The Journal. - Workers Win Big as UAW Strike Nears End

Episode Date: October 30, 2023

Today, General Motors became the last of the Detroit automakers to reach a tentative deal with the United Auto Workers union. It follows tentative agreements struck last week with Ford and Stellantis and is expected to end a strike that has spanned more than six weeks. We speak to WSJ’s Nora Eckert about the agreements reached and what it means for the U.S. auto industry and labor movement.  Further Reading: - Detroit Is Paying Up to End the UAW Strike. Now Carmakers Will Live With the Costs.  Further Listening: - 2023: The Year of the Strike  - ‘We’ll Strike All Three’: The UAW’s Historic Walkout  - Meet the Man Who Has Detroit on Edge  Learn more about your ad choices. Visit megaphone.fm/adchoices

Last week, the United Auto Workers reached a tentative agreement with Ford and Stellantis, signaling that the grueling strike that's been rattling the auto industry was finally nearing an end. These talks have been ongoing for several months now, and the strike itself stretched past six weeks. And it has been bruising, definitely, for the automakers, and it's been very tough for the union as well. That's our colleague Nora Eckert, who's been covering the strikes. I mean, these negotiators have been meeting

at Ford headquarters, Stellantis. Some have been sleeping in the buildings overnight. And when we think about coming out at the end of it, it's pretty clear that the union has notched some significant wins here, gains that they haven't seen in decades. While the UAW had deals with Ford and Stellantis, General Motors was still holding out. So on Saturday, to dial up the pressure, the UAW made a surprise move and called for a fresh walkout at another one of GM's plants. The United Auto Workers is expanding its strike against General Motors. The union announced Saturday workers at GM's plant in Tennessee will walk off the job.

And then, just as my conversation with Nora was wrapping up this morning. Just as my conversation with Nora was wrapping up this morning. So we're just getting some breaking news right now as we speak that General Motors has reached a tentative deal with the UAW. Oh my goodness. Okay. So you probably need to go. I might have to jump. Okay. Yeah. I just have to jump off. Welcome to The Journal, our show about money, business, and power.

I'm Ryan Knudsen. It's Monday, October 30th. Coming up on the show, the UAW's historic strike nears its end. Listen closely. That's not just paint rolling on a wall. It's artistry. A master painter carefully applying Benjamin Moore Regal Select eggshell with deftly executed strokes. The roller lightly cradled in his hands, applying just the right amount of paint.

It's like hearing poetry in motion. Benjamin Moore. See the love. So Ford was the first carmaker to reach a tentative deal with the union. Why was that? Why did Ford go first? When these talks kicked off, there were a lot of analysts and industry observers saying, well, Ford for sure is going to be the first to reach a deal. And there's a few reasons for that. One is that Ford has historically had a really positive relationship with the union. And this is their first nationwide UAW strike since the 70s.

So they're not used to having this sort of adversarial relationship with the union. On the UAW side, they had a very experienced bargainer leading on the Ford contract, and that put them at an advantage as well. And ultimately, Ford was just willing to put the most on the table. What did Ford put on the table? What kind of concessions did the company make? So the biggest one really is this general wage increase. So the biggest one really is this general wage increase.

Ford agreed to raise the wage for workers 25% over this four and a half year contract. They also secured the return of COLA, cost of living adjustments, to protect for inflation. And those were suspended in 2009. So that was a huge historic thing for the union to win that back. Over the next four years, under Ford's new contract, most unionized workers will make around $85,000 a year before overtime. And something also that's sort of gotten lost in the shuffle but is very important as we think about job security, especially during the EV transition, is the union won the right to strike over plant closures for the first time in its history.

What does that mean exactly? Like if Ford wants to close down a production facility, workers can now strike and say, don't close this place down? Yeah, yeah. They have a lot more leverage on their side. And I'll admit when I started covering, I sort of saw that demand, the right to strike over plant closures and thought, well, that doesn't seem that significant. But from talking to union folks and workers, it's really big. And another big thing, too, is that workers can reach the top wage in a much quicker time frame now. Used to be that you take eight years to get from your starting wage to your top wage. Now you can get there in three years. The union didn't get everything it asked for. Now you can get there in three years.

