13,000 Auto Workers In US Are On Strike: Know All About This Historic Protest

About 13,000 workers walked off from their jobs at three US auto manufacturing plants. Let's take a look into why this happened and what kind of impact can this kind of strike leave.

Every 4 years, the UAW negotiates a new master agreement on behalf of nearly 150,000 members working at General Motors, Ford, and Stellantis (formerly known as Chrysler) ( Image Source :Getty )

Auto workers in the US Midwest have started a targeted strike against three big car manufacturers General Motors (GM), Ford, and Stellantis. The workers are demanding better pay and benefits, much of which they gave up at a time when firms were in financial trouble. At the stroke of midnight on Friday, the US auto workers' union United Auto Workers (UAW) started the precise strike strategy, causing simultaneous shutdowns at the "Big Three" automotive manufacturers in Detroit, Michigan for the very first time.

According to an AFP report, about 13,000 workers walked off the job at a GM assembly plant in Wentzville, Missouri; a Ford factory in Wayne, Michigan, near Detroit; and a Stellantis Jeep plant in Toledo, Ohio. With honking and cheers union workers marched at a Ford plant in the Detroit area with UAW president Shawn Fain.

"Tonight, for the first time in our history, we will strike all three of the Big Three at once," said UAW President Shawn Fain. Let's take a look into why this happened and what kind of impact can this kind of a strike leave.

Here Is How It Started

The issue between the auto workers union UAW and three big carmakers is over a new contract. Every 4 years, the UAW negotiates a new master agreement on behalf of nearly 150,000 members working at General Motors, Ford, and Stellantis (formerly known as Chrysler), according to a Washington Post report. The old contract expired on September 14 and with no agreement, the UAW started the strikes.

The WP report noted that under the traditional negotiation pattern of UAW, one of the three automakers is selected as the initial negotiation target, and the agreement reached with them serves as a template for the other two companies. This year's negotiations came as GM and Stellantis posted record profits, while Ford also enjoyed healthy financial results. The auto workers want to get a part of these profits. 

How Much Pay Raise Workers Are Deamding?

As per the WP report, initially, the UAW requested a 40 per cent increase in compensation for their hourly workforce over the course of the four-year agreement, which equates to a 46 per cent rise when compounded. However, this was later reduced to 36 per cent.

As of now, full-time UAW employees start at a wage of $18 per hour and reach a maximum of around $32 per hour. The union's goal is to narrow the gap between starting and top-tier pay rates.

Additionally, in response to the sky-high inflation, the UAW seeks to reinstate a cost-of-living allowance (COLA) linked to inflation, a benefit that they gave up in 2007. They are also advocating for a reduction in the use of temporary workers and a faster path for these employees to attain full pay and benefits.

The UAW is also demanding the restoration of other benefits that their members lost in the years leading up to the 2009 recession when GM and Chrysler filed for bankruptcy and received government bailouts. According to Fain, these concessions laid the groundwork for the companies to achieve record profits over the past decade. The demands from the union encompass the revival of traditional pensions and retiree healthcare, along with a reduction in the workweek from 40 to 32 hours.

Unionisation Of EV Workers

The shift to electric vehicles (EVs), which require fewer components and less labor compared to gasoline-powered vehicles, is expected to result in the closure of plants producing engine parts for traditional cars. As consumers progressively embrace EVs, the US automakers are investing substantial sums in partnerships with Asian firms to construct battery manufacturing plants in the US, as batteries are a key component of EVs.

As per the report, key areas of contention between the union and automakers involve the compensation and benefits of workers in these new facilities and whether the UAW can represent them. To date, only the Ultium plant in Ohio, jointly owned by GM and South Korea's LG Energy Solution, is unionised. The initial pay rate there was $15.50 per hour, but following a ratified agreement last month, wages have increased by $3 to $4 per hour, along with retroactive pay dating back to the union election in December, potentially resulting in significant sums for some workers.

According to an Associated Press report, the UWA President has acknowledged that the union's demands are "audacious." But he said that the richly profitable automakers can afford to raise workers' pay significantly to make up for what the union gave up to help the companies withstand the 2007-2009 financial crisis and the Great Recession.

The report added that in the last ten years, the three major Detroit automakers have transformed into highly profitable entities, amassing a total net income of $164 billion, with $20 billion of that earned in the current year. The CEOs of these companies each receive multimillion-dollar annual compensation packages.

What Car Makers Are Offering?

Reports suggest the automakers have come closer to what UAW is demanding in terms of wages, but a big gap still remains. In an interview with CNN, GM CEO Mary Barra said that they are ready to offer a 20 per cent wage increase, including 10 per cent in the first year, over four years. 

Ford is also offering 20 per cent pay increase, while Stellantis (formerly Fiat Chrysler) initially proposed 17.5 per cent but has since adjusted its offer.

The car companies reject the union's demands, citing excessive costs. They argued that they're investing heavily in both traditional combustion-engine vehicles and electric vehicles, making higher labor costs unsustainable, reports added. 

They also contend that a generous UAW contract would raise vehicle prices, potentially making Detroit automakers less competitive against European and Asian rivals.

The AP report noted that analysts say, including wages and benefits, Detroit Three assembly plant workers receive around $60 per hour, compared to $40 to $45 per hour for workers at Asian automaker plants in the US.

The Targeted Strike And Way Forward

Only a small part of the United Auto Workers, about 150,000 members initiated walkouts at select plants including a GM assembly plant in Wentzville, Missouri, a Ford factory in Wayne, Michigan, near Detroit, and a Stellantis Jeep plant in Toledo, Ohio. These strikes commenced at 11:59 PM Eastern time on Thursday. UAW President Shawn Fain said these targeted strikes are a means to gain leverage in contract negotiations and to keep the auto companies uncertain about the union's next moves. Additionally, this strategic action may prolong the union's $825 million strike fund.

As per a report by AlJzeera, Fain said that, at present, the union does not intend to initiate a more extensive general strike. However, he made it clear that all possibilities remain open, should new contracts fail to be reached.

The UAW might select additional plants for strikes in the coming days, depending on the progress—or lack thereof—at the bargaining table, the UAW president stated.

"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, adding that the union "will keep the companies guessing." 

Amid this, US President Joe Biden has come out in support of the strikers saying he "respects workers right to collective action."

After negotiations broke down, the UAW announced a targeted strike at a few Big 3 auto plants.

No one wants a strike, but I respect workers' right to collective action.

Workers deserve to share in the benefits they helped create for an enterprise. pic.twitter.com/zlnvnYVvao

— President Biden (@POTUS) September 15, 2023

How The Strike May Impact Car Prices And Economy

According to the AP report, GM, Ford, and Stellantis have been running factories non-stop to build up inventory, but they only have a 70-day supply of vehicles. A strike could lead buyers to non-union competitors, worsening the shortage in an already chip-constrained market. A strike, particularly in the US Midwest, where most auto plants are located, could have significant economic repercussions. The auto industry contributes about 3 per cent to the US GDP, with Detroit automakers representing a major share of the US car market.

Workers on strike would receive $500 a week in strike pay, far less than their regular wages, impacting the economy. The automakers would also suffer substantial financial losses, with a 10-day strike estimated to cost them nearly a billion dollars, based on calculations by the Anderson Economic Group, the report said. Notably, in 2019, a 40-day UAW strike cost GM alone $3.6 billion.