United Auto Workers

• On September 15, 2023, the United Auto Workers (UAW) launched strike action targeted at General Motors, Ford, and Stellantis (formerly Fiat Chrysler).
• This is the first strike action in history that will simultaneously affect all three of the U.S. major auto manufacturers.
• While the strike action currently targets a limited number of factories at each automaker, its duration and scope are unclear.
• KBRA will continue to monitor developments of the strike action and its potential to affect the performance of its rated universe of 170 auto ABS transactions.

• The contracts expired at 11:59 p.m. on Sept. 14, 2023.
• By midnight, the union posted a strike declaration on its website.
• The union is seeking higher pay, better benefits and assurances that large numbers of its members will work in the automakers’ growing number of electric-vehicle factories.

1. How important is it that this strike is affecting all three Detroit automakers?

• And in recent years, all workers employed by that automaker had walked off the job.
• That’s what happened in the previous UAW strike.
• While holding a strike against a few key plants breaks with recent UAW practices, it’s a strategy deeply rooted in the union’s history.
• By the time the strike was over, GM had agreed to sign a contract for the first time with the UAW.

2. How would you define success or failure for the UAW’s new strategy?

• In the process, we learned what determined the level of success of previous auto strikes.
• Workers threaten the company’s viability by withholding their labor, going without paychecks to halt production.
• Strikes fail when workers can’t create enough disruption to pressure the company to give in before strike funds run out.
• I believe that the UAW is likely to ultimately have more success with this strike than it has had in decades.

3. Is this strike likely to be historically significant?

• No Ford workers had gone on strike in the U.S. since 1978.
• Chrysler workers, who are now employed by Stellantis, last went on strike in 2007.
• If the UAW’s “stand-up” strike strategy succeeds, I think it’s likely that other labor organizers will embrace it too – potentially improving the leverage other workers have in their contract negotiations and strikes.

• After decades of making concessions to their employers, the union’s demands for pay increases and better benefits exceed what some automotive industry executives say are reasonable.
• In particular, it should consider the legacy of Walter Reuther, the labor leader who served as the UAW’s president from 1946 until his death in 1970.
• By balancing his vision and aspirations with pragmatism, Reuther showed that bold labor leaders can score big wins.

Miscalculations can be costly for workers

• Strikes that fail to meet their objectives, often due to miscalculations by unions of their power to win concessions from employers, litter U.S. labor history.
• These failures were particularly common in the 1980s and 1990s, as companies and other employers demanded concessions and replaced workers during and after strikes.
• A 15-month walkout by International Paper workers at several plants in 1987 and 1988 was also disastrous for the strikers.
• The companies fired strikers, replacing them permanently with other workers.

Lessons from Walter Reuther

• Reuther understood the union’s capacity to hold a strike and how much harm it could inflict upon a company before the costs became prohibitive for both sides.
• Reuther knew to settle when the union’s ability to push a company for further concessions had reached a ceiling beyond which the losses on both sides exceed any possible future gains.
• Reuther understood that autoworkers and their employers depended on each other to make progress.
• 3: Balance competing interests Reuther also understood the limits of the UAW’s power, and he knew how to bargain for a contract that both autoworkers and automotive executives could accept.

New reality

• At least 85% of the vehicles U.S. drivers bought through the mid-1960s were made by the Big Three automakers.
• Those companies’ total U.S. market share is less than half of that now – a total of about 41%, with 16% for GM, 14% for Ford and 11% for Stellantis.
• Both labor and management could incur potentially substantial losses in a strike, which would compound over time.
• And I keep on wondering what Walter Reuther would do – and whether Shawn Fain is doing that too.

• It’s not clear that the UAW will agree upon a new contract with Ford, General Motors and Stellantis – the automaker that manufactures Chrysler and 13 other vehicle brands – by their impending deadline.
• The union’s leaders skipped the traditional handshake ceremonies it usually holds with these automakers, which are often called the Big Three or Detroit Three.
• The union instead held grassroots photo-ops: UAW leaders greeted rank-and-file members at one Ford, one GM and one Stellantis factory.
• I’m a labor scholar who has studied the history of UAW collective bargaining with the Detroit Three.

Strike could stall Detroit GM, Ford and Stellantis

• And UAW leaders have pledged to garner what they see as their members’ fair share of those profits through higher wages and stronger job security.
• The UAW’s newly elected president, Shawn Fain, frequently denounces corporate greed and has proclaimed the union’s willingness to go on strike.
• “And whether or not there’s a strike, it’s up to Ford, General Motors and Stellantis.” The UAW has said it has more than $825 million in its strike fund to help workers make do without pay should they walk off the job.

Fain’s leadership

• They want to prevent a recurrence of a massive scandal that resulted in the federal prosecution of more than a dozen UAW leaders from 2017 to 2022.
• Two former UAW international presidents were sentenced to time in prison after being convicted of embezzling union funds.

Seeking equal pay for EV workers

• Today, workers at the joint-venture factories earn far less than their counterparts who produce vehicles that run on fossil fuels.
• But pay for workers at the former General Motors plant, which is now a joint EV battery venture between GM and LG Energy, starts at just $16.50 per hour.
• In 2019, the year that GM ended car assembly at that factory, workers earned $32 per hour.
• They include greater job security and steep wage increases for UAW-represented workers covered by the union’s contracts with GM, Ford and Stellantis.

Smaller ranks

• Nonunion competitors with U.S. locations include foreign companies such as Toyota, Honda, BMW and Volkswagen, as well as domestic-based EV rivals Tesla and Rivian.
• Today, a total of only 146,000 people work for those companies – 57,000 at Ford, 46,000 at GM and 43,OOO at Stellantis.
• The Big Three’s share of the U.S. automotive market has declined to about 40% from more than 90% in the mid-1960s.
• Third, nonunion electric vehicle companies like Tesla and Rivian generally pay their production workers less than the Detroit Three.

What the automakers say

• Ford, GM and Stellantis have noted that they have invested heavily in U.S.-based factories to preserve UAW-represented jobs.
• Also, the Big Three point out that they have shared their North American profits in sizable annual payments to their workers.
• In 2022, for example, the Detroit Three combined made profit-sharing payments that averaged $36,686 per worker.
• In addition, the companies pay higher wages and provide more benefits to U.S. autoworkers than foreign automakers, such as Toyota and Honda, or domestic EV producers.

What may happen during a UAW strike

• Strikers would lose out on wages that would only be partially offset by the union’s striker benefits of $500 per week.
• And any strike could further disrupt supply chains that have not fully recovered from the shocks caused by the COVID-19 pandemic and natural disasters that have sharply curtailed vehicle production since 2020.
• A weekslong strike would also jeopardize the UAW’s struggle to rebuild its image following a string of corruption scandals.