(c) Reuters. FILE PHOTO: A person carries a flag with the patch from the United Auto Workers (UAW) labor union during a May Day rally for media workers held by The NewsGuild of New York on International Workers’ Day in Manhattan, New York City, New York, U.S., May 1,
(Reuters) -The United Auto Workers (UAW) union on Friday launched strikes at three U.S. auto plants after failing to reach an agreement over new contracts, the first-ever simultaneous labor action against the Detroit Three automakers.
The UAW contracts at General Motors (NYSE:), Ford Motor (NYSE:) and Chrysler parent Stellantis (NYSE:) expired at 11:59 p.m. EDT on Thursday.
Detroit automakers, like their global counterparts, have been focused on cost reductions, which in some cases include job cuts, to help accelerate a shift to electric vehicles (EVs) from gasoline-powered vehicles.
WHO IS THE UNION NEGOTIATING WITH?
The UAW, which represents 46,000 GM workers, 57,000 Ford employees and 43,000 Stellantis workers, kicked off negotiations with the companies in July.
The union historically has picked one of the Detroit Three to negotiate with first as the so-called target that sets the pattern on which subsequent deals are based. This time, UAW President Shawn Fain targeted all three companies simultaneously.
Contract talks between the UAW and the Detroit automakers in past years had gone on until the strike deadline and beyond.
WHAT ARE THE CURRENT OFFERS FROM THE DETROIT THREE? Stellantis announced on Saturday that it had increased its wage offer. It proposed raises of up to 20% over the course of a four and a half-year contract, with an immediate 10% increase. The union rejected these offers in the past. It has demanded a 40% wage hike, including a 20% immediate increase, and improvements in benefits.
“We’ll organize one day longer than they can and go the distance to win economic and social justice at the Big Three,” UAW President Shawn Fain said on Saturday.
WHAT ARE THE UNION’S DEMANDS?
The UAW is pushing automakers to eliminate the two-tier wage system under which new hires earn as much as 25% less than veterans.
Fain has said repeatedly that the union will push to restore pay improvements tied to the cost of living and retiree benefits cut during the 2008-2009 economic crisis.
The UAW also wants strong salary increases, given the financial success of the automakers, citing generous executive payouts and large U.S. federal subsidies for EV sales. The union wants to restore defined benefit pensions to all workers, as well as 32-hour weeks, additional cost-of living hikes, and job security. The industry has said that EVs will require less workers because they have fewer parts. Fain has said there should be no jobs lost because of the EV shift.
WHAT DO AUTOMAKERS WANT?
The Detroit Three want to close the cost gap they have with foreign automakers with non-unionized U.S. factories.
Ford sources estimate that their U.S. labor costs are $64 an hour, compared with an estimated $55 for foreign automakers and $45 to $50 for EV leader Tesla (NASDAQ:).
The companies also want greater flexibility in how they use their U.S. workforces to increase efficiency and cut costs as the industry shifts to EVs.
WHAT IS AT STAKE?
The industrial action hit the Detroit Three automakers as they ramp up efforts to maximize gasoline and EV vehicle production to capitalize on demand for new vehicles.
A full strike would hit earnings at each affected automaker by about $400 million to $500 million per week assuming all production was lost, Deutsche Bank previously estimated. The UAW’s 40-day strike in fiscal 2019 cost GM $3.6 billion.
HOW WIDEPREAD IS THIS STRIKE?
The UAW’s 10-day strike could cost manufacturers, workers, suppliers and dealers more than $5 billion, according to an analysis by the Anderson Economic Group, a consulting firm. These plants manufacture the Ford Bronco and Jeep Wrangler, as well as other popular models.