Detroit Is Paying Up to End the UAW Strike. Now Carmakers Will Live With the Costs. – WSJ:
The tentative agreements, to be voted on in the coming weeks, include a 25% general wage increase over four years. By the end of the contract’s term in 2028, most of the Detroit companies’ unionized workers would make in the mid-$80,000s annually, before overtime pay.
According to Ford, this adds $850 to $900 per vehicle to the consumer cost. The all-in labor cost for the Big Three was $65 an hour prior to the new contract. It’s got to be at least $70 or $75 an hour now.
…UAW’s Fain called the latest agreements a “turning point” for the union and emphasized that its next stop after Detroit will be trying to organize workers at automakers, such as Tesla, Toyota and Volkswagen, whose U.S. factories aren’t unionized.
“When we return to the bargaining table in 2028, it won’t just be with the Big Three, but with the Big Five or Big Six,” he said.
That may well be, but from the perspective of the Big Three it better happen. Foreign manufacturers labor costs are $55 an hour and Tesla’s are $45. If the UAW can’t unionize those plants, the Big Three will continue to operate at an enormous structural price disadvantage.
The UAW has tried multiple times to unionize auto plants in the South. Not a single plant in the South is unionized.
“Almost every foreign auto factory that’s opened since the ’90s has sprouted below the Mason-Dixon Line,” CNN reported in 2007. The trend has continued since then.
As the Big Three shrank into much smaller versions of themselves, losing large amounts of market share to the foreign transplants, the UAW shrank with it.
UAW membership peaked in 1979 at 1.5 million, according to the union. Last year, it had 383,000 autoworkers.
The UAW, with its stronghold in the union-friendly Midwest and northern states, has struggled to unionize autoworkers in the South, decades after the foreign auto plants went up in the region.
…The union has tried and repeatedly failed to gain a foothold at Nissan and Volkswagen in Tennessee, Toyota in Kentucky, Mercedes-Benz in Alabama, and other foreign-owned plants in the South. Tennessee Gov. Bill Lee in 2019 even visited Volkswagen’s plant in Chattanooga to encourage workers to reject the union. Former South Carolina Gov. Nikki Haley, now a contender for president, said in 2015 she was a “union buster” when recruiting automakers to the state.
Since 1990, the South’s share of auto jobs has doubled from around 15% to 30% today, according to S&P Global Market Intelligence.
Meanwhile, the Midwest’s share has declined from 60% to 45%.
EVs are a whole new problem. They take fewer workers to manufacture, and again the plants are predominately in the South. The Big Three seem to have negotiated away the ability to make even joint-venture battery plants non-union, so they’ve again baked in a structural disadvantage unless the plants of over auto manufacturers can be unionized.
This is to say nothing of EV leader Tesla who, again, pays just $45 an hour in labor, who is also non-union, and whose cars are now around $10k less than those of the Big Three. Theirs appear to be the only profitable EVs in the US market as well. Can the UAW succeed at Tesla? The picture is unclear. In Sweden at least, already unionized employees refused to walkout during a called strike. Employees cited better working conditions and pay than at other employers and Tesla stock options as the reasons they ignored the call to strike. It’s unclear that all these factors hold for US Tesla plants, but CEO Elon Musk has said that some line workers are millionaires thanks to company stock options.
Maybe the new deals with the Big Three will give the UAW the strength it needs to unionize other automakers’ plants. If not, the new contracts may prove a pyrrhic victory.