By David Ferris | 10/18/2023 6:58 AM EDT
United Auto Workers members show symptoms near a General Motors meeting plant Sept. 29 in Delta Township, Michigan Paul Sancya/AP
Ongoing negotiations between Detroit’s automakers and the United Auto Workers union revolve around higher wages and operating conditions — it’s a ghost war over who will exert force in battery factories that don’t yet exist.
The stakes are obvious after UAW President Shawn Fain announced this month that General Motors had agreed to allow the union to organize its battery plants. Not only does it shape the EV industry in a different way than a typical strike, but it can also adjust the living conditions of much of the population. Hard work of the automobile and charging electric vehicles.
This, in turn, may simply determine the good fortunes of President Joe Biden’s economic and climate agenda, adjust the economic face of the southeastern United States, and the speed of the transition to electric cars and its corresponding effect on climate change.
Chris Benner, a professor at the University of California, Santa Cruz, who studies the role of hard work in battery manufacturing, the UAW today moves to that of the 1930s, which featured maximum wages for a generation of autoworkers and helped propel a generation. prosperity for the American middle class. This overall prosperity has declined in recent decades, consistent with the declining rate of unionization in the United States.
“The shift to electric cars and batteries will be a continuation of this [decelerating] trend,” Benner said, “or it may simply be a fundamental inflection point in the world of work. “
Biden has been forced to navigate between his penchant for hard-working unions and his competitive politics to build a national EV industry. In late September, he was the first by a sitting president to come on a picket line, telling UAW members through a bullhorn, “You’ve made a lot more than you’re paid right now. On the other hand, automakers and EV advocates have warned that donations that are too generous for auto workers can hurt the transition to EVs.
At the start of the strike, automakers called the UAW’s call to extend existing hard-work agreements to new battery plants absurd. Automakers — Ford, GM and Stellantis, makers of U. S. brands such as Jeep, Dodge and Chrysler — have said they don’t have the ability to set regulations for use in long-term plants that they don’t fully control. Most of the factories are joint ventures with giant South Korean trading corporations that bring their battery expertise to the table.
In late September, two weeks after the strike, Ford CEO Jim Farley said at a press conference with media and investors that the UAW was “holding the battery plant deal hostage. “
“Keep in mind that those battery factories don’t exist yet. Most of them are joint ventures. And they haven’t been organized through the UAW yet because the staff hasn’t been hired, and possibly won’t be for many years,” Farley added. .
But with the concession announced through GM, the unimaginable suddenly becomes imaginable, and the UAW and its allies are emphasizing the advantage.
“This progress with GM proves once and for all that the rhetoric and legal gymnastics used by the Big Three to unionize their battery services are garbage,” Jason Walsh, executive director of the BlueGreen Alliance, said in a statement. A for-profit organization that represents hard work and environmental groups. Walsh added, “The corporate greed that has prevented those companies from accessing union contracts is precisely what the UAW is fighting against. “
Last Wednesday, the UAW extended its strike at the world’s largest Ford plant in Kentucky. Its 8,700 unionized employees went to the picket lines, halting production at some of Ford’s biggest moneymakers, adding Super Duty trucks and Lincoln Navigator and Ford Expedition SUVs. In a statement, the UAW said it went on strike because “Ford came to the table with the same offer it made to us two weeks ago. “
Ford has said unionizing its battery plants is an option.
“While Ford remains open to the option of using the UAW in long-life battery plants in the United States, these are multibillion-dollar investments and will need to operate at competitive and sustainable levels,” the company said in early October.
Like other Detroit automakers, Ford is touting its pay and benefits by offering regulations that exclude the expansion of its battery plants as the most it can face with other companies, Tesla. Tesla has lowered the prices of electric vehicles to such an extent that they now charge less. than some classic models, according to a Bloomberg analysis.
Automakers represented through the UAW have hard-working prices of around $65 per hour, and complying with all of the UAW’s demands would raise those prices to $140 to $150 per hour, according to research by consulting firm AlixPartners. By comparison, classic non-unionization auto plants have labor costs of $55 per hour, and Tesla $45 to $50 per hour.
Ford cited dubious and emerging labor costs as one of the issues that led to the postponement of construction of its battery plant in Marshall, Michigan, a large facility that the company owns wholly and is part of a joint venture.
“We made it very clear that we were on the edge. We’ve put a lot of effort into getting to this point,” Kumar Galhotra, president of Ford Blue, the company’s classic customer business, said on a call with investors this month. Going beyond that would hurt our ability to invest in the business we want to invest in. “
Little is known about the agreement the UAW claims to have reached with GM. The automaker verified Fain’s claim about a deal, but also denied it.
