Detroit automakers and auto workers remain far from a deal as end-of-day strike deadline approaches
DETROIT — As a midnight deadline approached Thursday evening, the United Auto Workers union and Detroit's three automakers remained far apart in contract talks and the union was preparing to strike.
Talks continued on Thursday with GM increasing its wage offer and Ford looking for a counteroffer from the union.
The UAW is demanding a 36% boost in pay over four years, 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 88-year history, a potential shock to a U.S. 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.
Union President Shawn Fain said Wednesday 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.”
Ford CEO Jim Farley countered that his company has made four offers without getting a “genuine counteroffer.” The company said it was waiting for one Thursday, a departure from the usual last-minute flurry of bargaining. Executives said they aren't optimistic about avoiding a strike.
"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.
On CNBC Thursday, Farley said if Ford had agreed to the union's demands, it would have lost $15 billion during the last decade and gone bankrupt.
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.
In a video released Thursday night, GM manufacturing chief Gerald Johnson said the union initially presented over 1,000 demands that he said would cost more than $100 billion. “That's unreasonable,” Johnson said. “It's more than twice the value of all of General Motors and absolutely impossible to absorb and still compete in today's automotive market.”
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 that 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.
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 union later lowered its demand to around 36%.
The UAW also 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.
The companies have upped their initial wage offers, with Ford and GM now at 20%, and GM offering 10% in the first year. Fain said in a statement that the union is evaluating the GM offer and will respond. Stellantis' last known offer was 17.5%, but the company has since made another offer.
“We know a strong GM is important to all of us,” GM CEO Mary Barra wrote in a letter to workers Thursday. “We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight.”
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.
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.
There has been vocal backing for the union from leading Democrats. 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.
The White House said Biden spoke to Fain and company officials about the negotiations on Friday, but gave no other details.
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.