Yahoo Finance UAW vs. Big Three: Where things stand as strike deadline looms
The UAW's contract with the Big Three expires on Sept. 14.
The clock is ticking.
All Big Three automakers have now submitted proposals to United Auto Workers, as the current contract between the union and GM, Ford, and Stellantis inches closer to expiration at 11:59 p.m. ET on Sept. 14.
General expectations for a deal being reached are low, with many seeing the UAW's demands as audacious and automakers rejecting certain demands without even addressing them. Here’s where the Big Three automakers individually stand with the UAW, which has more than 143,000 active members ready to strike if an agreement isn't reached.
Stellantis
Stellantis (STLA) was the last of the Big Three automakers to submit a proposal, sending its offer sheet on Friday.
Stellantis — which owns the US brands Dodge, Chrysler, Ram, and Jeep — has put forth an agreement similar to what Ford and GM have submitted, with a couple of wrinkles.
For most UAW workers, Stellantis is offering wage increases totaling 14.5% over the course of the contract, which generally lasts four years. This is different than Ford and GM’s approach, which is offering wage increases plus lump sum payments, though it is not known how long it will take Stellantis workers to achieve the full wage increase.
These workers will also qualify for a $6,000 one-time “inflation protection payment” in the first year of the contract as well as $4,500 in inflation protection payments over the final three years of the contract. These cost of living adjustments (COLA) are a crucial request on the part of the UAW. However, the union wants COLA built into contracts and not in the form of one-time payments.
For part-time, or “supplemental,” workers, Stellantis is offering wage increases to a starting rate of $20/hour, up from $15.78/hour, about a 25% bump. For “in-progression” employees, who are on the path toward the highest wage offered by Stellantis, the automaker says it will accelerate the timeline to six years from eight years. (This is also known as a tiered compensation scheme.)
Stellantis said in a statement on Monday morning that it has been negotiating with the UAW over the weekend and has “reached tentative agreements in a number of important areas, including health and safety."
The two teams remain in talks, Stellantis said. The company has received a counteroffer from the UAW.
Stellantis said it intends to submit a second proposal later on Monday. The UAW has publicly criticized the proposal for maintaining tiered compensation, not providing enough in terms of wage increases, not adding COLA, and not offering an enhanced profit-sharing proposal, among other things.
General Motors
GM (GM) submitted its offer to the UAW on Sept. 7. For UAW workers, GM is offering a 10% increase in wages combined with two 3% lump sum payments for a total of 16% over the life of the contract. In addition, instead of a COLA system, GM has offered a $6,000 one-time “inflation” payment, and a $5,000 inflation protection bonus over the life of the contract.
For all employees, GM is offering a one-time $5,500 ratification bonus, which Ford has also offered, but Stellantis has not. GM is saying it will increase entry-level wages for in-progress workers by 56% over time and will raise temp worker wages by 20% to $20/hr. GM says it will also eliminate two “progression steps” for tiered employees, which will reduce the time to achieve maximum wages by 25%, the automaker said.
Despite the UAW calling GM’s proposal “insulting,” the two sides are negotiating currently, and will likely push talks to the deadline.
Ford
Ford (F) was the first to submit a proposal to the UAW in the most recent round of talks. The automaker, which has the most UAW workers on its payrolls at 57,000, has said it is committed to US manufacturing and its “partnership” with the UAW.
Ford received a counteroffer from the UAW after its initial proposal and offered a counter to that. According to UAW president Shawn Fain, Ford upped its wage increase from 9% to 10%. Ford had offered 6% in lump sum payments as well, but Fain did not say whether these terms changed.
In addition to the same $5,500 ratification bonus GM was offering to most workers, Ford also apparently took a year off its six-year progression plan for workers to achieve the maximum wage, going down to five years.
Fain did not disclose whether Ford had changed its stance on COLA ($12,000 in cost-of-living “bonuses” over the life of the contract, including $6,000 in the first year, which Fain had called “deficient.”) Ford also said it was increasing starting pay of temp workers to $20/hr, an increase of 20%.
What’s next?
The union has promised to strike at any automaker who has not agreed to a deal by the Thursday deadline.
Most observers are not optimistic about those prospects, especially with the UAW's aggressive posturing. “I told [Big Three CEOs] that if they expected to drag everything out until the final days of bargaining and then try to settle everything all at once, then they were setting themselves up for a strike. I’ve told them repeatedly, Sept. 14 is a deadline, not a reference point,” Fain said in a statement earlier this month.
[Read More: For columnist Rick Newman's take on the potential strike, read Biden’s misplaced bet on labor unions]
But, threats aside, it’s possible the union would continue working with an automaker if it feels progress is being made toward a deal. The UAW’s strike fund has reached $825 million, a healthy amount. However, the fund would be depleted quickly if the union stopped working at all three automakers at once. It would make financial sense for the UAW to stage its strikes individually — as it has done in the past — based on the progression of talks at each automaker.
Conversely, the UAW may press what it sees as labor’s moment in the sun and strike at all three automakers, evidenced by a strong deal made recently by the Teamsters with UPS.
Meanwhile, Wall Street is grim.
"Our expectations for a strike beginning later this week haven’t changed," CFRA analyst Garrett Nelson told Yahoo Finance. "The two sides remain miles apart on a number of issues and a breakthrough in negotiations appears extremely unlikely."
"If an agreement (slim chance-15% at best we believe) is not reached by this Thursday, September 14th, a strike will then almost certainly occur with the UAW workers walking out," Wedbush’s Dan Ives wrote in a note to clients on Monday morning.
The financial pain, even from a short strike, would be costly for the autoworkers, the Big Three, and the economy.
Consulting firm Anderson Economic Group estimates that a strike at all Big Three automakers by the UAW could result in a $5.6 billion hit to US GDP after only 10 days, and UAW lost wages would total almost $860 million. Furthermore, a short strike could also trigger recessions in auto-dependent states like Michigan.
But the wily Fain deflected those critiques with some of his own.
"You don’t hear the media wringing their hands over how Big Three profits are driving up the cost of cars," Fain said in a video. "You don’t see big, splashy nightly news segments on how consumers will be impacted by companies choosing to spend billions on executive salaries, stock buybacks, and special dividends. No, you only hear these concerns when the working class stands up and demands a fair share of the value we produce."
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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