By David Shepardson
(Reuters) -General Motors said Thursday it upped its contract offer to a 20% wage hike for U.S. autoworkers – including 10% in the first year – in a bid to avoid a strike that is set to begin at 11:59 p.m. if no deal is reached.
The targeted actions against selected auto plants would be the United Auto Workers’ first-ever simultaneous strike against the Detroit Three carmakers. Ford Motor also confirmed it had earlier offered a 20% hike and other benefits.
“We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight,” GM CEO Mary Barra told employees of its proposal for the 4 1/2 year labor deal. “Remember: we had a strike in 2019 and nobody won.”
GM reported a $3.6 billion pre-tax loss in 2019 after the 42-day walkout.
Coordinated strikes would represent arguably the most ambitious U.S. labor action in decades and could impact U.S. economic growth, depending how long they last. A Ford official told reporters the odds of a strike are very high after it has received no counterproposal to its offer from Tuesday.
The union’s demands include restoring defined benefit pensions for all workers, 32-hour work weeks and additional cost-of-living hikes, as well as job security guarantees and an end to the use of temporary workers.
Fain said automakers had rejected the pension, 32-hour work week and other benefit improvements sought. He also criticized proposed changes to profit sharing that would cut payments to workers.
Automakers say the UAW demands are unaffordable and not realistic.
Ford told reporters if the UAW demands had been in effect it would have lost $14.4 billion over the last four years rather than the nearly $30 billion in profits it recorded.
The UAW has outlined plans for a series of strikes targeting individual, undisclosed U.S. auto plants if agreements are not reached by late Thursday, rather than a full walkout.
UAW organizing director Brian O. Shepherd said in an online event Thursday the strike strategy is to give “negotiators maximum flexibility” to get autoworkers “the contract they deserve.” He added a full walkout “is still on the table.”
UAW President Shawn Fain said Wednesday the Detroit Three had offered 146,000 U.S. auto workers pay raises of as much as 20% blasted the proposal as inadequate even as automakers protested the union had yet to formally respond to their latest, more generous offers. The union is asking for 40% raises and major improvements in benefits.
AID FOR SUPPLIERS
The U.S. auto sector, including parts manufacturers, employs almost 1 million people, according to the U.S. Bureau of Labor Statistics.
The Washington Post reported Thursday Biden administration officials are preparing economic measures to protect auto suppliers that could be impacted, including through government loans. The White House declined to comment on the report.
A source told Reuters aid for suppliers has been discussed “since the minute it became clear there could be a strike” but those talks are “premature and fluid.”
Ford CEO Jim Farley said in a letter to employees seen by Reuters, “bargaining is a two-way street and we continue to implore the UAW to stay at the table, work together to reach an agreement, and avert a strike.”
Fain outlined a strategy to “create confusion” with a series of work stoppages targeting individual U.S. plants if no deal is reached.
Stopping work at a key engine or transmission plant, for example, could have a cascading effect by depriving other factories of parts they need to produce vehicles. Another option would be to strike profitable pickup truck or SUV assembly plants.
Fain said it was still possible that at a later date all of the auto workers could strike.
A full strike would hit earnings at each affected automaker by about $400 million to $500 million per week assuming all production was lost, Deutsche Bank has estimated.
Some losses could be recouped by boosting production schedules after a strike, but that possibility fades as a strike extends to weeks or months. A UAW strike would not affect so-called transplant carmakers like Toyota, Honda and Mercedes, whose U.S. plant workers are not represented by the union.
U.S. President Joe Biden has encouraged the parties to stay at the table “to get a win-win agreement that keeps UAW workers at the heart of our auto future,” White House economic adviser Jared Bernstein said Wednesday. A prolonged strike could pose political problems for Biden.
Senator John Fetterman, a Democrat, rejected the idea automakers could not pay more, saying the Detroit Three CEOs made a combined $74 million last year.
Ford Motor has proposed a 20% hike in pay over the contract term. General Motors previously proposed a 18% hike, and Chrysler parent Stellantis 17.5%, Fain said Wednesday. That is less than half the pay hikes the union has sought, but higher than companies’ initial offers. It is not clear what is in the new GM offer.
Ford said Thursday it was still waiting for a UAW counteroffer.
Ford warned of a grim scenario. “The future of our industry is at stake. Let’s do everything we can to avert a disastrous outcome.”
The UAW said it was planning a rally in Detroit on Friday that will include Fain, Senator Bernie Sanders and other members of Congress, coinciding with a first of day of expected walkouts.
(Reporting by David Shepardson; additional reporting by Nandita Bose in Washington and Ben Klayman in Detroit Editing by Peter Henderson, Jamie Freed and Nick Zieminski)