The union didn't get everything it asked for. It started out with a demand to raise wages by 40%, but only ended up with 25%. Members also wanted big changes to retirement benefits that they didn't get. And they wanted a four-day work week at full pay, but they didn't get that either. Still, the concessions that Ford made will cost the company money. One analyst estimated that it'll cost Ford around $1.5 billion a year. So the companies are largely quiet on the costs of these new contracts,

especially because workers are going to be voting on them in the coming days, and the company can't really be so vocal about that. But in their earnings last week, Ford said that this contract would add about $850 to $900 per vehicle in labor costs. So Ford is going to be spending a lot more money than it used to on labor. Yeah. And the big question is, how will they recoup those losses in other parts of the company? What will they restructure, reorganize? Especially for a company like Ford that is already trying to reduce costs on quality issues, inefficiencies. It's one added struggle for them, especially as they're producing these very cost-intensive electric vehicles. So this new contract is going to cost Ford a lot more going forward, but

how much money did Ford lose already just on this six-week strike? So over this six-week strike, Ford said it lost about $1.3 billion total. Wow. And it's very hard to ramp up production once a plant is shut down. So even if it's shut down for a week, and we saw this during COVID, it's not like all these workers are going back to the plants this week and like that. It's, you know, starting production at full speed. It's also going to be harder for Ford to get, you know, its plants back up to full speed that were down during the strike.

After the UAW reached a tentative deal with Ford on Wednesday, Stellantis, which owns Chrysler, quickly followed suit. Their deal was announced on Saturday. Once, you know, one automaker sort of sets the terms in these bargaining discussions, there's not a lot of point for the other two to try to break that pattern. Because, you know, workers at these companies are seeing Ford got a 25% wage increase. We're not going to accept any less. So we were expecting that to happen pretty quickly. Stellantis did reach a tentative agreement on Saturday that largely followed, for what we know

at the moment, what Ford achieved. And then this morning, GM's deal came, according to people familiar with the talks, essentially ending the week's long strike. What these new deals could mean for the future of the auto industry? That's next. Summer is like a cocktail. It has to be mixed just right. Start with a handful of great friends. Now add your favorite music. And then finally, add Bacardi Rum. Shake it together. And there you have it. The perfect summer mix.

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The exact terms of the UAW's deal with GM haven't come out yet. The exact terms of the UAW's deal with GM haven't come out yet. But Norris says that the broad outlines, like a 25% raise, are expected to be the same. So overall, this looks like a pretty good deal for the union members in that they got some of these historic concessions out of the car companies in terms of wages and things like that. How was the union able to win such major concessions out of the car companies in terms of wages and things like that. How was the union able to win such major concessions? There's a few reasons that the union has been so effective in this round of talks. One is that there's this new president at the helm. His name is Sean Fain.

And actually, today is his birthday. Happy birthday, Sean. Yeah, yeah. But this new UAW president is really changing the way that the union approaches these negotiations. So Sean Fain brought in this really interesting team of folks who weren't union insiders. He brought in strategists, communication directors, and attorneys from outside of the auto industry, people who had notched wins on other union campaigns, people who had worked for Bernie Sanders and Alexandria Ocasio-Cortez, and folks who had even been labor reporters reporting on the UAW. He also employed a new strategy for how to carry out strikes.

Instead of having all workers walk out at once, the union called for walkouts at specific plants. So for example, if Ford didn't move at the bargaining table the way the union wanted them to, they could say, okay, you just lost your most profitable plant, Kentucky Truck. More than 6,800 UAW members have walked off the job as Delantis' largest plant. 5,000 more union workers are hitting the picket lines. This time, the target is General Motors' largest assembly plant. And it kept the automakers on their toes. It kept them guessing. And it really promoted this sense of chaos that they didn't know what the union was going to do next. And it put the union really in this position of power at the negotiating table.

