Four-day Workweek, 46% Raise: UAW Makes 'Audacious' Demands Ahead of Possible Strike Against 'The Detroit Three'

Analysts Notebook wrote a column · Sep 6, 2023 17:10

Auto Worker Strikes Seem Inevitable

Shawn Fain, the President of United Auto Workers (UAW), has taken a confrontational approach to contract negotiations with Detroit automakers $General Motors (GM.US)$, $Ford Motor (F.US)$, and $Stellantis NV (STLA.US)$. He has vowed to take nearly 150,000 auto workers out of factories if necessary, by driving a hard bargain ahead of the contract negotiations that expire on September 14. Unlike prior UAW leaders, Fain is negotiating with all three automakers at once, refusing to select a "target" company while extending deals at other firms. UAW's "audacious" demands mainly include:

• A 46% pay raise;

• A 32-hour week with 40 hours of pay;

• A restoration of traditional pensions;

To press their demands during the negotiations, the union filed unfair labor practice charges against GM and Stellantis, claiming the companies were not bargaining in good faith. Some industry analysts believe that strikes may be essential to convince UAW members that the union leaders fought as hard as they could to reach their demands. Art Wheaton, a labor professor at the Worker Institute at Cornell University, predicts that a strike is almost essential at Stellantis or the UAW will never get a deal ratified.

Why It Matters

A potential strike by 146,000 UAW members could send inflated vehicle prices even higher. The Detroit Three have collectively posted net income of $164bn over the past decade. A 10-day strike would cost the three automakers nearly a billion dollars, while a 40-day UAW strike in 2019 saw GM alone lose $3.6 billion.

Shawn Fain, the new leader of the UAW, has characterised the contract talks with Detroit's automakers as a form of war between billionaires and ordinary middle-class workers. Last week, the UAW filed charges of unfair labor practices against Stellantis and GM, while Ford rejected most of the union's demands. The automakers argue that they seek a fair deal to invest in the future.

Marick Masters, a business professor at Wayne State University in Detroit, suggested that the strong U.S. job market and the companies' outsize profits have given Fain leverage in negotiations.

They are vulnerable," Masters said. "The question really is," he said, "are the parties willing to move on some of these things at the table? That hasn't been evident yet."

One of the biggest issues standing in the way of a contract agreement between the UAW union and the three major automakers is union representation at 10 proposed electric vehicle (EV) battery plants. The union fears that fewer workers will be needed to assemble EVs due to their simpler structure and that combustion engine and transmission plant workers will lose jobs in the transition to EVs, making it necessary to find them new employment. The UAW has demanded that battery plant workers receive the same wage and salary standards as generations of auto workers before them.

What Will Happen Next

Wall Street has warned of a potential work stoppage for several months, and investors have taken heed. A brief survey of 99 investors by $Morgan Stanley (MS.US)$ found 58% believe a strike is "extremely likely." That's followed by 24% who said it's "somewhat likely." Just 16% said a strike was unlikely, while 2% said it was "neither likely not unlikely."

The UAW has more than $825 million in its strike fund, which it uses to pay eligible members who are on strike. The strike pay is $500 per week for each member. A fund of $825 million, then, would cover about 11 weeks. Then there's the question of how long a strike would last: a strike of more than a couple of weeks would reduce still-tight supplies of vehicles on Detroit automakers' dealer lots. With demand still strong, prices would rise.

So far this year, 247 strikes have occurred involving 341,000 workers — the most since Cornell University began tracking strikes in 2021, though still well below the numbers during the 1970s and 1980s.

The automakers wouldn't be able to quickly replace striking workers. The tight job market, diminished interest in manufacturing jobs and comparatively modest wages would make it difficult to hire enough workers," said Marick Masters.

Source: Market Watch, SHRM, CNBC, Fortune

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more

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Skuriob : Next year's prize money will run out

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Derpy Trades : Yea, I think we'd all love to get paid for 40 hours but only work 32. It's not realistic.

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Nephellium : Demanding a higher wage is admirable, however, demanding a raise of 46% is beyond reason! The leaders of the union representing its constituents are exploiting the needs of the workers. Whats in the deal for the representatives. I am willing to bet a much larger income!

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RDK79 : Tesla says go for it….

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RDK79 Derpy Trades : on an assembly line..

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good Raccoon_7918 : those are very demanding jobs. many leaving only seconds between demanded actions. and yes.. many of them require a college degree or specialized training while exposing workers to toxic chemicals and hazards that most people don't consider. take a look at what executives have paid themselves since yr2000 and how many jobs were eliminated by line innovation... you might reconsider the bargaining targets of the uaw as a legitimate starting point to bring our workforce into the 21st century along with the results of their years of dedication to the job..

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powerful Fish_7325 good Raccoon_7918 :

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shlhvac : It's best if you don't have to work hard; you can still get paid

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