September 24, 2023 01:00 PM
Will Ford deal in Canada drive UAW contract?
The drama is building in this second week of the UAW strike against the Detroit Three, even as Unifor in Canada brings home its first ratification.
On one level, UAW President Shawn Fain adding General Motors and Stellantis parts depots to the three assembly plants on strike looks to be a cost-effective move. It broadens protest activities about 13-fold, providing local footage to dozens more media markets, while increasing the number of strikers by less than 50 percent.
It’s also shrewd in terms of squeezing a key source of franchised dealerships’ profitability to apply indirect pressure on the automakers though their wholesale customers and vital partners.
But there’s some risk to the union: When American consumers can’t get their cars fixed, their sympathy with strikers may run dry. “It sounds to me like they are going to become a national villain to the retail customer or the retail public,” said Ben Keating, owner of Keating Auto Group, which includes two GM dealerships and five Chrysler-Dodge-Jeep-Ram stores in Texas.
While it was at least somewhat encouraging that Fain saw sufficient progress with Ford to limit action against the company to the ongoing stoppage at Michigan Assembly, neither side indicated on Friday that a deal is imminent.
Automakers are questioning how eager the UAW is to reach an agreement any time soon, in the wake of leaked messages written by Fain’s communications chief. The union, he wrote, wants to cause reputational “damage and operational chaos” to keep the Detroit 3 “wounded for months.”
While Fain brushed aside questions about the UAW’s sincerity in bargaining, it’s possible that the leaks played a role in his assessment of the Ford situation. It’s curious that some of Ford’s offer that he praised was already known to be on the table, and some of what he says Stellantis is refusing appears to have already been offered.
The strike has been among the top national news stories, along with the prospect of a federal government shutdown. The size and symbolism of this particular labor conflict is irresistible to politicians. President Joe Biden has scheduled a visit to Michigan, whether or not he joins a picket line, on Tuesday, one day before Donald Trump, his predecessor and likely rival in the 2024 presidential election, plans to give a speech to autoworkers in the Detroit area.
As we wrote in this week’s editorial: “It may be unavoidable that state and federal officials would visit picket lines and rallies … [b]ut the involvement needs to stop there, lest they undermine UAW leaders’ authority as negotiators or misunderstand the role of corporations in America.”
One of the most vulnerable and powerless industry stakeholders is the Detroit Three’s suppliers, many of which have shakier balance sheets now — after the pandemic – than they did when the UAW struck GM in 2019. Another complication for 2023 is the still-tight labor market. So while suppliers want to be careful with their cash, they are wary of laying off factory workers, who may find jobs elsewhere and not be available to meet pent-up demand whenever labor peace is achieved.
In a sense the road to a UAW contract runs through Canada.
Unifor members over the weekend ratified a contract with Ford that raises pay for senior members by 13.6 percent tomorrow and 19 percent over the course of the three-year deal.
That’s a little more up-front than the Detroit Three have offered the UAW.
It’s important to keep in mind that the Unifor deal has three rounds of pay bumps over three years, while the UAW is looking for five rounds of increases in a contract that runs about four and half years. If carried over to the UAW, it would produce about a 25 percent increase.
But the big wildcard is the defined-benefit pension agreement. Ford said it would convert people on a defined-contribution pension to a more-secure defined-benefit pension in 2025 and boost contributions to the pension until then. What is still unclear is how generous or liveable those future pensions will be — and whether union members will need outside retirement savings to preserve their lifestyles.
The UAW’s demand for a return to defined-benefit pensions has seemed to be a non-starter for the Detroit Three, because it was one of the key burdens that the old General Motors Corp. and Chrysler LLC couldn’t sustain. Ford has now opened the door to the return of traditional pensions — at some level.
Whatever that really is — and how it’s perceived by UAW members — is likely to have a big influence on what eventually gets worked out in the U.S.
— Jamie Butters, executive editor
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