Updated Sep 8, 2023 - Economy

UAW, White House, automakers at odds as strike threat looms

Illustration of Benjamin Franklin in a car's rear view mirror, with a dollar-symbol air freshener.

Illustration: Shoshana Gordon/Axios

The White House, the Detroit Three automakers and the United Auto Workers are at odds over the state of contract negotiations — with the serious prospect of a debilitating strike looming.

Why it matters: With eight days to go before the expiration of UAW deals with General Motors, Ford and Stellantis, insiders are expecting a strike that could affect one, two or all three automakers.

  • Collectively they have about 150,000 UAW-represented workers.

Driving the news: GM delivered a new offer to the UAW on Thursday, including 10% pay hikes for permanent employees, bigger increases for temp workers, $5,500 ratification bonuses and a $6,000 one-time "inflation-recognition payment."

  • The UAW's newly elected firebrand president, Shawn Fain, quickly scoffed at the offer: "GM either doesn't care or isn't listening when we say we need economic justice at GM by 11:59pm on September 14th," he said in a statement.
  • "The clock is ticking. Stop wasting our members' time. Tick tock," Fain added.

The intrigue: President Biden stunned both sides Monday when he predicted there won't be a strike. It led people familiar with the talks to wonder whether the person Biden appointed to help — Michigan native Gene Sperling — is providing an accurate synopsis of what's happening behind the scenes, or whether Biden is just trying to appear positive.

  • The UAW's Fain told reporters that he was "shocked" by the remark, adding that the president "must know something we don't know."
  • "That was overly optimistic," Harry Katz, a professor of collective bargaining at Cornell University, tells Axios. "There doesn't seem to be any evidence they're on a brink of a settlement."
  • Sperling did not comment when reached by Axios on Thursday.
  • White House press secretary Karine Jean-Pierre told reporters Thursday that "the president is an optimist," a believer in the collective bargaining process and he wanted to "encourage both sides to continue to talk."

Rising stakes

The big picture: Each party involved in the talks has their own divergent priorities:

  • The UAW wants massive pay increases of 40%+ as well as 40-hour pay for 32-hour workweeks and a boost to retirement compensation.
  • The automakers want affordable contracts so that they can deliver profits to their shareholders and transition to electric vehicles that are cost-competitive with their non-unionized rivals.
  • The White House wants something in between: improved compensation for unionized workers, but also more EVs to appease the progressive left — plus the UAW's endorsement, which the union has heretofore withheld.

What to watch: Whether the UAW decides to target one automaker to set a pattern contract or face a walkout — its standard procedure historically — or potentially strike all three companies simultaneously, which would be unprecedented.

  • The closer it gets to the deadline, the more likely a three-way strike appears.

The impact: Industry analysts say a strike would primarily benefit the Detroit Three's competitors — namely EV sellers Tesla, Hyundai, Kia, Volkswagen and Nissan — while damaging auto suppliers.

  • "A strike could also cause U.S. new vehicle prices to move higher and boost sales of both import brands and used vehicles, while certain auto suppliers and retailers could be hurt," according to CFRA Research analyst Garrett Nelson.
  • A bulked-up contract would likely also lead to product delays and long-term EV price increases, according to Wedbush Securities analyst Dan Ives: "If anywhere near a ~40% wage increase gets approved/agreed this will be a major headwind on the cost front and ultimately in some way be passed down to the consumer and thru EV prices," Ives wrote in a research note.

Yes, but: In an interview with the AP published Wednesday, Fain — who was narrowly elected to his post earlier this year — delivered some of the most conciliatory remarks he's made so far.

  • He acknowledged that "when you go into bargaining, you don't always get everything you demand."
  • "There's constraints on his leverage — not just that he wasn't elected with an overwhelming mandate," Cornell's Katz says. "There's just a rise in non-union competition facing the companies."

💭 Our thought bubble: Fain has made such lofty promises to his members that it'll be hard for him to reach a settlement without extracting blood from the automakers.

The big question: Is Fain's private posturing different from his public positioning?

  • "What really matters is how he's going to bargain at the table," Katz says. "We don't know what he's actually saying at the bargaining table and what he's willing to agree to."

Go deeper

Go deeper