We recently detailed the UAW’s “audacious” demands (including a 46% pay hike) for the Big Three negotiations. UAW President Shawn Fain has also withheld an endorsement carrot over Biden’s EV push and the feds’ generous incentives for battery factories to be built on U.S. soil.
Several EV plants are in development, as we shall discuss below, and Fain recently attended a solo meeting with Biden with no transcript provided. Yet the timing of this conversation is no coincidence.
Beyond those politics: EVs sit in a tricky place for the Big Three and the UAW. Why are they a “wild card” for these negotiations?
On one hand, this industry’s electrification is plowing full steam ahead, even if Ford’s CEO expresses skepticism about consumer affordability. Further, EVs require less labor than gas-powered vehicles. That means fewer jobs and lower wages (starting at $16.50 vs $32) than at traditional assembly plants. Fain wants to abolish that wage gap.
However: EV wages might not even surface on the Big Three tables. Automakers argue that battery plants are joint ventures and not privy to these negotiations. Lordstown’s Ultium Cells factory, for example, is a joint venture between GM and LG Energy Solution, and Ultium doesn’t envision “a viable legal” path to be included in a Big Three agreement.
A key distinction: GM is the only Big Three automaker with a joint venture that’s both unionized and currently in operation. GM/LG workers are also organized separately with the UAW, so GM argues that Ultium workers must hash out their own terms under their own contract. The UAW feels differently.
The near future: Stellantis and Samsung SDI will open a new Kokomo-based battery plant in 2025 with a second battery plant planned for 2027. Whereas Ford is planning three joint venture plants with South Korea’s SK. Ford has further plans for a Michigan battery that will not be a joint venture but rather a Ford-owned subsidiary.
These new plants will likely exist within four years. The UAW is pushing for the new master contracts to stand until May 2028, so EV plants could stand some guidance during the Big Three negotiations.
What could happen: Either the UAW or automakers could turn EV concerns (i.e., wages and safety) into indirect leverage. Hence a new UAW white paper focusing on safety issues at Ultium. The union argued for including provisions for EV factories within a national GM contract, which could then be used as a “model” for future talks.
Meanwhile, GM has outwardly expressed willingness to raise auto worker wages but declared that other UAW demands “threaten” the company’s future. So, one can easily see those EV safety concerns or wages spilling over into a new GM master contract in exchange for the UAW conceding on their overall demands.
In conclusion, the auto industry’s pro-labor and pro-environment stances are at odds, as Biden has realized. The spotlight is now on the Big Three and UAW as they navigate the EV challenge.
