What’s the Deal with the UAW Contract Talks? Labor Negotiations Explained

Every fourth Labor Day, the United Auto Workers union typically puts on a big parade in Detroit and announces which automaker—Ford? General Motors? or Stellantis?—will go first in their quadrennial contract negotiations, with the others falling in line.

This Labor Day, it’s anybody’s guess how contract negotiations will go. To keep track of it all, we put together a cheat-sheet to sum up what’s happening, what might happen and what’s at stake.

 How often do the United Autoworkers negotiate their contracts with Ford, GM and Stellantis?

Once every four years.

What’s Different About Union Negotiations this Year?

Leadership: An embezzlement scandal involving more than a dozen UAW officials brought a federally assigned independent monitor and reforms to UAW leadership elections, shifting the voting from a small circle of delegates to individual votes from rank-and-file members. One-person, one-vote paved the way for the current president, Shawn Fain, to win election in a close race, along with six other candidates from his new party, Members United. That party now holds half of the 14 leadership seats in the UAW. Six other leaders are from the old guard, and one is an independent (a reformer from Ohio who led the union at a plant that closed).

Tone: Fain is using much more aggressive language to stir up the rank-and-file membership than previous presidents. In August, he declined to do the traditional beginning-of-contract-negotiations ceremonial handshake with leaders of the automakers. Fain has also refused to engage in pattern bargaining with the automakers—an almost standard process where the UAW starts its contract talks with a single automaker, and the contracts with the other two tend to fall in line.

 Lee Adler, a labor attorney and lecturer at Cornell University’s School of Industrial and Labor Relations (IRL) said that Fain’s more populist tone coincides with his base—the workers themselves, not UAW leadership like in the past.

 “Mr. Fain will need to, in large part, make his credibility with the membership on the outcome of these negotiations,” Adler observed. “And then, on the other hand, the management folks are not really sure what to make of somebody like him. Because since the Great Recession, there hasn’t been a union that was shaped by this degree of frustration—some might call anger—about what Mr. Fain feels is the decline of what it means to be a UAW member in the automobile industry.

“He’s bitter about the way the government intervened to save GM and Stellantis’s predecessor Chrysler [during the automotive bailout in 2008 and 2009], but didn't really provide for the workers as much as it provided for the corporation. There’s frustration about that, and then there’s frustration that the matter didn’t really get corrected over the last 10 or 12 years.”

Momentum: Strike activity nationwide has increased overall since the pandemic. According to the IRL’s Labor Action Tracker, the first six months of 2021 saw 141 labor actions, compared to 233 for the first six months of 2023. In addition, across-the-board gains for union workers at companies including John Deere (UAW) and the UPS (Teamsters) have raised unions’ public profile.

• John Deere workers went on strike for a month in October 2021 and voted down two contracts, approving a third that gave them a 20% increase in wages over six years (vs. 5%-to-6% in the original contract), restored a cost-of-living adjustment that had been removed in the 2015 contract and improved retirement benefits.
• In contract negotiations with Teamsters this year that averted a strike, UPS agreed to end its “two-tier” employment structure that put more recent hires on a lower pay scale and won a big pay bump and more full-time opportunities for part-time workers.

 “The deals that John Deere got, and the agreement UPS got with the Teamsters, put some weight behind the UAW’s argument of ‘We need to be responsive so our people make more money and get back the benefits they lost,’” said Dennis Devaney, a corporate labor attorney for Clark Hill PLC who served on the National Labor Relations Board from 1988 to 1994. “And also, to continue to allow [automakers] to transition this business into electric vehicles.”

Kristen Dziczek, a policy advisor for the Federal Reserve Bank of Chicago, told a gathering of automotive suppliers in July that “every UAW worker in every Detroit 3 plant knows what John Deere got.”

Another clear win for the UAW occurred in August, when workers at Ultium, the new GM-LG joint venture electric-vehicle battery cell plant in Lordstown, Ohio, overwhelmingly voted to join the UAW, then gained a 25% pay raise and back pay in their contracts. The win is significant in the sense that the electric-vehicle supply chain is overwhelmingly non-union.

 What Are the Union’s Big Demands?

Substantial raises: Fain has talked about raises of over 40% over four years, pointing out that Detroit 3 CEOs had 40% pay increases on average over the last four years. By comparison, the last UAW contract in 2019 had two 3% wage hikes. Fain has also been floating the idea of a 32-hour week for workers, for 40 hours’ pay.

End the two-tier wage structure: Devaney sees the UAW having leverage in this area as the Teamsters were able to eliminate tiers for their part-time workers at UPS in their recent negotiations.

