Tag: iab-executive leadership & management

Detroit
CNN
 — 

With just hours to go before labor contracts expire at America’s three unionized automakers, thousands of autoworkers could walk off the job.

Those limited, targeted strikes could be enough to grind production to a halt at General Motors, Ford and Stellantis, which builds vehicles under the Jeep, Ram, Dodge and Chrysler brands for North America.

But the uncertainty and confusion underscore the high stakes, with a possible historic strike at all three major automakers, disruptions to the local and national economies, and, perhaps more than anything, a hint at the future of manufacturing jobs in America.

The union and the automakers continued to negotiate down to the wire on Thursday. GM made a new offer on Thursday afternoon, including a 20% raise, matching Ford’s offer.

“We don’t want there to be a strike. We’re ready to work until the deadline,” Ford CEO Jim Farley told CNN. “We’d like to make history by making a historic deal, not having a historic strike,” he said.

And President Joe Biden himself spoke to leaders of the union and the automakers, as a strike could be politically costly for him, as well.

UAW President Shawn Fain on Wednesday evening announced plans for those targeted strikes at any company that fails to reach a labor deal with the union before contracts expire at 11:59 pm Thursday. Fain suggested the strategy, including the possibility of ramping up strikes as negotiating continues, would give the UAW more leverage. “We have the power to keep escalating and keep taking plants out,” he said.

But Farley said on CNN Thursday that striking plants that make critical parts could affect workers at downstream assembly plants.

“We can’t make a vehicle without an engine or transmission or stamping. So those people will, you know, basically be furloughed,” Farley said.

Slowing or stopping the production of a few engine or transmission plants at each company could be as effective at stopping operations as a full strike at all plants, according to industry experts.

One engine or transmission location per company might be enough to shut down nearly three-quarters of the US assembly plants, said Jeff Schuster, global head of automotive for GlobalData, an industry consultant.

“Two plants per company, you can pretty much idle North America,” he said.

Halting the companies’ assembly lines would likely happen in less than a week that way, Schuster said.

One advantage for the union of a targeted strike is the potential to save resources and extend a possible walkout. Striking union members are eligible for $500 a week from the union’s strike fund.

If all 145,000 UAW members among the three automakers were to strike at the same time, it could cost the fund more than $70 million a week, draining the $825 million fund.

If the companies shut down operations and lay off members who are not technically on strike, those workers could be eligible to receive state unemployment benefits rather than strike benefits, which could preserve the union’s resources.

Strikers are not eligible for unemployment benefits, but workers on temporary layoff can receive the benefits, which differ by state but would be less than the union’s $500 strike pay. There also are legal questions in different states about qualifying for unemployment.

An official with Ford told reporters Thursday that under state law, workers in Michigan and Ohio were not eligible to receive unemployment benefits if they were laid off due to lack of parts at their plant caused by a strike. There are some other states, such as Kentucky and Tennessee, where they would be able to receive unemployment benefits, according to the officials.

But they said none of the Ford UAW members would be eligible for so-called “sub-pay,” which they typically receive during temporary layoffs. Sub pay is far more lucrative, covering most of the gap between unemployment benefits, typically less than $300 a week, and normal company pay, which can be close to $1,300 a week.

GM CEO Mary Barra sent a letter to employees Thursday saying the company’s latest offer now includes a 20% raise, with an immediate 10% pay hike. The lower paid temporary employees would get $20 an hour, which represents a 20% raise from the current $16.67 an hour they receive. She called the offer “historic.”

“We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight. Remember: we had a strike in 2019 and nobody won,” she said in the letter.

Farley told CNN the offer from Ford of a 20% raise over the life of the contract is the most lucrative offer the company has made to the union in the 80 years it has been there. But he said meeting the union’s demands of close to a 40% raise, along with a four-day work week and other benefit improvements, would have been unaffordable.

Farley blamed the union for the lack of progress in negotiations. But the union has blamed the companies for waiting until the end of August or early September to make their first counteroffers.

