DETROIT — With a deadline looming just before midnight Thursday, the United Auto Workers union and Detroit's three automakers remain far apart in contract talks and the union is preparing to strike.
The union is demanding a 36% boost in pay and the automakers, General Motors, Ford and Stellantis, formerly Fiat Chrysler, have countered with offers that are roughly half of that increase.
The chasm between the two sides threatens to ignite the first simultaneous strike by the United Auto Workers against all three Detroit companies in the union's 80-year history, a potential shock to an economy already under strain from elevated inflation. It's also a test of President Joe Biden's treasured assertion that he’s the most pro-union president in U.S. history.
In an online address to members late Wednesday, union President Shawn Fain said the automakers have raised initial wage offers, but have rejected some of the union’s other demands.
“We do not yet have offers on the table that reflect the sacrifices and contributions our members have made to these companies,” he said. “To win we’re likely going to have to take action. We are preparing to strike these companies in a way they’ve never seen before.”
But Ford CEO Jim Farley said Wednesday night the company has made four offers to the union without getting a “genuine counteroffer.”“
"It’s hard to negotiate a contract when there’s no one to negotiate with,” Farley said, wondering out loud whether Fain was too busy planning strikes or events aimed at getting publicity.
The company, he said, has made a generous wage offer, eliminated wage tiers, restored cost of living pay increases and increased vacation time. The union disputes his contention that tiers were ended.
While Farley and Fain both said there's still time to reach an agreement, there didn't appear to be a lot of movement. Ford said at midday Thursday that it still hasn't received a counter to its fourth offer. GM, though, said it made another offer.
Automakers contend that they need to make huge investments to develop and build electric vehicles while still building and engineering internal combustion vehicles. They say an expensive labor agreement could saddle them with costs that would force them to raise prices above their non-union foreign competitors. And they say they have made fair proposals to the union.
Fain said the final decision on which plants to strike won’t be announced until 10 p.m. Eastern time.
The union president said it is still possible that all 146,000 UAW members could walk out, but the union will begin by striking at a limited number of plants.
“If the companies continue to bargain in bad faith or continue to stall or continue to give us insulting offers, then our strike is going to continue to grow,” Fain said. He said the targeted strikes, with the threat of escalation, “will keep the companies guessing.”
If there’s no deal by the end of Thursday, union officials will not bargain on Friday and instead will join workers on picket lines, he said.
The UAW started out demanding 40% raises over the life of a four-year contract, or 46% when compounded annually. Initial offers from the companies fell far short of those figures. The UAW later lowered its demand to around 36%.
In addition to general wage increases, the union is seeking restoration of cost-of-living pay raises, an end to varying tiers of wages for factory jobs, a 32-hour week with 40 hours of pay, the restoration of traditional defined-benefit pensions for new hires who now receive only 401(k)-style retirement plans, pension increases for retirees and other items.
On Wednesday, Fain said the companies upped their wage offers, but he still called them inadequate. Ford offered 20% over 4½ years, while GM was at 18% for four years and Stellantis was at 17.5%. The raises barely make up for what he described as minimal raises of the past. In a 2019 agreement the union got 6% pay raises over four years with lump sums in some years as well as profit-sharing checks.
Top pay for an assembly plant worker is now $32 per hour.
All three companies’ offers on cost-of-living adjustments were deficient, Fain said, providing little or no protection against inflation.
The companies rejected pay raises for retirees who haven’t receive one in over a decade, Fain said, and they are seeking concessions in annual profit-sharing checks, which often are more than $10,000.
Stellantis said it gave the union a third wage-and-benefit offer and is waiting for a response.
“Our focus remains on bargaining in good faith to have a tentative agreement on the table before tomorrow’s deadline,” Tobin Williams, the company’s head of human resources in North America, said in a statement. “The future for our represented employees and their families deserves nothing less.”
GM said that it continues to bargain in good faith, making “additional strong offers.”
Farley, the Ford CEO, said that his company has made four “increasingly generous” offers since Aug. 29.
Farley said Ford has raised its wage offer, eliminated wage tiers and shortened from eight years to four years the time it would take hourly workers to reach top scale, and added more time off.
Thomas Kochan, a professor of work and employment at the Massachusetts Institute of Technology, said both sides are going to have to make big compromises quickly in order to settle the disputes before the Thursday deadline.
“It’ll go down to the wire, and there won’t be an agreement until the final moment, if there is one at all,” he said.
The union, he said, knows its initial proposals weren’t realistic for any of the companies, but the companies know they’re going to have to make a very expensive settlement, including addressing tiered wages for people doing the same jobs.
There has been vocal backing for the union from leading Democrats, yet the auto industry accounts for about 3% of the nation’s gross domestic product, and Biden has shown previously that the broader economy remains a priority.
Biden faced criticism from labor groups last year when he urged Congress to approve legislation preventing rail workers from going on strike, fearing an upending of supply chains still struggling to recover from the pandemic. But, unlike with rail and airline workers, the president doesn’t have the authority to order autoworkers to stay on the job.
Nowhere will the political fallout of an auto workers strike be felt more than Michigan, which Biden won by nearly 3 percentage points in 2020. The state shifted further during last year’s midterms, leaving the governor’s office and Legislature Democratic-controlled for the first time in 40 years.
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