September 21, 2023

Auto News

Striking workers want to preserve jobs as the industry shifts to batteries

A confrontation between major automakers in Detroit and the United Auto Workers (UAW) union has escalated with targeted strikes at three different locations, unfolding against the backdrop of an unprecedented technological revolution that carries substantial consequences for both the industry and the union.

This strike has emerged at a pivotal moment as traditional automakers invest billions in the development of electric vehicles, even though their primary source of revenue still comes from gasoline-powered cars. These negotiations are central to the power dynamics between labor and management, with the potential to shape the industry's direction for years to come. Consequently, this strike goes beyond mere disputes over wages, benefits, and working conditions; it takes on the role of a defining battle for the future of the automotive sector.

Well-established automakers like General Motors, Ford Motor, and Stellantis (the owner of Chrysler, Jeep, and Ram) are currently defending their profitability and market position in the face of formidable competition from Tesla and foreign automakers. Some industry leaders and analysts draw parallels between the ongoing industry transformations and the significant technological shift that began with Henry Ford's pioneering assembly line in the early 20th century.

Last Friday, nearly 13,000 UAW workers initiated strikes at three plants located in Ohio, Michigan, and Missouri. While the union is pushing for a 40 percent pay increase over four years, the automakers have offered approximately half that amount.

However, the discussions extend beyond mere compensation. Workers are grappling with the challenge of preserving their jobs as the industry undergoes a transition from internal combustion engines to battery-powered vehicles. A favorable outcome for the UAW would also strengthen the union's position, particularly if it seeks to organize employees at non-union automakers like Tesla and Hyundai, which plans to manufacture electric vehicles in a large new facility in Georgia.

John Casesa, a senior managing director at the investment firm Guggenheim Securities, who formerly led strategy at Ford Motor, emphasized, "The shift to electric vehicles dominates every aspect of this discussion."

Under the pressures of government regulations and evolving consumer preferences, Ford, GM, and Stellantis are channeling significant investments into reconfiguring their sprawling operations for electric vehicle production. However, these investments are currently yielding minimal to no profits, whereas Tesla, a dominant force in the electric vehicle market, is both profitable and experiencing rapid growth.

Union demands have the potential to force Ford to reconsider its investments in electric vehicles, according to Jim Farley, the company's CEO. Farley expressed in an interview on Friday, "We want to engage in a dialogue about a sustainable future-one that doesn't force us to make the impossible choice between going out of business and fairly rewarding our workers."

For the workers, the primary concern is that electric vehicles require far fewer components than their gasoline counterparts, potentially rendering many jobs obsolete. Factories producing components such as mufflers, catalytic converters, and fuel injectors-components unnecessary for electric cars-may need significant transformations or face closure.

While new battery and electric vehicle facilities are emerging, offering potential employment opportunities for displaced workers, automakers are primarily establishing these operations in Southern states with labor laws less favorable to union organizing, in contrast to the Midwest, where the UAW holds more sway. One of the union's demands is the inclusion of workers in these new facilities under the automakers' national labor agreements, a request automakers argue is impractical due to the joint ownership of these plants. Additionally, the union aims to regain the right to strike as a means to prevent plant closures.

Madeline Janis, executive director of Jobs to Move America, an advocacy group working closely with the UAW and other unions, noted, "We stand on the brink of another industrial revolution, and the trajectory we are following is reminiscent of the last industrial revolution, where a few reaped immense profits while many endured hardship and faced a scarcity of good job opportunities."

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Check Illumination

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Thanks for reading,

The Editor

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