UAW president Shawn Fain raised some eyebrows during a Facebook Live video address in early August to the union faithful.
In an hour long talk, Fain, a 20-year UAW veteran and a former shop chair at Stellantis’ Kokomo Indiana plant, told members what he had planned for the Big 3 — GM (GM), Ford (F), and Stellantis (STLA), formerly Chrysler — for this year’s contract negotiations. The bottom line: after all the sacrifices the UAW had made over the years, the days of rolling over were done. The bill is due.
“I’ve been told I am crazy to raise member expectations this high as we head into bargaining,” Fain said in his address. “I refuse to allow employers, the billionaire class, and sellouts to play on our fears.”
The stakes couldn’t be higher for the UAW and the Big 3.
The current contract ends on September 14th, at which point a work stoppage could occur if a deal hasn’t been struck. The negotiations, if Fain’s speech is any indication, will be the most contentious in recent memory. Why? Fain and current UAW leadership believe the union has given up too much in the past.
The increased rancor has already made a mark. Shares of the Big 3 automakers all dropped steeply this past week, largely because Wall Street is concerned that a work stoppage would seriously impact automakers as they navigate a generational, and costly, electric transformation
Among the demands set out by Fain and UAW leadership: “substantial wage increases” which amount to a 46% gain over three years, eliminating compensation tiers for new and old workers (which the UPS Teamsters secured), restoring cost of living adjustments, providing a new pension plan, and reducing work weeks to 32-hours from the standard 40.
Making such demands public isn’t typical. In the past, the UAW and Big 3 go behind closed doors to negotiate—after a contract is hammered out, the UAW presents the proposed contract to its members for a vote. But publicly releasing contract demands may backfire for the union: it may put pressure leadership to avoid compromise, thus upping the likelihood of an impasse with the Big 3 negotiators.
But the tough guy talk may be a plus: Fain, in essence, may be preparing the rank and file for a long, rough fight.
And it may be a long fight indeed because caving in would be too costly for the Big 3. According to Bloomberg, the cost of the UAW demands could amount to $80 billion over the course of the contract, which typically last 3 to 4 years.
Fain’s demands caught Big 3 leadership off guard,
“Everyone understands these demands aren’t going to happen – it would be suicidal for the companies to agree to this,” one industry source told Yahoo Finance.
The UAW’s wish list would amount to $25 -$30 billion per automaker over the life of the contract. “That adds $35 to $40 per hour to active labor cost – an increase of roughly 60%,” the source said. The impact: automakers would return to the “bankruptcy era,” and more than double the labor costs for the Big 3 versus non-union automakers like Tesla (TSLA).
When reached for comment, a UAW spokesperson noted the industry source’s take misrepresented a few key points.
“The Center for Automotive Research in Ann Arbor estimates that labor is just 5.1% of the cost of the average vehicle. That’s a very important data point to take into account when the automakers claim that our demands will be catastrophic,” UAW spokesperson Jim McNeil said.
McNeil also noted that the rising MSRPs of Big 3 vehicles have not been driven by labor. “[A recent study] published by the BLS shows that dealer markups have been driving up the costs of new cars, NOT labor costs.”
Finally…
Read More: why the union’s contract demands ‘aren’t going to happen’