The labor union in general has been sort of reinvigorated in the United States over the last few years. Do you think that that played a factor in how many concessions the UAW was able to win? Completely, completely. You know, I've even talked to workers who say, look at what the Teamsters won. Look at what this other union won. You know, we are completely justified in making these demands. So there's this reinvigorated energy in the UAW, whether it's from this new leadership or this broader movement in labor, but workers feel empowered to make more audacious demands than they have in the past, and they're being more effective at reaching new wins that they haven't in the past.

and they're being more effective at reaching new wins that they haven't in the past. Right now, the deals are all still tentative. Union members have to vote to approve them, and those votes should take place over the next few weeks. How would you say workers seem to be feeling about these deals? It's hard to quantify, you know, like tens of thousands of workers, but I'll say that most of the folks I've talked to, you know, from the factory floor especially, have been feeling really positive about the terms of the deal and been getting a lot of texts of like, wow, that's pretty substantial. That's more than I thought we were going to get. And now, employees that were on strike are getting ready to go back to work.

It's an emotional time for me, you know, emotional, but just super excited that this is over with and just can't wait to get back to work. I'm happy. It's a good day. It's a happy day for everybody. Record practice, Sharon, and oh, goodness. Oh, this is great. I talked to some folks on the picket lines early last week at Ford's Michigan Assembly Plant, and one of them told me, I'm kind of bored. and one of them told me, I'm kind of bored. I want to get back to my job. I like my job. And also not to minimize that it's been very difficult for them to live on this $500 weekly strike pay. I was talking to one woman who said, you know, I tried to get work outside to supplement my income. So folks have been really struggling to make ends meet during this time. So there's a real sense of relief. So what are these deals going to mean for the auto industry?

Big picture. There's been a real divide in Detroit over this question. So there are some folks who say this is very dangerous and it's going to lead automakers to ship production overseas. So in a few decades, you'll be seeing more production shipped to Mexico, for example, because the labor costs are too high here. Another big issue for automakers during negotiations was how to manage the cost of transitioning to electric vehicles.

In the last couple of weeks, we've seen both Ford and GM walk back some EV production goals or suspend EV spending. And they've been very clear that that is not just about UAW. That's about consumer demand. So there was a lot of questions around the EV transition, regardless of what's happening with the UAW talks. So it's definitely contributing to this uncertainty around what the automakers can sustain and what they want to spend. But the bigger variable, I think, is really if the consumer is going to buy these vehicles. Speaking of consumers, what impact might this deal have on consumers? Are cars going to get

more expensive or will consumers see any impacts from this? It's definitely possible. You know, it's hard to hear Ford's chief financial officer say this is going to add $850 to $900 in labor costs per vehicle and not automatically think, well, that's going to drive our prices up. So yeah, I mean, the automakers are going to be looking for different ways to absorb these costs, but it's probably pretty reasonable to expect that vehicle prices could increase as a result. The union has pushed back against this whole argument saying you can reorganize your businesses in a way where this doesn't have to be transferred to the consumer. So it'll be

interesting to see how much does land on the consumer moving forward after these deals are solidified. What is this going to mean for the UAW itself going forward? I think this is the first chapter in a whole new book for the UAW. negotiations in Detroit are done, they made it clear that they're already strategizing how they're going to organize Tesla, other automakers that have operations in the U.S., where the union has historically failed. And they said, this is just the first step in a stronger, more effective UAW that sets the standards for the rest of the industry. What do you think that these tentative deals will mean for other unions as they look at the UAW and see that they were able to get 25% wage increases? It definitely adds energy to the broader labor movement. You know, we've seen that even before the UAW talks, but something that this new union leadership has done is really contextualize

their campaign as a part of this broader fight for the working class of the nation. And Sean Fain has said this as he's talked about Stellantis' and Ford's tentative agreements is, this is a win for the entire working class. So they're not even shy about saying this is not just about the auto industry, this is about the greater labor movement. And it's definitely contributing energy to folks who are still on the picket lines or still at the bargaining table in other industries. That's all for today. Monday, October 30th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Mike Kalias and Ryan Felton.

Thanks for listening. See you tomorrow.