The six-week rolling strike by members of the United Auto Workers union seems to be at an end. After making deals with Ford and Stellantis last week, U.A.W. leaders reached a tentative agreement with General Motors on Monday, opening the way for a full return to work. Although some details of the agreements haven’t yet been made public, it’s clear that the U.A.W. has achieved a historic victory for its members. Capitalizing on the industry’s high profits, a tight labor market, and support from President Biden, the union forced the Big Three automakers to make big concessions not just on wage rates but in other areas, too.
Shawn Fain, the leader of the U.A.W., has hailed the outcome of the strike as a major win for the entire labor movement, and he’s right. Like the recent deals between the Teamsters and UPS, health-care workers and Kaiser Permanente, and the Writers Guild and the Hollywood studios, the tentative agreement between the U.A.W. and the Big Three has demonstrated that, even in the fissured and outsourced economy of the twenty-first century, organized labor can still wield considerable power, especially in favorable economic conditions. That isn’t a surprise to anybody familiar with labor history, but it is a lesson that in recent decades has often been lost, or deliberately obscured.
Going into the strike, the media attention focussed on four of the U.A.W.’s basic demands: sharply higher wages, including the restoration of automatic cost-of-living adjustments; the elimination of a two-tier pay system that was introduced more than fifteen years ago ago; a pathway to unionize new electric-vehicle plants; and the restoration of defined pensions and health insurance for union retirees. In the first three areas, the union appears to have achieved what it wanted. Only in the area of retiree benefits did the auto companies manage to hold the line.
Under the new labor contract with Ford, which served as the model for the agreements with Stellantis and G.M., fully vested production-line workers will receive cumulative hourly pay increases of about twenty-seven per cent, and some members of skilled trades will receive raises of more than thirty per cent. All union members will also receive annual cost-of-living adjustments based on the rate of consumer-price inflation. Taken together, these provisions will raise the top hourly wages of Ford production workers from $32.05 to $42.60 in the course of the contract, which will run until 2028, and the hourly wages of skilled workers from $36.96 to $50.97, the union said.
The agreement will also shorten the time it takes for new hires to be paid full wages. Under a two-tier pay system that was introduced in 2007, newer Ford workers received roughly half as much pay as older workers, and it took them eight years to make up the difference. Going forward, new hires will be paid eighty-five per cent of the top rate after two years, and a hundred per cent after three years. Between now and October, 2025, according to the union, some Ford workers will see their hourly wages double under this provision.
Given that last year G.M. and Ford each made more than ten billion dollars in operating income, it was always going to be difficult for them to resist the U.A.W.’s wage demands. What is perhaps more surprising is the companies’ willingness to make concessions on unionizing the electric-vehicle plants that are key to the industry’s future. According to U.A.W. leadership, the agreement with Ford will enable the union to organize workers at a new battery plant that the automaker is building in Marshall, Michigan, and at a new E.V. plant in Tennessee that is a joint venture with a South Korean electric-battery company, SK Innovation. In addition, workers at existing plants, which mainly make vehicles and components for vehicles powered by internal-combustion engines, will have opportunities to switch to electric-vehicle plants.
In the area of retirement benefits, Ford agreed to increase its 401(k) contributions to roughly ten per cent for older workers, but the new contract doesn’t include the restoration of a defined-benefit pension and retiree health insurance for all employees. This wasn’t really surprising. In 2009, the hefty cost of retirement benefits was one of the factors that prompted G.M. and Chrysler to file for bankruptcy protection. The current management of the auto companies is extremely reluctant to restore the old system.
On this issue, Fain and his members didn’t prevail. Taken over all, though, the new contracts vindicated the aggressive but deliberate strategy of the fiftysomething U.A.W. leader, who was only elected to his post earlier this year. Rather than calling all his members out on strike at once, Fain targeted individual plants that were particularly important to the auto companies. This tactic caught the companies “flat footed and proved to be very effective,” Marick Masters, a professor of business at Wayne State University, told me. “The companies knew they were going to have to raise their employment costs significantly, but I think they ended up raising them considerably more than they would have liked to.”
Over the weekend, Bob Lutz, a former president of Chrysler, claimed that the new contracts could seriously undermine the future prospects of the Big Three. “In the past, the U.A.W. always had a realistic respect for the needs of an automobile company to stay competitive,” Lutz said, in a radio interview. “This time, they did not.”
That remains to be seen. According to Ford, the agreement will increase its costs by about eight hundred and fifty dollars to nine hundred dollars per vehicle. At a time when the average selling price of new cars has risen to about forty-eight thousand dollars, the automaker would appear to have ample room to prosper.
However, like G.M. and Stellantis, Ford makes most of its profits selling gas-guzzling S.U.V.s and trucks, which may not exist a decade from now. Far down in the U.A.W.’s information sheet on the Ford deal is a line relating to the agreement about unionization efforts at the company’s new Marshall battery plant: “Special provisions regarding operational flexibility will be negotiated based on the unique circumstances of the manufacturing operations.” In other words, E.V.s represent a new production model for the auto industry, and many details of this model are still to be worked out at a time when competition from Tesla and foreign-owned auto companies is intensifying. “The big question and the big challenge ahead is still the same—and that is whether these American companies are going to survive the transition to electric vehicles,” Masters said. Unions and management at the Big Three will be back at the bargaining table again soon enough. In the meantime, the workers have secured a good deal. ♦
