The clock is ticking for Detroit’s three major automakers to sign a new labor contract and avoid a work stoppage that could cost the U.S. economy billions of dollars.
Ford, General Motors and Stellantis (formerly Fiat Chrysler) have until 11:59 a.m. Thursday to reach an agreement or face a potential strike by more than 140,000 members of the United Auto Workers union. The labor talks come as automakers invest billions of dollars to produce electric and hybrid vehicles, a key market for the companies.
If both sides fail to reach a deal within the next two days, it could mark the first UAW strike since auto workers walked out of GM in 2019 and culminate in the nation’s largest strike among active employees in 25 years.
Here’s what you need to know about a possible UAW attack.
What the UAW wants
The top of the auto workers’ demands is a 46% pay rise over four years. Full-time assembly plant workers at Ford and GM currently earn $32.32 an hour, while part-time workers earn about $17 an hour. At Stellantis, full-time employees earn $31.77 an hour, and part-time employees earn nearly $16 an hour.
Automakers can afford wage increases because each has posted big profits this year, UAW President Shawn Fain said.
“After a decade of hard work by our members, they have had massive profits and continue to have massive profits – $21 billion in the first six months of this year between the Big Three,” he told told reporters in Detroit last week. “Our workers deserve their share of the equity in this, and they’re not getting it.”
Although a sharp increase in wages would benefit workers, some experts believe it could lead to higher prices for electric cars.
“The big issue for GM and Ford as well as investors is that if anywhere near a 40% wage increase is approved,” analysts with Wedbush Securities said in a report this week “This will be a major headwind on the cost front and ultimately in some way be passed on to the consumer and through EV pricing.”
Perhaps most important to the union is that it is allowed to represent workers at 10 electric vehicle battery factories, most of which are built by joint ventures between automakers and South Korean battery makers. The union wants these plants to receive top UAW wages.
In addition to wages, the union also wants management to limit the use of temporary workers and impose forced overtime. UAW members said they are looking for more time off, including a four-day work week, and are asking for additional job protections, including the right to strike over plant closures.
What car manufacturers have offered
So far, the automakers’ latest counteroffers include a much more modest wage increase. Stellantis has offered a salary increase of 14.5% over four years. Ford and GM have offered roughly 10% raises to its employees over four years. UAW leaders have called the proposals unfair and disappointing.
The UAW and automakers continued their negotiations Tuesday, but so far the sides are far apart on wages and working conditions at electric car plants, said Benjamin Salisbury, an analyst at Height Securities.
“While the continued exchange of counterproposals between the union and the automakers shows progress, it does not eliminate the risk of a strike,” Salisbury said Tuesday in an investor note.
Fine told CNN on Monday that negotiations are progressing, but that both sides disagree on cost-of-living allowances and job security.
“Our members are not only left with the transition to EV, but only with product placement, retirement security,” he said. “There are a lot of issues that give rise to this.”
How a strike could affect car buyers and the economy
The average new vehicle in the United States costs $48,451, according to August data from Kelley Blue Book. A two-week UAW strike could push new vehicle prices up 2%, says auto consultancy JD Power told Reuters.
That’s because a work stoppage would stifle production for new Ford, GM and Stellantis models. With sudden uncertainty about when new cars would arrive on their lots, car dealers would likely raise the sticker price of their existing inventory.
At the end of August, the three automakers combined had enough vehicles to last 70 days. After that they would run short. Buyers who need vehicles are likely to go to non-union competitors who would be able to charge more.
“A work stoppage of three weeks or more would quickly drain excess supply, raise car prices and push more sales to non-professional brands,” said Sam Fiorani, an analyst at consulting firm AutoForecast Solutions.
Auto production at the Big Three could fall by 150,000 cars a week in North America, and prices would rise soon after, said Garrett Nelson, an auto analyst at CFRA Research.
For the United States as a whole, reduced auto production resulting from a UAW strike affecting the Big Three would reduce economic growth by up to 0.1 percentage point for each week it lasted, Goldman Sachs analysts said in a report. “Automobile production is likely to decline sharply—we assume to roughly zero—at any company affected by a strike,” they wrote.
The trade unions have stepped up their activity
The UAW’s contentious talks with Detroit automakers come as a wide range of unionized workers in a variety of industries are pushing for better wages and working conditions. Organized labor groups have flexed their muscles and won enhanced contracts.
Museum workers in Chicagothe police officers in Los Angelesthousands of American Airlines pilotscollege professors in New Jersey and Oakland, Calif. hospital workers have all seen wage increases. UPS drivers in August approved a five-year contract that brings their average annual salary to $170,000.
So far this year, there have been 247 strikes involving 341,000 workers — the most since Cornell University began tracking strikes in 2021, though still well below the numbers in the 1970s and 1980s.
“With the latest UPS union agreement sealed, this puts more pressure on UAW management to deliver a big win,” Wedbush analysts said.
— The Associated Press contributed to this report.