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Big 3 automakers reject workers’ demands as strike deadline nears

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DETROIT — A 46% pay raise. A 32-hour week with 40 paid hours. A restoration of traditional retreats.

Demands that a more combative United Auto Workers union has lobbied General Motors, Stellantis and Ford — demands that even the UAW’s own president calls ‘bold’ — bring him closer to a strike when his contract ends on September 14.

Automakers, which make billions in profits, rejected the UAW’s wish list. They argue his demands are unrealistic at a time of fierce competition from Tesla and low-wage foreign automakers as the world shifts from internal combustion engines to electric vehicles. The wide rift between the parties could mean a strike against one or more automakers, which could drive up prices for already inflated vehicles even further.

A potential strike by 146,000 UAW members comes amid growing emboldened U.S. unions of all kinds. The number of strikes and strike threats is on the rise, involving Hollywood actors and writers, major railroad deals and major concessions from giants like UPS.

Shawn Fain, the UAW’s tough new leader, has called contract talks with Detroit automakers a form of war between billionaires and ordinary middle-class workers. Last month, in an act of showmanship at a Facebook Live event, Fain condemned a contract proposal from Stellantis as ‘trash’ – and threw a copy in a trash can, ‘in its place’. , did he declare.

Over the past decade, the Detroit Three have become solid profit generators. They have collectively posted a net profit of $164 billion over the past decade, including $20 billion this year. The CEOs of the three major automakers earn several million dollars in annual compensation.

Speaking to Ford workers at a plant in Louisville, Ky., last month, Fain complained about one standard for corporate class and another for ordinary workers.

“They are getting salaries out of control,” he said. “They get pensions they don’t even need. They enjoy top-notch health care. They work the schedule they want. The majority of our members do not receive a pension these days. It’s crazy. We receive substandard health care. We cannot work remotely.

United Auto Workers President Shawn Fain greets workers at General Motors’ Factory Zero in July, to mark the start of contract negotiations in Detroit. Photo by Rebecca Cook/Reuters

UAW members voted overwhelmingly to allow its leaders to go on strike. The same goes for Canadian autoworkers, whose contracts end four days later and who have named Ford as their target.

The UAW did not say whether it would select a target automaker. He could hit all three, but that could deplete the union’s strike fund in less than three months.

By contrast, if a strike lasted just ten days, it would cost the three automakers nearly $1 billion, the Anderson Economic Group calculated. During a 40-day UAW strike in 2019, GM alone lost $3.6 billion.

Last week, the union filed an unfair labor practices lawsuit against Stellantis and GM, which it says have not yet offered counter proposals. As for Ford, Fain said his response, by rejecting most of the union’s demands, “insults our own worth.”

The three automakers have countered that the union’s accusations are baseless and that they are seeking a fair deal that would allow them to invest in the future.

Marick Masters, a business professor at Wayne State University in Detroit, suggested that the strength of the U.S. labor market and outsized corporate profits gave Fain leverage in the negotiations. In addition, he noted, automakers are set to launch a slew of new electric vehicles that would be delayed by a strike. And they only have a limited number of vehicles to withstand a prolonged strike.

“They’re vulnerable,” Masters said.

“The real question is, he said, are the parties willing to move forward on some of these issues at the table? It is not yet obvious.

Fain, who won the UAW presidency this spring in the first direct election of members, has set high expectations. He assured the workers that they could make significant gains if they agreed to walk the picket lines.

Yet even Fain called the union’s proposals “bold” in demanding the restoration of traditional defined-benefit pensions for new hires; the end of salary levels; pension increases for retirees; and – perhaps the most daring – a 32-hour week for 40 hours of pay.

Currently, UAW workers hired after 2007 do not receive a defined benefit pension. Their health benefits are also less generous. For years, the union waived general wage increases and lost cost-of-living wage increases to help companies control costs. Although high-level assembly workers earn $32.32 an hour, temp workers start at just under $17. Still, full-time workers have received profit-sharing checks this year ranging from $9,716 at Ford to $14,760 at Stellantis.

Chris Lindsey, a union member who builds Ford trucks at a Louisville plant, says workers deserve a bigger share of Ford’s massive profits.

“We keep giving up, but nothing in return,” Lindsey said. “We just want something fair.”

Perhaps the biggest issue blocking a contractual agreement is union representation at the 10 electric vehicle battery plants offered by the companies. Most of these factories are joint ventures with South Korean battery makers, who want to pay less.

“These battery workers deserve the same wage and salary standards that generations of autoworkers have fought for,” Fain told members.

The union fears that because electric vehicles are simpler to build and have fewer moving parts, fewer workers will be needed to assemble them. In addition, workers in combustion engine and transmission plants are likely to lose their jobs during the transition; they will need a place to go.

Fain, a 54-year-old electrician from a Chrysler plant in Kokomo, Indiana, is among many labor leaders from across the economy who have stepped up their demands and flexed their muscles. So far this year, 247 strikes have taken place, involving 341,000 workers – the highest number since Cornell University began tracking strikes in 2021, though still well below 1970s figures and 1980.

Masters suggested automakers would not be able to quickly replace strikers. The tight labor market, less interest in manufacturing jobs and relatively low wages would make it difficult to hire enough workers.

Some autoworkers consider the UPS contract, with a maximum wage of $49 an hour for experienced drivers, as a benchmark for their negotiations. Others say they just hope to get closer to that number.

But the automakers say a generous deal would impose costs on them far above those of their competitors just as they start producing more electric vehicles. The inability to bring the Hyundai-Kia, Nissan, Volkswagen, Honda and Toyota plants into the union has weakened the UAW’s influence, said Cornell labor professor Harry Katz.

Including the value of their benefits, workers at Detroit 3 automakers receive about $60 an hour. The corresponding figure for foreign automakers with US plants is just $40 to $45, Katz said. Much of the disparity reflects pensions and health care.

If Detroit businesses end up with higher labor costs, they’ll pass them on to consumers, making vehicles more expensive, said Sam Fiorani, an analyst at AutoForecast Solutions, a consulting firm.

“More than half of the vehicles built in the United States are built in non-union factories,” he said. “So if you raise the price to build a unionized vehicle, you could find yourself out of competition with vehicles already built in North America. »

A strike lasting more than two weeks would reduce the still-limited supply of vehicles at Detroit automaker dealerships. With demand still strong, prices would rise.

UAW members are “reminding management that management cannot operate these factories without a settlement,” Katz said.

Masters and Katz say there is still time to fix the problem without a strike. Katz predicts settlement below UPS numbers, possibly with 3% general wage increases plus cost-of-living adjustments, increased company contributions to 401(k) accounts for new workers, and transitions faster to higher salaries.

That said, Katz suggested, Fain needs to back up his tough talk: “He has to prove himself. »

AP writers Bruce Schreiner in Louisville, Kentucky, and Christopher Rugaber in Washington contributed to this report.

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