Last Friday, the U.S. Auto Workers Union UAW went on strike, creating an unprecedented situation. It’s not that there haven’t been strikes before, there have been many, but for the first time the three major American automakers were affected at the same time: Ford, General Motors and Stellantis Owner of the Jeep, Ram and Chrysler brands.
The other peculiarity of the strike is that only 14,000 of the 150,000 workers are striking, affecting strategic areas of certain plants that are crippling or hampering production in many others due to the interconnectedness of parts supply. Three plants are currently affected: one owned by Ford in Michigan, which produces the Bronco and Ranger models; one from GM in Missouri, which produces the Chevrolet Colorado pickup, and one from Stellantis in Ohio, which produces the Jeep Wrangler. They are all highly profitable models for their companies, so stopping their production means serious economic losses. On the other hand, the minimal number of strikers involved allows for very effective management of the union’s enormous strike fund (estimated at $825 million), which partially offsets strike workers’ pay. All this is a clear sign that the union has methodically planned this violent measure and that it has enough strength to prolong it over a longer period of time and even expand it to other plants if negotiations require it.
“This strategy will unsettle companies. It will give our national negotiators maximum bargaining power and flexibility. And if we need to dig deep, we will. Everything is on the table.”
Shawn Fain – President of the UAW
The UAW’s request, led by its combative President Shawn Fain, is also unprecedented. They demand 40% salary increase (staggered over 4 years, which corresponds to the term of the agreement), job stability and reduction of the working day to 32 hours per week (from the current 40). They also call for equalization of benefits between workers hired before and after 2009, as the latter are much more “precarious” in terms of health insurance or access to pension funds.
The three manufacturers quickly condemned the strike, arguing that the union proposals were disproportionate, unworkable and would threaten the companies’ profitability. In any case, they improved their proposals as negotiations progressed, with increases reaching 20% for Ford and GM and 17.5% for Stellantis. But Fain rejected these offers as inadequate given the high inflation rate, the concessions workers had made in previous contracts and the very high profitability of automakers in recent years.
Two pieces of information support the claim: According to estimates the combined winnings of the three big ones In the last decade they amounted to 250,000 million dollars, an increase of 92% compared to the last 10 years. During the same period, the average salary of workers in these companies barely increased by 6%, with a Real purchasing power loss of 30%.
The history of this decoupling goes back to the 2008 crisis, when workers had to make many concessions so that companies could “stay afloat”. But now that things are improving and profits are rising, the company’s relative position in its share of the pie remains at an all-time low.
The current narrative from manufacturers is that the priority is to increase corporate profits in order to manage the costly transition to clean energy. Furthermore, they argue, they are unable to gain an advantage over competition, both from China – with much lower labor costs – and Tesla, whose workers are not unionized. All of this is very true, as is the fact that the CEOs’ incomes are Big Three they haven’t stopped growing. Ford CEO Jim Farley received $21 million in compensation last year; Mary Barra of General Motors, 29 million, and Carlos Tavares, CEO of Stellantis, almost 25 million. This is an average of 40% more than four years ago and, incidentally, is the fairly robust benchmark that the UAW uses to make its own salary adjustment claim.
In several reports to the American media, Jim Farley complained that it would have been impossible to distribute the large amounts of profits of recent years among shareholders if all the union’s demands were accepted, thereby making it clear where his priorities lie as CEO. It should be noted that a large part of the companies’ profits were used to buy back their own shares – a so-called financial practice buy back– whose main purpose is to increase the price of these titles. And it’s no secret that senior executives’ bonuses and compensation are tied to the company’s stock price, creating a kind of virtuous circle for them, but from which employees are clearly excluded.
So far there are no signs that the conflict will be resolved any time soon. The positions are still very far apart and the union’s position is extremely decisive; They are allowed to cause even greater damage to companies by shutting down factories that produce the most profitable models, such as the large Ford F-150, Chevrolet Silverado and Ram pickups. On the corporate side, there is always the risk of moving production to Mexico, a country with much lower labor costs. But that would have different implications given the very heated political scene in the United States. In fact, the country’s most important politicians are taking a stand in the conflict with an eye on next year’s elections. On the one hand, current President Joe Biden, his predecessor Barack Obama and the popular Senator Alexandria Ocasio Cortez have already expressed their support for workers; while on the other side – the Republican Party – Donald Trump is leading the criticism of Fein’s actions as a union leader.
But everything is more complex than it seems: For Biden, the strike could worsen his chances in the state of Michigan, which is one of the most famous Swing states that make up the presidential election. Meanwhile, Trump is using the opportunity to ramp up his diatribe against sustainable mobility, a position that aligns with the interests of the union, which fears that the transition to electric cars – because they require fewer workers – will cost thousands of jobs in the industry. .