HomePoliticsBattle over electric vehicles central to car strike

Battle over electric vehicles central to car strike

A battle between Detroit automakers and the United Auto Workers union, which escalated Friday with targeted strikes at three locations, is unfolding amid a once-in-a-century technology upheaval that poses enormous risks to both companies and for the union.

The strike came as traditional automakers invest billions to develop electric vehicles while making most of their money from gasoline-powered cars. The negotiations will determine the balance of power between labor and management, possibly for years to come. That makes the strike as much a fight for the future of the industry as it is for wages, benefits and working conditions.

Established automakers (General Motors, Ford Motor and Stellantis, owner of Chrysler, Jeep and Ram) are trying to defend their profits and their place in the market in the face of stiff competition from Tesla and foreign automakers. Some executives and analysts have characterized what is happening in the industry as the biggest technological transformation since Henry Ford’s moving assembly line was launched in the early 20th century.

Nearly 13,000 UAW workers walked off the job at three plants in Ohio, Michigan and Missouri on Friday after talks between unions and companies in three separate negotiations failed to reach agreements by a Thursday deadline. Pay is one of the biggest sticking points: The union is demanding a 40 percent pay increase over four years, but automakers have offered about half that.

But the conversations go beyond payment. Workers are trying to defend their jobs as manufacturing shifts from internal combustion engines to batteries. Because they have fewer parts, electric cars can be made with fewer workers than gasoline vehicles. A favorable outcome for the UAW would also give the union a strong calling card if, as some hope, it then tries to organize employees at Tesla and other non-union automakers like Hyundai, which plans to make electric vehicles in a huge new factory. in Georgia. .

“The transition to electric vehicles is dominating every part of this discussion,” said John Casesa, senior managing director at investment firm Guggenheim Partners, who previously led strategy at Ford Motor.

“Nothing is said,” Casesa added. “But really, it’s about positioning the union to have a central role in the new electrical industry.”

Under pressure from government officials and changing consumer demand, Ford, GM and Stellantis are investing billions to restructure their expanding operations to build electric vehicles, which are critical to addressing climate change. But they are making little or no profit on those vehicles, while Tesla, which dominates electric car sales, is profitable and growing rapidly.

Ford said in July that its electric vehicle business would lose $4.5 billion this year. If the union were to get all the pay increases, pensions and other benefits it seeks, the company said, its workers’ total compensation would be twice that of Tesla employees.

The union demands would force Ford to abandon its investments in electric vehicles, Jim Farley, the company’s chief executive, said in an interview on Friday. “We really want to have a conversation about a sustainable future,” he said, “not one that forces us to choose between going out of business and rewarding our workers.”

For workers, the biggest concern is that electric vehicles have far fewer parts than gasoline models and will make many jobs obsolete. Plants that make mufflers, catalytic converters, fuel injectors and other components that electric cars don’t need will have to be overhauled or closed.

Many new battery and electric vehicle factories are emerging that could employ workers from plants that have closed. But automakers are building more aggressively in the South, where labor laws are tilted against union organizers, rather than in the Midwest, where the UAW has more influence. One of the union’s demands is that workers at the new factories be covered by the automakers’ national labor contracts, a demand the automakers have said they cannot meet because those plants are owned by joint ventures. The union also wants to regain the right to strike to block plant closures.

“We are at the dawn of another industrial revolution and the path we are on is the same as the last industrial revolution: lots of profits for a few and misery and not good jobs for many,” said Madeline Janis. executive director of Jobs to Move America, an advocacy group that works closely with the UAW and other unions.

“The UAW is truly advocating for communities across the country to ensure this transition benefits everyone,” Ms. Janis added.

Automakers have been racking up record profits over the past decade, but they can’t afford to waste time with work stoppages as they race to compete with Tesla and foreign automakers.

All three companies are already struggling to get their electric vehicle business off the ground. A new GM battery factory in Ohio has been slow to produce batteries, delaying electric versions of the Chevrolet Silverado pickup truck and other vehicles. This year, Ford had to suspend production of its electric F-150 Lightning in February after a battery caught fire in one of the trucks that was parked near the factory for quality control. And Stellantis won’t even start selling all-electric vehicles in the United States until next year.

Those problems and Tesla’s growing sales could put the union in a strong position to strike a good deal.

On Thursday, in a sign that automakers are willing to go much further than they had previously done, GM offered a 20 percent wage increase over four years. That’s half of what the union is seeking, but much more than workers received in recent contracts. President Biden on Friday strongly supported the union in statements at the White House. The administration has been pouring thousands of millions in programs to promote electric vehicles and doesn’t want a strike to delay a centerpiece of its climate policy.

Despite all the money automakers have made in recent years, their executives express deep concern about the growth of electric vehicles, which account for 7 percent of the U.S. new car market so far. this year and are on track to surpass sales of one million. this year. Managers are well aware that traditional companies like theirs have a poor track record of retaining dominance after a major technological change. Let’s see how Apple left out Nokia and Motorola when mobile phones became smartphones.

Auto company executives and most industry analysts underestimated how quickly electric vehicles would catch on and can’t confidently forecast how sales, which have been choppy lately, will grow in the future. “I don’t think anyone can perfectly predict what the adoption will be,” Mary T. Barra, CEO of General Motors, said in an interview with The New York Times last month.

Speaking to “CBS Mornings” on Friday, Barra said an excessive wage increase would undermine GM’s ability to continue producing vehicles with internal combustion engines while also developing electric vehicles. “This is a critical juncture where investment is very important,” he said.

Still, unions and their supporters are unlikely to express much sympathy for auto executives. Barra, Ford’s Farley and Stellantis CEO Carlos Tavares have received tens of millions of dollars in compensation packages in recent years. Company shareholders have been rewarded with dividends and share buybacks.

Unions “aren’t going to have a lot of patience with sob stories,” said Karl Brauer, executive analyst at iSeeCars.com, an online marketplace.

Adjusted for inflation, autoworker wages in the United States have fallen 19 percent since 2008, according to the Economic Policy Institute, a left-leaning research group.

At the same time, union leaders are aware of changes in the industry and have said they do not want to hurt GM, Ford and Stellantis as the companies try to regain ground they have lost to Tesla, which has aggressively resisted attempts to unionize their companies. factories. Detroit automakers also face challenges such as Rivian, a startup that makes electric trucks and sport utility vehicles in Illinois, as well as foreign-owned rivals such as Mercedes-Benz and toyotawhose American factories, mainly in the South, are not unionized.

“That’s the biggest challenge here,” Brauer added, “trying to commit to a long-term contract in an industry that is very uncertain and unpredictable over the next five years.”

Union supporters say it would be a mistake to blame workers if traditional automakers can’t compete with Tesla and other rivals.

“If you look at the breakdown of what it costs to build an electric vehicle, labor is a very small part of the equation. Batteries are the most,” Janis said of Jobs to Move America. “This idea that the UAW is going to drive Ford, GM and Stellantis out of business is not true.”

But other analysts said a prolonged work stoppage could help Tesla and foreign automakers gain ground on GM, Ford and Stellantis.

“If something happens that disrupts your business, will that give emerging electric vehicle manufacturers an advantage?” said Steve Patton, who oversees consulting firm EY’s work with auto companies. “Who will benefit if there is a prolonged strike?”

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