As contract negotiations with the United Auto Workers union, or UAW, continue, the “Detroit Three” or “Big Three” automakers – GM, Ford, and Stellantis – could face $80 billion in extra yearly labor costs, according to unnamed sources speaking to Bloomberg.
The costs would be driven by a shortened 32-hour work week, new retiree benefits, cost-of-living adjustments, return of earlier pensions, and the 46 percent boost to wages sought by the UAW.
The sources claimed that meeting all the demands of the UAW would raise labor costs for the Big Three to $150 per hour versus the $64 per hour currently incurred. For comparison, labor costs at non-unionized automakers such as Toyota amount to $55 per hour, while Tesla’s outlay for labor at its EV plants is between $45 and $50 hourly.
Notably, labor costs are not identical with hourly wages, but include total costs for labor, including wages, benefits, and other payments and expenses. For example, the highest-paid Ford UAW production worker receives $32 per hour in actual pay, with most receiving less, but unionized labor costs for the Detroit Three are $64 per hour.
Meeting the UAW contract demands would put the survival of the Big Three automakers in jeopardy, according to the individuals speaking with Bloomberg.
Meanwhile, new UAW president Shawn Fain continues to take an aggressive stance during negotiations. In a dramatic gesture Fain recently flung a copy of Stellantis’ contract proposal into a trash basket during an interview, exclaiming “Stellantis’ proposals are a slap in the face.” The automaker – parent of the Jeep, Dodge, and Ram brands among others – tabled the ideas of reducing medical coverage, hiring more temporary workers, and changing profit-sharing methods.
Fain is using strong negotiating tactics in pushing for UAW demands, including mentioning that the union is prepared to go on strike if its 150,000 workers at the Big Three don’t get what the union believes is a fair deal. The UAW is also seeking political support, withholding its endorsement from President Joe Biden as it looks for his help. Likely challenger Donald Trump has recently courted the UAW, blasting Biden’s “ridiculous Green New Deal crusade” in an effort to capitalize on the sore spot EV manufacture represents for the union.
GM has pushed back against the UAW demands, issuing a statement that the union’s list of wants “threaten our ability to do what’s right for the long-term benefit of the team.” The General also said it wants to “protect U.S. manufacturing and jobs in an industry that is dominated by non-unionized competition.” GM also put up a negotiations website to present its side of the matter.
The parties have about a month remaining to iron out their differences, with the current UAW contract expiring on September 14th.