General Motors said Thursday it boosted its contract offer to a 20% wage hike for U.S. autoworkers, including 10% in the first year, in a move to avoid a strike that is scheduled to begin at 11:59 p.m. if no deal is agreed on.
The strike by the United Auto Workers union, which represents about 150,000 workers at Ford, General Motors and Stellantis, would target specific automotive plants across the country. This would be the union’s first-ever simultaneous strike against the Detroit Three carmakers, and it could disrupt the economy for weeks or longer. According to Anderson Economic Group, a work stoppage of 10 days could result in an economic loss of more than $5 billion.
The fight between autoworkers and automakers comes as OEMs work to transition to electric vehicles, a task that is proving to be loss-generating. As such, they’re looking for ways to compete with the likes of Tesla, which is not unionized.
Autoworkers are also concerned about their future job security as EVs take hold — workers say EVs need fewer people to assemble them.
Ford also confirmed to Reuters that it had earlier offered a 20% hike and other benefits. Ford told the publication it believes the odds of a strike to be high after it received no counterproposal to its offer from Tuesday.
The union is demanding not only pay increases, but shorter working days and stronger pensions — benefits that reflect their contributions to their employers’ multibillion-dollar profits.
“I know that our demands are ambitious, but I’ve told the companies repeatedly, I’m not the reason that members’ expectations are so high. What’s driving members’ expectations are the Big Three’s profits,” said UAW President Shawn Fain in a statement. “You cannot make $21 billion in profits in half a year and expect members to take a mediocre contract. You can’t make a quarter trillion dollars in North American profits over the last decade and expect us to keep aiming low and settling lower. Our campaign slogan is simple: record profits mean record contracts.”
President Joe Biden, whose administration passed the Inflation Reduction Act last year that will provide healthy incentives to automakers to go electric, has called on both sides to reach an agreement. On Labor Day, he predicted there wouldn’t be a strike.
An armistice seems unlikely at this point, though.
Analysts at Evercore ISI say there’s a 90% chance of a strike at all three companies.
That’s likely because there’s still a disconnect between what the workers are asking for and what the automakers are willing to give. The union’s most recent proposal was a 36% wage increase, down from 40%.
Those pay increases, the union says, are vital in order to help workers meet a living wage. The union says many of its members work 60 to 80 hour weeks just to make ends meet.
The union is also demanding a shift back to traditional pension, the elimination of compensation tiers (which the Teamsters eliminated at UPS) and a restoration of cost-of-living adjustments.
Ford and GM have both published the details of their latest offers, but Stellantis has not.
Aside from the 20% pay increase, Ford and GM both offered some cost of living adjustments, increased retirement contributions, more paid time off and protected healthcare benefits.
Fain has called the offers from both automakers “insulting.”
“We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight,” GM CEO Mary Barra told employees of its proposal. “Remember: we had a strike in 2019 and nobody won.”
In 2019, GM workers issued a national walkout across all factories. The strike lasted 42 days and GM reported a pre-tax loss of $3.6 billion.
The UAW has also pointed to a strike during the Great Recession of 2008, during which union workers agreed to concessions in their contracts to help keep car companies from filing for bankruptcy. A new strike has been festering ever since.
While the strikers will hit select factories first, the strategy to “create confusion” that Fain outlined could have a domino effect, depriving other factories of parts they’d need to produce vehicles. The UAW might also choose to strike first at profitable pickup truck or SUV assembly plants. Fain has also not ruled out the possibility for a national walkout.
The Biden administration is discussing emergency aid to protect smaller companies that supply U.S. auto manufacturers, according to Reuters.