Tuesday, September 26, 2023

Wages are putting pressure on car manufacturers

The United Auto Workers (UAW) union, which represents about 150,000 American auto factory workers, declared a “limited and targeted” strike early Friday against three of the nation’s largest automakers as the union and the companies failed to reach an agreement to sign a new strike Contracts.

The three manufacturers – General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram – had said they could be forced to stop or reduce production if an agreement could not be reached by midnight Thursday. UAW President Shawn Fain emphasized that Thursday is the “deadline, not a benchmark.”

The union wanted to negotiate a separate four-year contract with each automaker. The UAW never struck all three companies simultaneously, preferring to do so individually. But Fain had stated that he and his colleagues were prepared to strike at all three companies on this occasion.

What is the disagreement in the labor dispute about?

Compensation is the main topic of negotiations. The UAW is asking for a 40 percent pay increase over four years, which Fain said isn’t far off the pay increase for CEOs of these companies over the past four years.

By September 8th, the position of both parties was very different: the companies were offering a salary increase of between 14 and 16 percent in four years. Fain called the offer “insulting” and said the union remains committed to its goal of a 40 percent raise.

What role does the switch to electric cars play in the negotiations?

The auto industry is in the midst of a massive transition to battery-powered vehicles, so GM, Ford and Stellantis are investing billions of dollars developing new models and building factories. Companies have said these investments make it harder for them to pay workers higher wages. They say they are already at a major competitive disadvantage compared to non-union automakers like Tesla, which dominates the electric vehicle market.

The UAW fears that companies will exploit the transition to electric vehicles to cut jobs or hire more non-union workers. The union is seeking to have automakers include battery plant workers in their nationwide contracts with the UAW. Currently, these workers do not have union representation or are in independent contract negotiations. However, the companies argue that they cannot legally comply with this request because these investments are co-investment projects.

What happened at the last UAW strike?

The most recent UAW strike took place in 2019 and was against General Motors. Almost 50,000 General Motors employees stopped work for 40 days. The company said the strike cost it $3.6 billion.

It ended after both sides reached an agreement that ended a two-tier pay structure that paid newer employees much less than veterans. GM also agreed to pay workers more.

How would a strike against the three automakers affect the economy?

A prolonged pause in auto production could trigger a chain reaction in many parts of the U.S. economy.

According to calculations by the Anderson Economic Group, a 10-day strike could cost the economy $5 billion. A prolonged strike could impact car inventories at dealers and drive up vehicle prices.

The auto industry is in a more vulnerable situation than it was in 2019, the last time the UAW went on strike. At the start of the pandemic, automobile production was halted, resulting in a significant decline in vehicle supply. Domestic car inventories remain at about a quarter of the level at the end of 2019.

Will a strike have political consequences?

I could definitely have her. President Joe Biden has called himself “the most pro-worker president” and sought to strengthen his ties with unions before launching his re-election campaign. But the UAW, which typically supports Democratic candidates as it did Biden in his 2020 campaign, has not said it will support him in the 2024 campaign.

The union fears Biden’s decision to promote electric vehicles could further undermine union membership in the auto industry. Fain has criticized the administration for providing large federal incentives and loans to new factories without requiring those factories to employ union workers.

Former President Donald Trump, who is most likely to win the Republican nomination, has tried to win over UAW members. He criticized Biden’s auto industry and climate policies as negative for workers and consumers.

Nation World News Desk
Nation World News Deskhttps://nationworldnews.com/
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