demands come just weeks after the Teamsters union reached a tentative deal with United Parcel Service Inc. adding tens of billions of dollars in new costs, which led the courier to cut its financial outlook for the year.
GM shares fell 5.8% Thursday in New York, their biggest daily plunge in nearly eight months. Ford fell 4.5% and Stellantis NV declined 1.8%. GM and Ford were the second- and fourth-biggest percentage decliners on the benchmark S&P 500.
“GM and Ford may be in the penalty box for a while. Wall Street hates uncertainty,” said Morningstar analyst David Whiston. “This is not a normal negotiation both in style and the demands they are asking.”
The so-called Big Three US automakers are mired in tense negotiations with the UAW on a new four-year contract. The union wants a 46% wage increase, restoration of traditional pensions, cost-of-living increases, a shorter work week and better retiree benefits.
Read More: UAW Demands Would Add $80 Billion to US Carmaker Labor Costs
The carmakers have pushed back on many of the demands, but organized labor is having a moment in the US, especially after Teamsters’ success negotiating the favorable new deal last month with UPS.
UAW President Shawn Fain contends the roughly 150,000 union-represented workers at GM, Ford and Stellantis are due a payback for helping the companies recover from the Great Recession a decade ago, which set them up for record profits. On the other hand, the carmakers say they already offer generous pay and benefits, and need to keep wages competitive with lower-paying and non-union rivals like Tesla Inc. as they invest billions into the shift to electric vehicles.
“The ongoing talks with the UAW over a labor agreement always cause concerns for investors because a potential strike would negatively impact operations at the companies, and impact profit outlooks,” Argus Research analyst William Selesky said in an interview.
--With assistance from Catherine Larkin and David Welch.
Bloomberg Businessweek
United Auto Workers calls Stellantis contract offer 'trash'
David Shepardson
Tue, August 8, 2023
(Reuters) — United Auto Workers (UAW) union President Shawn Fain angrily tossed contract proposals from Stellantis (STLA) in a trash can on Tuesday, citing numerous concessions that the Chrysler parent is seeking in labor talks.
"Stellantis proposals are a slap in the face," Fain said during an online chat, disclosing the company is proposing cuts to health-care coverage, fewer vacation days for new hires, employer cuts to 401(k) contributions, and lifting a cap on the number of temporary employees. "Management has chosen to spit in our faces."
During the chat Fain tossed a copy of the Stellantis proposal in a waste basket. "That's where it belongs — in the trash — because that's what it is," he said.
The July 27 company document seen by Reuters makes many proposals aimed at reducing absenteeism, which the automaker said cost it more than 16,000 vehicles of lost production, or $217 million in lost revenue.
Stellantis also seeks to cut pension, health-care and other costs, saying that amid government electric vehicle rules, it "is imperative we find ways to reduce the overall fixed cost structure of our business."
The owner of the Jeep, Peugeot and Chrysler and brands said the cumulative increase in employee health-care costs over the next four years is expected to be $613 million.
The UAW said the automaker opposes an end to two-tier wages, a practice of newer hires getting paid much less than veteran workers.
Fain cited an Aug. 1 statement Stellantis made to Reuters that the automaker is "not seeking a concessionary agreement." Stellantis did not comment.
United Auto Workers (UAW) President Shawn Fain (C) speaks with workers at the Ford Michigan Assembly Plant on July 12, 2023 in Wayne, Michigan, the start of contract negotiations with Stellantis. (Photo by Bill Pugliano/Getty Images)
The UAW is seeking pay raises of more than 40% over four years, significant additional time off, and a restoration of defined-benefit pensions previously eliminated for newer workers.
Stellantis' proposal said it wants to "minimize pension costs," which are approximately $1 billion annually.
The current four-year contracts with Stellantis, General Motors and Ford Motor expire on Sept. 14. Fain warned Tuesday: "The clock is ticking - time to get down to business."
Two people briefed on the matter told Reuters that automakers have estimated the UAW's contract demands could raise the current mid-$60-per-hour labor rate to more than $150 per hour.
The UAW is also seeking to make all temporary workers at U.S. automakers permanent, add a substantial increase in paid time off, and restore retiree health-care benefits and cost-of-living adjustments. The union also wants new limits on temporary workers.
(Reporting by David ShepardsonEditing by Bernadette Baum, Marguerita Choy and Leslie Adler)
David Shepardson
Tue, August 8, 2023
(Reuters) — United Auto Workers (UAW) union President Shawn Fain angrily tossed contract proposals from Stellantis (STLA) in a trash can on Tuesday, citing numerous concessions that the Chrysler parent is seeking in labor talks.
"Stellantis proposals are a slap in the face," Fain said during an online chat, disclosing the company is proposing cuts to health-care coverage, fewer vacation days for new hires, employer cuts to 401(k) contributions, and lifting a cap on the number of temporary employees. "Management has chosen to spit in our faces."
During the chat Fain tossed a copy of the Stellantis proposal in a waste basket. "That's where it belongs — in the trash — because that's what it is," he said.
The July 27 company document seen by Reuters makes many proposals aimed at reducing absenteeism, which the automaker said cost it more than 16,000 vehicles of lost production, or $217 million in lost revenue.
Stellantis also seeks to cut pension, health-care and other costs, saying that amid government electric vehicle rules, it "is imperative we find ways to reduce the overall fixed cost structure of our business."
The owner of the Jeep, Peugeot and Chrysler and brands said the cumulative increase in employee health-care costs over the next four years is expected to be $613 million.
The UAW said the automaker opposes an end to two-tier wages, a practice of newer hires getting paid much less than veteran workers.
Fain cited an Aug. 1 statement Stellantis made to Reuters that the automaker is "not seeking a concessionary agreement." Stellantis did not comment.
United Auto Workers (UAW) President Shawn Fain (C) speaks with workers at the Ford Michigan Assembly Plant on July 12, 2023 in Wayne, Michigan, the start of contract negotiations with Stellantis. (Photo by Bill Pugliano/Getty Images)
The UAW is seeking pay raises of more than 40% over four years, significant additional time off, and a restoration of defined-benefit pensions previously eliminated for newer workers.
Stellantis' proposal said it wants to "minimize pension costs," which are approximately $1 billion annually.
The current four-year contracts with Stellantis, General Motors and Ford Motor expire on Sept. 14. Fain warned Tuesday: "The clock is ticking - time to get down to business."
Two people briefed on the matter told Reuters that automakers have estimated the UAW's contract demands could raise the current mid-$60-per-hour labor rate to more than $150 per hour.
The UAW is also seeking to make all temporary workers at U.S. automakers permanent, add a substantial increase in paid time off, and restore retiree health-care benefits and cost-of-living adjustments. The union also wants new limits on temporary workers.
(Reporting by David ShepardsonEditing by Bernadette Baum, Marguerita Choy and Leslie Adler)
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