On Monday, General Motors and the United Auto Workers (UAW) reached a tentative agreement, bringing an end to the union’s extraordinary six-week-long series of coordinated strikes. These strikes resulted in historic wage increases for employees at the Detroit Three automakers.
This agreement comes on the heels of similar deals that the union had recently reached with Ford Motor and Stellantis, the parent company of Chrysler. These developments mark substantial victories for auto workers who had experienced years of wage stagnation and difficult concessions in the aftermath of the 2008 financial crisis.
UAW President Shawn Fain claimed in a video address, “We wholeheartedly believe our strike squeezed every last dime out of General Motors. They underestimated us. They underestimated you.”
The union has officially put the strike against the Detroit Three on hold. UAW local leaders are scheduled to meet in Detroit on Friday to review the agreement with GM before presenting the terms to all union workers for their approval.
“We are looking forward to having everyone back to work across all of our operations,” stated GM CEO Mary Barra.
The new contracts are expected to result in a substantial increase in costs for the automakers. Both the companies and some analysts have voiced concerns that these agreements could make it more challenging for the Detroit Three to compete with electric vehicle pioneer Tesla and nonunion foreign brands like Toyota Motor.
GM has agreed to similar wage increase terms as the other two automakers. This includes a 33% pay raise for veteran workers, and GM will also provide $2,500 in five installments to retirees through 2028.
Key Points of the UAW-GM Labor Agreement
According to sources, pension benefits were a contentious issue in the UAW’s negotiations with GM, mainly because GM has a larger number of retirees compared to Ford or Stellantis.
The United Auto Workers (UAW) decision to strike a crucial General Motors (GM) engine factory in Spring Hill, Tennessee, on Saturday played a pivotal role in shaping the new labor agreement. According to Fain, this strike proved to be the decisive factor in reaching a favorable deal.
This contract represents a significant departure from GM’s previous efforts to establish lower-paid categories of UAW workers in various divisions, including component plants, parts warehouses, and electric vehicle battery facilities. The agreement now places workers in GM’s battery joint venture with LG Energy from South Korea under the national agreement.
Fain also highlighted that some employees in GM’s component operations are set to receive substantial pay raises, with increases of up to 89%.
Another noteworthy provision of the contract is the limitation placed on the use of lower-paid temporary workers. Fain expressed, “We are putting an end to the establishment of a permanent underclass of temporary workers at GM.”
Furthermore, the UAW has gained increased influence over the companies’ investment decisions by securing the right to strike in the event of potential plant closures.
Labor Contract Implications for Detroit Automakers and the Broader Economy
All three companies involved have stated their intention not to close any existing factories as they transition to electric vehicles (EVs). However, this contract may compel them to keep unprofitable facilities operational during economic downturns or periods of sluggish sales for new vehicle models.
A series of strikes commenced on September 15, with almost 50,000 workers out of nearly 150,000 UAW members at the Detroit automakers ultimately participating. The strategy of escalating work stoppages incurred substantial financial losses for the Detroit Three and their suppliers.
UAW leaders portrayed their contract negotiations as a crucial part of a broader movement aimed at reversing decades of economic hardships faced by working-class Americans. Some experts concurred with this viewpoint.
“This is more than an auto industry story; it is a signal to the entire country that unionized workers can demand and get big wage increases,” stated Patrick Anderson of the Anderson Economic Group.
According to insider sources, the new contract will result in $7 billion in increased labor costs for GM over a span of 4.5 years. Ford, in a recent announcement, indicated that they would add between $850 and $900 per vehicle in labor expenses.
“Consumers will bear some of the cost burden over time … automakers will not have an easy time passing along all of the costs … and will have to seek efficiencies in other ways, or further limit production to more expensive vehicles that can absorb higher labor costs,” explained Jonathan Smoke, the Chief Economist at Cox Automotive.
The Growing Influence and Political Support of UAW
US President Joe Biden, alongside politicians from both parties, expressed their support for the UAW as the union’s cause gained popularity among voters. In the lead-up to the 2024 presidential election, where Michigan is a crucial swing state, Fain’s endorsement is contingent on supporting the union’s struggle. Notably, the UAW has not yet officially endorsed Biden’s re-election bid.
In a statement, President Biden emphasized the significance of unions and collective bargaining in creating robust middle-class jobs and ensuring the success of iconic American companies. Biden’s team had concerns that a prolonged strike could harm the US economy and potentially affect the President’s 2024 re-election prospects.
The UAW is committed to extending its efforts to organize workforces at other automakers, with negotiations expected in 2028 involving the union and the “Big Five or Big Six” companies.
Momentum toward agreements picked up speed over the past two weeks after UAW workers staged walkouts at three of the world’s most profitable factories. Ultimately, the UAW initiated strikes at nine different plants.
Fain emphasized, “We have shown the companies, the American public and the whole world that the working class is not done fighting; In fact, we’re just getting started.”
