United Auto Workers President Shawn Fain Takes Different Approach in Contract Talks

Fain’s Strategies Put UAW in National Spotlight

The United Auto Workers (UAW) President Shawn Fain has promised to approach contract negotiations with Detroit automakers differently this year and has followed through on that promise. Fain’s politically astute strategies, effective social media messaging, and confidence in the UAW’s ability to harness national support for organized labor are intended to win the battle against “corporate greed” and big corporations like General Motors, Ford Motor, and Stellantis.

The upcoming negotiations are anticipated to be “different,” “confrontational,” “costly,” “critical,” and “unprecedented.” With new top bargainers on both sides, the union’s belief that concessions are not an option, and concerns about the impact of the industry’s shift to electric vehicles on employment and wages, this year’s negotiations are expected to be challenging.

The contract talks will overlap with negotiations between the Detroit automakers and Canadian union Unifor, which represents 18,000 employees. The American and Canadian unions have expressed solidarity, but this is expected to add complexity and competition for investments and jobs.

The UAW has opted for a “members’ handshake” instead of the customary handshake to signal the start of bargaining, and Fain has publicly stated that he will not shake hands with any CEOs until they address the union’s concerns and fix the broken status quo with the Big Three. Public disagreements have already started between the UAW and automakers, including an unexpected exchange of local Detroit newspaper editorials between Ford CEO Jim Farley and UAW Vice President Chuck Browning.

Fain has made significant changes to the UAW’s culture, transforming it from a reactionary, defensive union to an aggressive and offensive-minded union. He has also modified the union’s political approach by organizing elected officials rather than being organized by them. Fain has decided to withhold the UAW’s reelection endorsement of President Joe Biden until he addresses UAW concerns regarding the transition to EVs. Fain has also emphasized his willingness to use work stoppages or strikes to obtain a “fair share” for members.

Estimated Cost of a Potential Strike

If there were to be a union strike, it would result in significant financial losses for the automakers. Bank of America estimates that the work stoppage would cost automakers hundreds of millions of dollars per week in earnings before interest and taxes. This could potentially lead to billions of dollars in losses. BofA Securities estimates that the weekly financial impact of a union strike on General Motors would be $770 million, or 46 cents in adjusted earnings per share, while Ford Motor would face $620 million in losses or 11 cents in adjusted EPS. Stellantis would also be hit hard, with an estimated $470 million, or 12 cents in adjusted EPS. In 2019, a similar breakdown in negotiations between the Detroit automakers and UAW resulted in a national 40-day strike against GM, costing the automaker approximately $3.6 billion for that year alone.

Focus on Wages, Benefits, and EV Transition

Automakers have long sought to eliminate fixed costs from their financial reports, opting instead for flexible bonuses such as profit sharing based on company performance rather than cost-of-living adjustments tied to external factors like inflation. However, the United Auto Workers (UAW) union is pushing for the reinstatement of COLA as a top priority during current negotiations, along with increased wages, retention of a platinum healthcare package, and an end to the grow-in pay system. Currently, UAW members receive a starting wage of approximately $18 per hour, and it takes four years to reach the top wage of over $30 per hour due to the grow-in period.

Following the 2019 UAW-Detroit automaker negotiations, the Center for Automotive Research predicted that average hourly labor costs would increase by $11 per worker for Stellantis and $8 per worker for GM and Ford through the current contracts, which expire in September. As a result, labor costs for the automakers could rise to $66 per hour for Stellantis, $69 for Ford, and $71 for GM. Bank of America’s Murphy suggests that wage hikes during this year’s negotiations could lead to further labor cost increases of 25% to 30% over the next four years for the Detroit automakers, based on recent UAW negotiations with non-auto sector firms such as Deere & Co., Caterpillar, and CNH.

In addition to wages, benefits, and bonuses, the UAW is also focusing on the auto industry’s shift to electric vehicles (EVs). The union is calling for a “just transition” for workers as the government uses taxpayer funds to subsidize the EV industry.

The UAW is also negotiating separate contracts with Ultium Cells LLC, a joint venture between GM and LG Energy Solution to produce batteries for the automaker’s EVs near Lordstown, Ohio, where the company closed a major assembly plant during the last round of negotiations. In a white paper released on Monday, the UAW highlighted some safety concerns and issues at the plant reported by workers. The union suggested that the GM national agreement, including its wages, could offer a solution to address the problems at the site.