EV Push Complicates Bargaining for Union That Backed Biden (1)

President Joe Biden’s plan to electrify the nation’s auto supply has added difficulties into contract negotiations between the United Auto Workers and the Big Three, potentially leaving him in an awkward spot when seeking the union’s key endorsement in 2024.

Talks between the union—which represents 400,000 workers at Ford Motor Co., Stellantis N.V., and General Motors—and the automakers began earlier this month and have centered on electric vehicles and the changing workforce needed to accommodate their production.

Biden has pledged that 50% of all vehicle sales in the US will be electric by 2030. Congress also passed the Inflation Reduction Act last year, funneling massive amounts of money to automakers to support EV manufacturing.

“These negotiations with the Big Three are really important as we see how the rubber hits the roads on these investments,” said Matthew Mayers, executive director of Green Workers Alliance.

The workers and the automakers have until Sept. 14 to reach a deal or face a potential strike.

State of Play

The federal government’s support for the EV industry has grown substantially since Biden took office in 2021. The IRA’s production tax credit is also expected to generate over $25 billion for General Motors and over $20 billion for Ford by 2032.

Additionally, the federal government issued a $9.2 billion loan to BlueOval SK, a joint-venture battery facility between Ford and SK On Co., last month to aid with the production of electric vehicles.

Now the UAW is asking for a piece of the pie.

“If the government is going to give billions of taxpayer dollars to these companies to fund the EV transition, then workers can’t be left behind,” UAW President Shawn Fain said in a statement provided to Bloomberg Law. “We will not stand for the EV transition being a continued race to the bottom.”

The union’s desire to reap the benefits of the investments is emerging at the bargaining table. The UAW has said its objectives include eliminating a two-tier wage system and restoring cost-of-living adjustments.

The union is also taking a more aggressive stance toward bargaining than it has in past, labor observers say.

Fain skipped the ceremonial pre-bargaining handshake with his CEO counterparts, and UAW is targeting all three auto companies for negotiations instead of focusing on one and applying the contract to the others.

“They’re taking a new approach to negotiations that may mean that they keep all of their options open,” said Marick Masters, management professor at Wayne State University in Detroit.

Looming over the proceedings is another stumbling block rooted in government EV investment: the disagreement between the parties over whether the UAW can organize workers at the new battery plants formed by the automakers as joint ventures.

While the direct unionization of battery plants likely won’t be a part of official negotiations, the UAW is applying pressure on the automakers to provide their workers with UAW salaries as well as a straightforward path to UAW membership.

A Stellantis spokesperson said in a statement that the company “respects the right of the union to organize future hourly employees” at joint venture battery facilities, but those employees will have the “right to decide their representation status.”

The Big Three would struggle to remain competitive if the new plants were to fall under union control, considering that rivals like Tesla Inc. and Rivian Automotive Inc. are not currently unionized, Masters said.

If the UAW were to be successful in eliminating the two-tier wage system, which allows newer employees to be paid considerably less than those with higher seniority, that could make expanding the UAW into battery plants especially risky for automakers.

“The tier wages are very difficult to get rid of because they need to compete with other battery plants in the United States,” said Yen Chen, principal economist at the Center for Automotive Research.

Pressure on Biden

Biden’s ability to give union workers a bigger share of the EV windfall is limited.

“The UAW has been critical of the Department of Energy’s loans of money to GM and other companies to promote joint ventures without increases in wages,” Masters said. “They’re going to want to see some rectification of this, and only part of it can be addressed through collective bargaining. Another part will have to come from public policy.”

In order for the federal government to earmark funds from the IRA and federal loans for labor at these plants, however, Congress—not the president—has to act, according to Northeastern University professor Seth Harris.

Biden “cannot legally add requirements to the funding provided by those bills unless Congress delegated authority to him to do that,” said Harris, who served as acting labor secretary under President Barack Obama.

The time to advocate for labor appropriations in EV tax credits was when Congress was debating the IRA, not a year later during labor negotiations, he added.

The UAW withheld its endorsement for Biden’s re-election earlier this year, citing concerns with the EV transition. The union is based in Michigan, which Donald Trump narrowly won in 2016, but Biden carried in 2020.

“Joe Biden is waging war on the auto industry with a series of crippling mandates, forcing Americans into expensive electric cars,” Trump said in a recent video campaign for the UAW’s endorsement.

The union has said there are no plans to endorse Trump.

But if the parties can’t reach a deal by deadline, Biden may find himself in a bind.

An auto work stoppage likely wouldn’t cause enough economic damage for the president to invoke the Taft-Hartley Act, which allows his intervention in strikes in the event of a national emergency, Harris said.

“Joe Biden doesn’t have a secret pot of money that he can hand over to the parties to pay those wages,” he said. “The parties are going to have to wrestle it out.”