By Joe Gomez
Tentative deals between the United Auto Workers (UAW) and Ford, GM, and Stellantis ended a six-week strike against the three major automakers that has been described as a “historic” win for the union—but there has been some debate about how the agreements will impact the auto industry and consumers.
“The D3 [Detroit Three] will be under enormous pressure to find new ways to cut labor costs. Over time they might increase production in Canada or México. They might introduce more automation and robots in their plants,” automotive industry expert and founder of Autoline John McElroy told The Epoch Times.
The deals with all three companies are generally the same, although there are some differences. All give workers 25 percent general pay raises with 11 percent upon ratification. With cost of living pay, the raises will exceed 30 percent by the time the contracts end on April 30, 2028. Workers hired after 2009 without defined benefit pensions will get 10 percent annual company contributions to 401(k) plans, and they’ll get $5,000 ratification bonuses.
“It is historic and if you think about the last two decades, it is a real turnaround. Auto workers have been taking concessions since the 1980s and have lost their premier spot among unionized workers in the United States,” Judy Ancel, the retired director of labor studies at the University of Missouri – Kansas City, told The Epoch Times. “They used to have the best jobs of blue-collar workers in the U.S. because of the power of the United Auto Workers and its control over the labor market.”
Ms. Ancel says that unlike the former leadership at UAW, the new president of the union Shawn Fain “promised to fight” instead of “accepting takebacks” from the big three automakers, and that’s why they were able to make significant gains against the companies in their tentative contract agreements.
But while the union appears to have scored a major victory, how will these concessions from Ford, GM, and Stellantis impact the rest of the auto world?
American auto buyers are already facing enormous price runups since the pandemic: The average new car price has soared roughly 25 percent since the pandemic struck three years ago.
Now, new labor costs incurred by automakers as part of the tentative agreements with UAW could further increase car prices in the future and the strike by union workers (while limited) also shut down several major assembly plants that cost the industry billions of dollars.
“Consumers will not benefit from these contracts in that they significantly raise labor costs for GM, Ford, and Stellantis who will try to pass these costs onto consumers. Other automakers might also take advantage of this to raise their prices too,” said McElroy.
Ford said earlier that its deal with the union would raise labor costs by $850 to $900 per vehicle. In addition, a study this month by Moody’s Investors Service found that annual labor costs could rise by $1.1 billion for Stellantis, $1.2 billion for GM, and $1.4 billion for Ford in the final year of the contract. The study assumed a 20 percent increase in hourly labor costs.
Meanwhile, the union and some auto industry experts contend that the companies are making billions of dollars in profits and can afford to pay workers to make up for previous concessions.
“They always threaten [to raise prices], and the public should have some say over whether or not they wanna buy vehicles at even greater inflated prices than they already are paying,” said Ms. Ancel. “The fact is the automakers are rolling in dough and they can afford every bit of these agreements without raising prices … These companies have had extraordinary profits. They have inflated the price of their stock through numerous stock buybacks rather than investing the money in either their workers or in conversion to electric vehicles.”
UAW maintains labor expenses are only 4 percent to 5 percent of a vehicle’s cost.
The Automotive Industry
The impact of the tentative deals with the “Detroit Three” is already rippling across the auto industry. Toyota announced this week that it plans to increase wages of nonunion factory workers.
Manufacturing workers at top pay who are paid hourly will receive a wage increase of about 9 percent effective on Jan. 1. Logistics and service parts employees who are also nonunion will be getting wage hikes as well.
“I think that these agreements actually will create more of an incentive for nonunion workers to want to join the UAW,” said Ms. Ancel. “I’ve even heard rumblings that there’s even an organizing effort at Tesla. We’ll see if that pans out. I expect that Elon Musk is going to be one of the biggest union-busters in history, I think he’s even gonna outclass Howard Schultz at Starbucks.”
After accomplishing such a victory against the automakers, McElroy agrees there will likely be a big push by UAW to grow their membership.
“The UAW will likely launch new efforts to organize the non-union automakers in America. They’ve been unsuccessful in doing so for 40 years, but they feel emboldened by the success of their new tactics. If they’re able to unionize those plants it would erase the labor cost disadvantage that the D3 has,” he said.
The automotive industry was also hit in the pocket by the six-week UAW strike. Ford said that the UAW strike cost it $1.3 billion in earnings before interest and taxes. GM reported the strike cost it $800 million and Stellantis reported the strikes cost the company about $3.2 billion in lost revenue through October.
The Labor Movement
President Joe Biden, who has described himself as the “most pro-union president in American history,” indeed made a historic move when he decided to walk the picket line with UAW members to show his support for their strike.
It was viewed as a political risk if a deal didn’t manifest between the union and the automakers, but now that it has, President Biden and labor activists are taking a huge victory lap.
“This … is a testament to the power of unions and collective bargaining to build strong middle-class jobs while helping our most iconic American companies thrive,” Biden said in a statement.
Ms. Ancel, who has been a union activist and organizer in both the United Steelworkers and the American Federation of Teachers, agrees.
“We are beginning to see an upsurge in labor activism in this country for the first time since the 1930s,” she said. “So it’s very exciting for people who follow the labor movement to watch as workers once again get the hope that they can get the power by organizing and by sticking together to be able to take on these mega corporations which have been fleecing them for decades.”
The Associated Press contributed to this report.