UAW Chief Says Offers From Detroit Companies Are Inadequate, Says Union Is Ready To Go On Strike

With just over 24 hours left before a strike deadline, United Auto Workers President Shawn Fain said Wednesday that offers from the companies aren’t enough and the union is getting ready to strike.

In an online address to union members, Fain said General Motors, Ford and Stellantis have raised their 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.”

The union is threatening to strike after contracts with companies that haven’t reached an agreement by 11:59 p.m. on Thursday. But the strikes would be targeted to a small number of factories per company. It would be the first time in the union’s 80-plus-year history that it struck all three companies at the same time.

The prospect of an autoworkers strike could test Joe Biden’s treasured assertion he’s the most pro-union president in U.S. history.

With a deadline looming just before midnight Thursday, the United Auto Workers union and Detroit’s three automakers are far apart in contract talks and the union is preparing to strike.

Talks continued Wednesday with the companies, but it appeared that both sides are still far apart.

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.

Questioned Wednesday night after an appearance at the Detroit auto show, a frustrated Ford CEO Jim Farley said if the union strikes Ford, it’s not the company’s fault because it has made four offers and hasn’t gotten 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.

“It was fully competitive with all of the UAW-negotiated settlements, sometimes after strikes, with other industrial companies. And we heard nothing,” Farley said.

But he said there is still time to reach an agreement before the deadline.

Fain said the final decision on which plants to strike won’t be made until Thursday night and will be announced at 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.”

The union will not extend contracts, so those who stay at work will do so with an expired agreement. Fain said he understands sentiment behind an all-out strike, which is still possible. But he said the targeted-strike strategy is more flexible and effective.

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, he said, providing little or no protection against inflation, or annual lump sums that many workers won’t get.

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.

In a statement, 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 in a statement that it continues to bargain in good faith, making “additional strong offers.” The company reported progress including guaranteed annual wage increases and investment, investing in U.S. factories and shortening the number of years for employees to make top wages.

Farley, the Ford CEO, said in a statement that his company has made four “increasingly generous” offers since Aug. 29. “We still have not received any genuine counteroffer,” he said.

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.

With Fain in charge of the union, the negotiations have been the most public in U.S. history, he said, putting pressure on both sides to reach an agreement.

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United Auto Workers Strike: How Will This Impact Consumers?

The United Auto Workers are striking against three of the largest automakers; Ford, General Motors and Stellantis, according to CBS News. These strikes are primarily happening in Detroit, but are affecting supply chains elsewhere. The UAW is also talking about encouraging strikes at other plants, if their demands are not met soon enough.

"The price of vehicles went up 30%. In the last four years, CEO pay went up 40%. In the last four years, worker pay went up 6%. We're not the problem," UAW President Shawn Fain said on Good Morning America.

UAW’s Demands

1. Pay increases and cost of living adjustments: The UAW is asking for a 36 percent pay increase across a four-year contract, according to CBS News. The UAW also wants to reinstate annual cost of living adjustments.
2. End of wage tiers: The UAW wants to end the two-tiered wage structure. Under that structure, the top tier workers (anyone hired before 2007) are paid around $33 per hour. Lower tier workers (anyone hired after 2007) earn around $17 per hour, according to CBS News. Lower tier workers also miss out on pensions and have worse health benefits, CBS News says.
3. Defined pension plans: UAW workers who were hired after 2007 do not receive defined benefit pensions, according to CBS News. The UAW wants all workers to receive defined benefit pensions.
4. Four-day work week: The UAW is also asking for four-day work weeks and more time off, according to CBS News. The four-day work week would entail working 32 hours for 40 hours of pay.
5. Right to strike: The UAW wants the right to strike over plant closings, CBS News says. Ford, General Motors and Stellantis have closed 65 plants in the last 20 years, according to the UAW. The UAW is also asking that they be allowed to represent workers at electric vehicle battery factories.
6. Retiree health care: The UAW also wants a return of retiree health care, which is available for employees who were hired before 2007, but not for those hired since.
7. Limit use of temporary workers: The UAW is hoping to end the “abuse” of temporary workers, who are hired under the lower tier pay and benefits.

Assembly Plant Idles

Strikes at Ford, General Motors and Stellantis could cause other assembly plants to idle, basically meaning temporarily shutdown. Normally when a plant is idle, workers are still paid. However, since this would be caused by the strike, Ford and General Motors are saying they will not pay, according to the Associated Press. 

Effects on suppliers and the supply chain

Strikes in the Auto Workers industry will have a ripple effect, if not ended soon. The trucking industry and smaller suppliers could feel the strikes hardest, according to Freight Waves. There have already been an uptick in rescheduled trucking shipments from Mexico to the US, according to Freight Waves. 

According to the US Chamber of Commerce, Ford, General Motors and Stellantis have 5,600 suppliers and more than 690,000 supplier jobs tied to them.

The decrease in parts moving out of plants will have an effect on dealerships across the world, according to Freight Waves. UAW plants make parts for American and foreign cars. As the supply of auto parts begins to dwindle, repairing cars could become more costly, or impossible. It would take weeks for consumers to feel the effects of the strike, according to Freight Waves.