After six weeks of strikes at various factories, major actions in the American car industry have finally come to an end. On Monday, General Motors (owner of Cadillac, among others) also concluded an agreement with the United Auto Workers (UAW) union. Ford already did this last week, Stellantis (including RAM, Chrysler and Jeep) reached an agreement on Saturday.
The agreements mark the resolution of one of the most visible labor disputes in years in the United States. For weeks, the union, with 140,000 members at the three manufacturers, alternately shut down factories, slowly building up to the most profitable locations. They demanded significant pay increases, a goal that President Joe Biden quickly endorsed. Ultimately, around 50,000 employees did not work at some point.
In total, employees will receive a wage increase of 30 percent over four years, through a combination of wage increase and inflation compensation. The agreement with GM was already expected after the other two companies caved last week, as the ‘Big Three of Detroit’, as the manufacturers are called, often follow each other’s employment conditions. Moreover, the UAW had expanded its actions towards GM last weekend after the deals with the other two manufacturers were finalized.
Tougher actions
The union celebrated the latest agreement on Monday as a major victory, just like the previous two. “We fully believe that our strike will happen every dime squeezed out of General Motors,” UAW President Shawn Fain said in a video message. Its members still have to vote on the agreement.
Fain was the driving force behind the actions, which started on September 15. Not so long ago, he surprisingly came to office by narrowly beating the established union name Ray Curry in an internal election. He did this with a promise of tougher actions and higher wages. According to Fain, employees could now also benefit from the enormous profits at the car companies, after difficult years in which the staff had also taken a lot from the employers.
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3 billion euros in turnover had been missed, which, according to her, meant that profits were about 750 million euros lower. Nevertheless, turnover amounted to 45 billion euros in the third quarter of 2023.
Ford previously said that its profit would be 1.3 billion dollars (approximately 1.23 billion euros). is lower due to the strikes. GM assumed 800 million dollars (753 million euros).
In addition, the labor costs of the three manufacturers will of course also increase considerably in the future. “We have work to do,” Ford chief financial officer John Lawler said last week. He guessed that a car could easily cost $850 to $900 more to build. According to him, Ford must look for “inefficiencies” to eliminate.
Competition with Tesla
During the negotiations, the three car manufacturers continually pointed out that higher labor costs meant that their competitive position would deteriorate compared to companies such as Tesla and Honda, where staff are not members of a union. These companies often operate from American states with less strict labor laws, which means they can pay employees less.
There is indeed a fear among the employees of the ‘northern’ factories that the American car industry will eventually shift to these states, especially in the south. Many companies are now also opening battery factories and factories for electric cars, partly supported by the Inflation Reduction Act: a large package of support measures for ‘green’ investments. Donald Trump responded to this during the strikes by saying during a visit to the employees that they will lose their jobs anyway due to “environmental madness”.
The UAW would like to combat the difference in labor costs by also introducing measures in these other states, such as Georgia and South Carolina. to achieve a higher degree of organization, although it is not yet clear exactly how. “If we return to the negotiating table in 2028, we will not just be with the Big Three,” Fain said on Sunday. “Then it is the Big Five, or the Big Six.”