The union came up with the 40% raise request based on the increase in the pay of CEOs at the three automakers over the last four years. Ford CEO pay rose 21%, from $17 million for Farley’s predecessor Jim Hackett in 2019, to $21 million for Farley last year. (Farley is the lowest compensated of the three CEOs.)

Asked why the union workers shouldn’t get the same increases, Farley responded, “We’re really open to huge increases.” As to the 40% increases for CEOs, Farley responded, “I wasn’t CEO four years ago, but we have put on the table huge increases, double digit increases.”

Ford has not had a strike since 1978; it has more UAW workers than the other two automakers.

President Joe Biden spoke with Fain and leaders of the major auto companies “to discuss the status of ongoing negotiations,” the White House said Thursday.

The White House declined to say Wednesday that Biden would support UAW workers if they chose to strike.

“I’m gonna leave it at, [Biden] believes the auto workers deserve a contract that sustains middle class jobs and wants the parties to stay at the table, to work round the clock to get a win-win agreement,” Council of Economic Advisors Chair Jared Bernstein told reporters during Wednesday’s White House press briefing.

Biden became directly involved in 11th hour negotiations a year ago to stop engineers and conductors at the nation’s major freight railroad from going on strike and was credited by both sides with a deal being reached at that time. But Biden and Congress had power under a different labor law to keep workers on the job by imposing a contract, a power he used later in the year when rank-and-file rail workers rejected the deal he brokered and again threatened to strike

The autoworkers fall under a different labor law, one that leaves Biden with no power to stop a walkout. And he has limited influence with the UAW, which has been critical of his push to have the industry convert to electric vehicles, a move that could cost members jobs in the long run.

In a statement midday Thursday, GM said it remains in “good faith negotiations” with the UAW but cautioned that a strike would be disruptive to its business.

“Any disruption would negatively impact our employees and customers, and would have an immediate ripple effect across our communities,” a company spokesperson said.

One sticking point in negotiations is that wages are only part of the gap between the two sides. In some ways it might be the least difficult problem to solve, said Patrick Anderson, CEO of Anderson Economic Group, a Michigan research firm.

“The difference between the automakers and the unions on wages is a gap that could be closed,” said Anderson. “The differences involving non-wage demands are a gulf, not a gap.”

The union is attempting to reverse deep concessions that go back as far as 2007. At the time, years of losses had left Ford nearly out of cash, and GM and Chrysler were on their way to bankruptcy and federal bailouts.

The number one concession the union wants to end is a lower tier of wages and benefits for workers hired since 2007. While top pay for those newer hires, who today make up a majority of membership, is the same as the $32.32 paid to more senior members, it takes many more years to reach that level.

The union also wants to restore traditional pension plans for those hired since 2007, as the more senior workers now receive, as well as the same retiree health care coverage. And to protect members from rising prices, it wants a return of the cost-of-living adjustments to pay that all employees lost in 2007.

Even Fain calls those demands “ambitious,” but he said they’re driven by record or near record profits at the automakers.

Pandemic supply chain disruptions and shortages of some parts, particularly computer chips, have led to record car prices. The average purchase price of a new car in August was nearly $48,000, according to Edmunds. That’s up 30% from August of 2019.

Automakers have used their limited supply of parts to build vehicles loaded with options to maximize profits. That’s produced a strong bottom line. General Motors reported record profits in 2022, and Ford posted near-record profits as well. Stellantis, a European-based automaker formed in 2021 by the merger of Fiat Chrysler and PSA Group, had 2022 profits up 26% compared to its first year of combined operations.

A strike that halts production nationwide could also be costly for the automakers at a time of strong demand by car buyers and strong competition from nonunion automakers such as Tesla and foreign brands. GM said it lost $2.9 billion during its 2019 strike.

While the automakers have done their best to build up inventory at dealerships, car buyers could have trouble finding some of the models they want and could have to wait longer for their choice of colors and options. And limited supplies could put upward pressure on some vehicle prices.

– CNN’s DJ Judd contributed to this report