Members of the United Auto Staff union hold a rally and practice picket near a Stellantis plant in Detroit, Aug. 23, 2023.
Michael Wayland / CNBC
DETROIT – United Auto Staff President Shawn Fain appears ready to fireplace up the picket lines.
The union’s bulldog recent leader has repeatedly vowed to drive a tough bargain with Detroit automakers General Motors, Ford Motor and Stellantis in contract negotiations ahead of an expiration at 11:59 p.m. on Sept 14.
He’s maintained it’s a tough deadline that his leadership team doesn’t plan to increase, just like the union has prior to now, and that he is not afraid to take roughly 150,000 auto employees out of factories if essential.
That — plus the revelation late Thursday that Fain and the union filed unfair labor practice charges against GM and Stellantis with the National Labor Relations Board, claiming the businesses weren’t bargaining in good faith — makes a strike against one, if not all three of the automakers, increasingly inevitable.
Unlike prior union leaders, Fain is attempting to barter with all three automakers without delay, refusing to pick out a “goal” company to give attention to while extending deals on the others. He’s also been way more confrontational with the automakers in comparison with previous union leaders, at times launching personal attacks on executives.
There is a belief amongst some industry analysts and experts that a strike, or several, could also be essential to persuade UAW members that the union leaders fought as hard as they may to achieve the demands.
“I expect there to be a strike,” said Art Wheaton, a labor professor on the Employee Institute at Cornell University. “I feel there’s an affordable likelihood they strike Stellantis first after which give a pair more days for Ford and GM to provide a greater offer.”
Wheaton believes that a strike at Stellantis is almost guaranteed with the perimeters as far apart as they are actually. The union could use that work stoppage as a warning to GM and Ford to finalize their deals, he said.
“I feel a strike is nearly essential at Stellantis or they may never get a deal ratified,” Wheaton said. “Stellantis is picking a fight, saying, ‘Try me if you happen to dare.'”
Strikes could take various forms, including a national strike, where all employees under the contract stop working, or targeted work stoppages at certain plants over local contract issues.
During a Facebook Survive Aug. 8, 2023, UAW President Shawn Fain
Screenshot
Prolonged strikes against all three of the automakers can be unprecedented and quickly impact the automotive supply chain, U.S. economy and domestic production.
The Biden administration has taken particular interest within the talks, including the appointment of longtime Democratic adviser Gene Sperling to observe the situation for the White House.
Wall Street watching
Wall Street has warned of a possible work stoppage for several months, and investors have taken heed.
A temporary survey of 99 investors by Morgan Stanley found 58% imagine a strike is “extremely likely.” That is followed by 24% who said it’s “somewhat likely.” Just 16% said a strike was unlikely, while 2% said it was “neither likely not unlikely.”
Industry and labor experts agree, and for good reason.
The upcoming contract deadline follows combative rhetoric by Fain and other union leaders; a years-long labor movement involving work stoppages, including the UAW; and bold demands by the union for 40% or more pay increases, retention of platinum healthcare and a 32-hour workweek.
Such demands aren’t typically made public and even fully reported until near the tip of the negotiations, partly as an effort to bargain in good faith but additionally to avoid setting expectations — either too high or too low — for UAW members, who have to ratify the contracts after the perimeters announce a tentative agreement.
“I’ve all the time said that the perfect method to reach agreements is to be negotiating with one another and never within the newspapers, TV or anywhere else,” said Dennis Devaney, senior counsel at Clark Hill who formerly served as a NLRB board member and attorney for GM and Ford. “I do not think the general public negotiation … is de facto going to maneuver things along.”
United Auto Staff members on strike picket outside General Motors’ Detroit-Hamtramck Assembly plant on Sept. 25, 2019 in Detroit.
Michael Wayland / CNBC
o be clear, it isn’t exclusively as much as Fain to call for strikes. It’s as much as the UAW’s 14-member International Executive Board (IEB), which Fain leads as president. The leaders, based on weighted votes, must approve such a piece stoppage by a two-thirds majority vote.
Then there’s the query of how long a strike would last.
Of its surveyed investors, Morgan Stanley found the overwhelming majority of respondents (96%) expected a possible strike to last more than per week. Over a 3rd (34%) expect the strike to last more than a month.
A strike against GM in 2019 in the course of the last round of contract negotiations lasted 40 days and price the automaker $3.6 billion in earnings that 12 months, GM reported on the time.
The UAW has greater than $825 million in its strike fund, which it uses to pay eligible members who’re on strike. The strike pay is $500 per week for every member.
Assuming 150,000 or so UAW members covered by the contracts, strike pay would cost the union about $75 million per week. A fund of $825 million, then, would cover about 11 weeks. One caveat: that does not include health-care costs that the union would cover, similar to temporary COBRA plans, that will likely drain the fund way more quickly.
Ratification
For much of the union’s history, it was largely expected that members would ultimately approve whatever deal was bargained and endorsed by UAW leaders.
Nevertheless, in recent negotiations, that hasn’t been the case and the perimeters have needed to return to the negotiating table.
That was the situation two rounds of negotiations ago, in 2015, with then-Fiat Chrysler, now Stellantis, employees, who voted down a tentative agreement. That very same 12 months, GM expert trade employees also voted against a tentative cope with the Detroit automaker, stalling ratification.
Typically, once a tentative deal is reached between the union and an automaker, the members of that automaker will then vote by local organization on whether to just accept the tentative agreement and make it a contract. The entire ratification process can take about two weeks for every company.
“The UAW’s tentative agreement with an automaker is de facto a set of agreements—the primary text, in addition to appendixes for various facets, similar to pensions and retirement plans, health care advantages, supplemental unemployment advantages, profit sharing, personal savings plans, life and disability advantages, dependent care advantages, and salaried employees (for individuals who are also UAW-represented),” said Kristin Dziczek, automotive policy advisor for the Federal Reserve Bank of Chicago’s Detroit branch, in a blog post.
In 2019, it took eight additional weeks to barter and ratify all three agreements once the primary tentative agreement was reached following GM’s strike. The negotiations and ratification voting resulted in early December.
Spokespeople for the automakers declined to comment directly for this text, but reiterated that their teams proceed to bargain in good faith with the union in hopes of deals that profit either side.
– CNBC’s Michael Bloom contributed to this report.
