GP Short Notes

GP Short Notes # 750, 21 September 2023

The US: The Auto Workers' Strike against the Detroit Three
Lakshmi Parimala H

In the news
On 15 September, 12,700 workers from the UAW (United Auto Workers) union walked out of the Detroit Three, which includes General Motors, Ford Motor and Chrysler. UAW is a North American industrial union of automotive and other vehicular workers headquartered in Detroit, representing workers in the United States, Canada and Puerto Rico. The workers started strikes after failing to reach an agreement over the new contract after the prior four-year labour agreement expired on 14 September, marking the first simultaneous strike against the three companies. 

On 14 September, stating that a new offer had been made by them, General Motors stated that the company engaged in “continuous, direct, and good faith negotiations” to avoid a strike. Ford and Chrysler have also emphasised bargaining overstrikes. 

On the same day, US President Joe Biden expressed his support to the union autoworkers, stating: “Over generations auto workers sacrificed so much to keep the industry alive and strong, especially through the economic crisis and the pandemic. Workers deserve a fair share of the benefits they helped create for an enterprise.” Acknowledging and appreciating the offers made by the companies, he underlined the need for them to go further to ensure that “record corporate profits mean record contracts for the UAW.”

Issues at large
First, the demands put forth by the union. The UAW is demanding a 40 per cent wage rise by 2027, including an immediate 20 per cent boost. Besides the wage hikes, union negotiators are also seeking restoration of cost-of-living pay raises, removal of the tier-system of wages, a 32-hour week with 40 hours of pay, and pension increases for retirees. However, the three automakers have proposed a 20 per cent raise through 2027 and an immediate wage boost of 10 per cent, which the union has not accepted. 

Second, failed negotiations. The negotiations over the demands have been in process for six weeks before the date of expiry of the previous contract. The concessions put forth by the companies during the negotiations did not contend with the union’s demands, hitting a roadblock. While the UAW is pushing for significant wage increases, aiming to align them with the salaries of top automaker CEOs, the automakers argue that the union's demands are unrealistic and could pose challenges to their operations.

Third, the approach of the first elected president. Shawn Fain, a 54-year-old American labour unionist leading the strikes for a reformed contract won the election in 2022 to become the leader of the UAW. Automakers had expressed outrage against his tactics and stance attacking the “billionaire class” and “corporate greed.” During the counting of votes, he stated: “This is the end of company unionism, where the companies and the union work together in a friendly way because it hasn’t been good for our members.”

Fourth, limited and targeted strikes. On 14 September, Fain announced that the initial strike locations would be “limited and targeted.” Unlike the previous strikes of the union, which were strikes against a single automaker, this strike targeted three companies at a time. The strikes are limited to three assembly plants: a GM factory in Wentzville, a Ford plant in Wayne, and a Jeep plant run by Stellantis in Toledo, Ohio. This strategy helps the union in two ways: first, by inflicting a wider impact on the companies, and second, by allowing the union to strike for longer and preserving its strike fund. 

In perspective
First, a potential effect on the companies and the economy. The automotive industry, which has just recovered from the pandemic, is facing another obstacle. The strikes are affecting the companies' ability to manufacture due to the number of people leaving the companies. There is also an indirect impact as the halt of production in one plant affects the supply of materials in the other plants. If the strikes continue and expand to other plants, they are expected to lead to a rise in car prices leading to inflation and a subsequent rise in interest rates. The strike is also affecting the workers who are being laid off.

Second, the rising number of strikes in the US. This year, workers across industries in the United States have been walking out of their jobs or are threatening to do so. In July, Hollywood saw a strike with thousands of actors and screenwriters joining the picket line. Similarly, an imminent strike by nearly 300,000 workers of United Parcel Service was averted with a last-minute agreement in August. 

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