“Negotiations are ongoing and we will continue to work to find answers to important issues,” GM said in a statement. “Our goal remains to achieve a deal that rewards our creators and sets GM up for good fortune in the future. “
GM has designed its line of batteries for electric vehicles with a logo called Ultium. Most will be produced in factories in joint ventures with South Korean companies. Of those joint ventures, the largest is with LG Energy Solution, a subsidiary of the LG conglomerate. The first, in Warren, Ohio, opened last year. There are two more in Lansing, Michigan, and Spring Hill, Tennessee.
Together, LG and GM have committed about $7. 5 billion to build the plants and plan for about 4,500 people.
In addition to LG, GM is also pursuing a joint venture with Samsung SDI announced in June. It is a $3 billion plant located in Indiana, just outside South Bend, that is expected to open in 2026 and employ 1,700 workers.
Samsung responded to a request for comment. A spokesperson for LG Energy Solution had no comment, saying only that the joint venture is a “separate entity of LG Energy Solution and GM. “
Organizing battery plants can provide UAW members with a huge advantage: the ability to transition a task at an old plant that is closing its doors to a new battery plant while maintaining the same wage and benefits structure. internal combustion engines, they will most likely be as the transition to electric cars unfolds.
Fain, the president of the UAW, alluded to this situation in an update to his members a few weeks ago, while also giving his opinion on GM’s strategy. The plan to close engine and transmission plants and permanently upgrade them with low-wage engines in battery jobs,” he said in an updated video for UAW members.
However, even if GM agrees to unionize battery plants, UAW staff representation is not guaranteed. Employees would have to vote their consent to UAW representation. Ultium’s first plant, in Warren, Ohio, opened last year, and in December, staff voted to join the UAW. But no definitive contract has been signed with the controller.
The length and complexity of those plants, as well as the number of parties involved — GM, LG, Samsung and UAW — mean there’s still a lot to negotiate over wages, employee classification and other labor rules, Dan said. Gilmore, a former Tennessee employee, is an employment lawyer who teaches hard labor relations at the University of Tennessee at Chattanooga.
“Including those workers in those framework agreements” between GM and the union, he said, “could be done. “
The GM deal is the first example of new joint ventures included in framework agreements between automakers and the UAW, said Marick Masters, a business professor who studies hard-working issues at Wayne State University in Detroit.
Several decades ago, U. S. automakers struggled to catch up with Japanese automakers’ ability to make small, inexpensive automobiles. The Japanese, on the other hand, were looking to be informed about how to function in the U. S. market. A number of joint ventures have sprung up, and it hired staff under framework agreements with the UAW.
In the early 1990s, Ford converted its plant in Flat Rock, Michigan, into a joint venture with Mazda. Previously, in the 1980s, GM turned to Toyota and shifted its plant in the San Francisco Bay Area to non-unusual vehicles, adding the Chevrolet. This company, called New United Motor Manufacturing (NUMMI), went bankrupt and closed in 2010.
The factory then played a pivotal role in the EV sector: the NUMMI site was sold at a premium price to Tesla, then a start-up, which needed its first factory. The deal was finalized in 2010, before Tesla dominated the EV industry and catalyzed the transition to EVs that is now at the root of the clash between classic automakers and the UAW.
Past joint ventures set an ancient precedent, Masters said, but not as momentous as what’s happening today. “We haven’t realized this at a time like this,” he said.
Tennessee is a state that would be hit hard by the UAW’s presence in battery factories.
The state has a magnet for the production of electric cars and their batteries, in part because business leaders are able to keep wages low because of weak unions. But if the UAW gains strength to organize the Detroit Three battery plants, it may simply challenge the state’s anti-union stance.
A successful unionization drive at the plants GM and Ford are building in the state may result in a regrouping of unionized, well-paid staff in the Central Southeast, where nearly every single foreign automaker has set up its plants.
Vehicles produced in Tennessee include GM’s Volkswagen ID. 4, Nissan Leaf and Cadillac Lyriq, which are made alongside classic cars at the giant plants automakers already own in the state.
Tennessee is also expected to be home to EV-related factories that go beyond battery assembly. Other projects in structure or planned in the state include a $3. 2 billion cathode plant built independently through GM partner LG, an organization of factories to manufacture upstream battery components, and a lithium mine. Total investment in electric cars and batteries in the state exceeds $16 billion, according to a knowledge portal run by Jay Turner, a professor at Wellesley College in Massachusetts.
In addition to the disruption of work within the state, the effects of which are lower wages, tax incentives and the availability of land are a charm for businesses. Nearly a decade ago, the UAW failed in its attempt to unionize Volkswagen’s Chattanooga plant.
At the same time, Tennessee is also one of the last states in terms of employee situations and protections, according to a report this year by Oxfam America. It ranks 41st out of 50 states, with low wages as the main obstacle.