Restore cost-of-living adjustments (COLA): Inflation boosts to wages went away during the Great Recession.

Restore medical benefits for retirees

Bring back defined pensions for workers.

Other wants: the right to strike against plant closures (currently that's not allowed in their contract), guaranteed paid community service work for workers displaced by plant closures, more rights for temp workers and increased paid time off.

What Happens on September 14?

The current contract with the UAW runs out. If workers do not approve a contract by this date, UAW leadership can declare a strike to start on Sept. 15. Historically, automakers and the union have extended existing contracts without a new one in place, as long as the sides make progress in negotiations. Fain has vowed to avoid extensions this year.

The Union Voted to Strike. Does that Mean they Will Strike?

No, the rank-and-file strike vote on August 25 allows union leadership to authorize a strike only if the union and automakers cannot agree on a contract by Sept. 14. 

What are the Chances of a Strike, and for How Long?

The UAW has a strike fund of $825 million. With 150,000 at $500-per-week strike pay, that fund would last 11 weeks if all workers strike at once. That fund, however, could last a year if the union is strategic about its work stoppages, Dziczek told the auto suppliers. “I think you could cripple the Detroit 3 production with about 2,500 workers on strike,” she said.

Analyst Mike Bisson, in a recent Moody’s Talks Inside Economics podcast, put the likelihood of a strike at 75%, and the likelihood of a strike going more than one to two months at 45%. “Just the way both sides are talking right now, they’re not anywhere close to where they need to be,” he said.

Devaney’s bets are on avoiding a strike. “My guess is if they get the companies to show a little bit of movement, there may be some demonstrations, some strike events, but I don’t think that even Fain is going to walk.”

When was the Last UAW Strike at a Detroit 3 automaker, and what Effect Did it Have?

GM workers walked off the job in 2019. The walkout lasted 40 days. It cost GM /approximately $3 billion (900,000 vehicles). It also hit automotive suppliers hard.

Lear Corp. CFO Jason Cardew said in an analyst call that the GM strike cost Lear $70-$75 million per week. If all three automakers were striking, he said, the total would be more like $140 million weekly. Michigan-based Lear manufactures automotive seating and electrical systems and employs about 175,000 people.

What’s at Stake for Workers?

Keeping their union jobs as the industry slowly shifts to electric vehicles, which have fewer components and require fewer workers with different skills to produce.

More pay parity, with all workers on equal footing: Eliminating the two employment tiers for production workers that were established in 2007. Hires beginning in 2008 received considerably less pay and fewer benefits than legacy workers. In 2015 negotiations, those second-tier workers received a path to the higher scale after seven years of full-time employment, at the expense of a wage freeze for higher-paid legacy workers.

What’s at Stake for Automakers?

It’s a time of uncertainty in the industry, when consumer demand in the moment doesn’t coincide with the shift to electric vehicles—and automakers are looking for more control over decision-making, not less. Automakers are cementing new partnerships in areas like battery development and rare earth minerals and investing in new plants, equipment and technology for the electric future. But they still must churn out gas-powered vehicles by the tens of millions to be profitable for the foreseeable future.

The automakers have said that meeting all UAW contract proposals—very unlikely—would increase labor costs by $80 billion over four years. Considering that the Big Three’s profits over the past decade were around $250 billion, that’s quite a sum.

Adler sees the big question for the automakers—who make their biggest profits in passenger trucks—as, “‘What will they need for the relationship to be with the UAW to push back against Rivian and push back against Tesla, both of which are non-union?’

“You’re going to have to go pretty quick, right? To both open up more and more manufacturing or assembly plants and then opening up more and more battery plants. And so, as part of that process—what to me seems to be key—is to have the full and complete cooperation from the UAW in order to be able to be faster, to be expedient in your production …  giving the UAW a serious seat in structuring and ordering the new kinds of manufacturing and the new kinds of battery equipment that will be needed to make them more effective and efficient.”

“If we do get a result that is considered to be helpful to the workers at UAW, it’s going to be helpful to the Big Three, because the Big Three has a huge monstrous fight for survival on its hands, switching the whole industry to electric on some level and then fighting off this guy who’s willing to pay $40 billion of chump change for something called Twitter.”

How Are Auto Suppliers Preparing?

“They’re trying to the extent they can to make early deliveries on products that have already been ordered,” said Devaney. “So they at least can get paid for the manufacturing products that the companies ordered. It gets a lot harder if there is a strike.”

Devaney said a European-based auto supplier he’s associated with is already worried about losing business with VW in Chattanooga because of supply-chain shortages and logistics issues.  A strike shutting down production at Ford, GM and/or Stellantis would “accelerate the fact” that they would lose more business.

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