Rick Haglund: Transition to electric vehicles at the heart of UAW’s tough contract demands

There’s less than a month before labor contracts between the UAW and Detroit automakers expire, and the two sides appear destined for a head-on collision.

Bargaining has become unusually acrimonious as UAW President Shawn Fain is using hardball tactics not seen since firebrand Stephen Yokich led the union nearly 30 years ago.

Last month, Fain refused the traditional handshakes with top Ford, General Motors and Stellantis executives to kick off bargaining, calling the grip and grin sessions nothing more than “a dog and pony show.”  He replaced them with a  “members handshake” at various automaker factories that he said will be a new UAW tradition.

In a Facebook livestream earlier this month, Fain angrily threw Stellantis’s opening contract proposal in a trash can, saying the company “has chosen to spit in our faces.”

Stellantis Chief Operating Officer Mark Stewart fired back in a letter to employees, denouncing what he called Fain’s “theatrics and personal insults.” Stewart called the UAW’s contract demands “a losing proposition” for the automakers, its employees and customers.

Fain responded by accusing Stewart of writing the letter “from his second million-dollar mansion in Acapulco, Mexico.”

What’s next — a cage match between Fain and Stewart? 

Talks at Ford and GM have been far less publicly acrimonious than at Stellantis, which produces Chrysler, Dodge, Jeep and Ram vehicles. But Fain warned on August 15 that negotiations were moving too slowly and said he would not extend the labor contracts, which expire at 11:59 p.m. Sept. 14.

On the surface, it wouldn’t seem to be all that difficult for automakers and the UAW to negotiate a fair contract for both sides. The Detroit Three are financially strong, earning, Fain noted, a staggering $750 billion in profits over the past decade. Even the automakers have acknowledged workers deserve a raise.

But the transition to electric vehicles represents the biggest threat to the UAW since the bad old days of 2009 when Chrysler and GM went bankrupt and Ford had to put up its revered Blue Oval logo as collateral in 2006 to obtain a lifesaving, $23.5 billion loan.

Fain is seeking contracts with automakers that preserve UAW jobs in building batteries and assembling electric vehicles, which require about 30 percent fewer parts than gas-powered cars and trucks.

The union has given the automakers a list of demands that include a reported 46% raise over four years, eliminating the two-tier wage structure, restoring cost-of-living payments, providing traditional defined-benefit pensions for all workers, more paid time off and reestablishing health care benefits for retirees.

Those demands would boost automakers’ wage and benefit costs to $150 an hour, according to Bloomberg News, up from $64 an hour currently. Automakers say such an increase would threaten their viability.

MICHauto, an industry promotional group. said a strike by up to 150,000 UAW autoworkers would have a “sizable economic impact” in Michigan and the rest of the Midwest, shutting down suppliers, cutting consumer spending and reigniting inflation as the supply of new vehicles dries up.

Some analysts are particularly incensed about the UAW’s proposed “Working Family Protection program” that would require automakers to continue paying workers laid off in plant closings.

The program is modeled after the controversial Jobs Bank from the 1980s. Created by the automakers and the UAW, it paid thousands of idled workers, particularly at GM, nearly full wages to perform community service work, train for new jobs and, in too many cases, do nothing. 

The Jobs Bank was a response to a rapidly shrinking domestic industry, which shed tens of thousands of hourly jobs in the 1980s and 1990s. But the program, which was initially capped at a certain level, grew over the years, costing money-losing automakers billions.

Then-UAW President Ron Gettelfinger agreed to end the Jobs Bank in early 2009 as GM and Chrysler prepared to enter bankruptcy.

Ironically, the UAW sees the need for a renewed Jobs Bank program at a time when Detroit automakers are flourishing. Even though Ford, GM and Stellantis are making gobs of money, they’re also cutting costs and jobs to help finance the hundreds of billions of dollars they’re investing to build electric vehicles.

The UAW has estimated that 35,000 jobs at Detroit Three engine and transmission plants are at risk because electric vehicles don’t need those components.

It’s also fighting for better wages at new battery plants. Those factories are not part of the UAW national labor contract talks because the plants are organized as joint ventures between automakers and battery manufacturers.

Ahead of potential UAW strike, Biden calls for cooperation in union negotiations

The starting wage at the Ultium Cells battery plant in Ohio, a joint venture between GM and LG Energy Solution, is $16.50 an hour. That’s about half of what UAW workers earn in GM’s assembly plants.

Fain has accused the federal government of funding a “race to the bottom” by awarding automakers billions of dollars to construct battery plants “with no consideration for wages, working conditions, union rights or retirement security.” 

That’s put President Joe Biden in an uncomfortable spot. His Inflation Reduction Act offers automakers hundreds of billions of dollars in incentives to build battery plants in the United States. But the UAW said it won’t endorse Biden for reelection until he addresses its concerns about electric vehicles.

Biden, a strong advocate for organized labor, called for the UAW and automakers to “work together to forge a fair agreement” in an Aug. 14 statement.

He also said the transition to electric vehicles should be a “win-win opportunity for auto companies and unionized workers.”

The current labor talks are crucial in determining whether that will happen.