In attracting business projects, state officials tout the fact that Tennessee is a right-to-work state, referring to a series of laws that restrict the success of unions. For example, an employee might decide not to join the union in a unionized status quo and possibly refuse to pay union dues even if he or she is a union member. Such legislation weakens the industrial unions’ presence in the office and restricts their ability to raise funds.
Last year, Tennessee voters overwhelmingly approved a ballot initiative enshrining right-to-work legislation in the state constitution. Supporters said the measure allows a long-term governor or legislature to override the state’s course on unions.
Gilmore, the hard-working Tennessee lawyer, said the anti-union stance has long been beloved by state leaders and speaks to the state’s credibility in favor of corporations.
“It should be considered a state where the economy is not conducive to the efforts of unions,” Gilmore said, referring to the government’s way of thinking. “We can’t give up our reputation, our position. “
But the UAW’s presence at the Tennessee Ultium plant could complicate that narrative.
The plant is located in Spring Hill, next to what is already GM’s largest plant in North America, which makes SUVs for its GMC and Cadillac brands, as well as the electric Cadillac Lyriq. Workers at the plant, like all GM plants in the U. S. U. S. representatives are represented through the UAW.
The Ultium factory is a 165-acre facility that is set to produce 35 gigawatt-hours of batteries per year, about as much as Tesla’s gigafactory in Nevada currently produces. Production is scheduled to begin later this year, employing up to 1,300 more people at full capacity.
The UAW’s biggest prize is also the state’s biggest EV award: the vehicle and battery production plant of Ford’s joint venture with South Korean battery maker SK On. The joint venture, called BlueOval City, envisions a $5. 6 billion commercial park that will span 6 miles and produce 500,000 Ford cars a year and their batteries. Total employment when it opens in 2025 is projected at 6,000 people.
Almost all of those automakers, from Toyota to BMW to Hyundai, are making large investments in the region to make electric cars and batteries, in factories without union representation.
If the UAW wins a contract in its favor at the Detroit Three battery plants, the knock-on effects could be felt in each and every network building an EV battery plant, whether they are unionized or not. Wages will most likely increase if some other nearby factory offers higher wages for similar work.
The UAW “is going to offer this [best wage offer] to Teslas and the electric vehicle operations of foreign companies, and say, ‘This is what we got from other automakers, and this is what we’re going to get. ‘”” said Masters, a professor at Wayne State.
Any attempt through the UAW is likely to meet fierce resistance from non-union automakers. “It’s going to be tooth and nail,” Masters added. The auto bosses “are going to play any and all cards that have opposed the UAW. “
But even if unionization efforts fail, automakers can’t possibly forget about higher wages at other battery plants, which could lead to the departure of their key employees.
In general, any non-union battery plant “will have to raise rates, unionize or not keep its workers,” said Mike Ramsey, an automotive analyst at consulting firm Gartner.
That pay tension may simply replace the dynamic between the UAW’s Fain, who wore a T-shirt that read “Eat the Rich” in one of his recent video updates, and Tesla CEO Elon Musk, who has opposed a unionization drive at the California company. “There’s [Fain] a billionaire he can chase with his ‘Eat the Rich’ T-shirt,” said Tony Flanagan, an automotive analyst at AlixPartners.
According to analysts, if Detroit’s battery plants were unionized, it would most likely have a two-stage effect on automakers and the prices of their electric vehicles.
First, electric cars from unionized Ford, GM or Stellantis plants would be more expensive. They’re going to be less competitive in terms of rates, that’s just a fact,'” Flanagan said. Meanwhile, the non-union automakers — Tesla, Hyundai, Honda and Volkswagen — “are winners,” Flanagan said, “their merit in positions will continue to grow. “
Within a few years, however, this price gap could narrow, as higher wages induced through unionized plants expand the industry. The situation of some EVs being more expensive than others due to the higher costs of hard work would go away.
“It’s not as catastrophic as you think,” said Ramsey, an analyst at Gartner. “Everyone will have to raise their salaries to stay in the job. In 3 or 4 years, it will be an abyss. “
How the story plays out will be a verdict on the Biden administration’s dual goal: unionizing and spreading electric vehicles.
The result may simply be a bigger, better-paying car that would increase average elegance while also spawning affordable U. S. -made EVs. U. S. Or, higher prices for hard work could cause U. S. automakers to shrink, cutting back on their professional role and making electric vehicles more expensive. and slower to adopt.
A union presence in the factories that manufacture batteries can also serve as an additional launching pad in the chain of origin, for the many long-lasting factories that offer to manufacture the films, powders and other fabrics that make up a battery.
“The UAW knows that if it wants to replace the industry, it has to organize it wall-to-wall,” Masters said. “If they need to be the first force in the industry and set the model, they have no choice. “