Get Ready to Rumble — UAW Negotiations with the Detroit 3 Begin This Week

Get Ready to Rumble — UAW Negotiations with the Detroit 3 Begin This Week

July 10, 2023 — Dealers selling one or more of the Big Three domestic automotive brands may want to mark September 14, 2023, on their calendars. 

At midnight on September 14, the current contracts between the United Auto Workers Union and Ford Motor Co., General Motors, and Stellantis will expire, resulting in what likely will be a protracted strike against one — or more — of the Big Three. 

What happens in the next couple of months will determine inventory, sales, parts, and public perception in the fourth quarter and, perhaps, longer for dealers selling those brands. 

Long term, these negotiations will impact the future of these automakers as they navigate the transition into an electric vehicle world. 

For the UAW, it is a fight for survival. For the Detroit Three, it is a fight to control costs while they attempt to transform capital-sucking EV initiatives into profitable businesses.


Every four years, the UAW and the three automakers renegotiate their contracts. Negotiations for the new agreements involving nearly 150,000 manufacturing employees are slated to begin this month. 

The UAW typically selects one automaker of the three to target in negotiations. The contract resulting from those talks will set the pattern for the other two. 

Occasionally, negotiations fail, and workers from either one or more of the automakers decide to strike. 

In 2019, the UAW targeted GM. Talks failed, and 48,000 GM employees walked off the job as the contract ended in mid-September. A 40-day strike ensued — the longest strike in nearly 50 years against GM — costing the manufacturer more than $3.8 billion in profits while delaying production of more than 300,000 vehicles. (A 54-day strike against two GM parts plants in 1998 crippled 27 out of 29 of the automaker’s manufacturing plants). 

This year’s negotiations will make 2019 seem like child’s play. All signs indicate a summer of contentious and hostile talks at a level Detroit hasn’t seen in decades. 


Shawn Fain, the newly elected president of the UAW, signaled he is ready for a fight this year, adopting a combative tone in his opening speech to the UAW troops in March. 

Fain, an electrician out of the Stellantis Kokomo Casting Plant, has worked at Chrysler for 30 years while making his way up the UAW ladder over the last 20 years. He campaigned for the leadership position, promising to reform the UAW, which has seen 17 of its leaders, including two presidents, recently convicted of corruption as part of a federal investigation that began in 2013. 

Fain wants to overhaul how the UAW operates. According to him, in recent years, UAW leaders engaged in a much-too-friendly relationship with their OEM counterparts during contract negotiations, leading to too many concessions. And he argues previous leadership became complacent over the last 30 to 40 years — years in which UAW membership declined from a high of 1.5 million in 1979 to just 400,000 today. 

He is preparing for war. In recent weeks, Fain has made several moves to overhaul the old guard and old thinking at UAW headquarters.

  • Purged several staff members that were part of the Administrative Caucus, which had controlled the leadership for several decades;
  • Remade the communications team;
  • Ousted the union’s chief general counsel, two other internal attorneys, and an outside law firm;
  • Continues to withhold endorsement of a second Biden administration, saying the president needs to push more for better union wages and benefits at new EV facilities and battery plants;
  • Negotiating concurrently with each automaker instead of targeting one OEM and applying the agreement terms as a pattern for the other two; 
  • In a symbolic move, the UAW will dispense with the traditional public handshaking ceremony with the OEMs, reported Reuters’ transportation reporter David Shepardson late Monday.  

Controlling the narrative going into and continuing through the negotiation process is also a big part of Fain’s strategy. Unlike previous leadership, which historically kept the rank and file — and media — in the dark, he has engaged in numerous Facebook Live, YouTube videos, town hall meetings, and conversations with the press providing updates while outlining his strategy for a much more effective (some would say confrontational) UAW. 

His personality is not firey or bombastic. Rather, he is measured and sometimes uncomfortable in front of the camera, but his words reflect a more militant era of the 1930s and 1940s when the UAW was at its most powerful. 


The UAW has no choice but to take a hard line in negotiations this year. In some ways, it is fighting for its survival.

The Big Three — as are all automakers — are investing billions of dollars in the transition to electric vehicles. Consequently, they argue they have to reduce labor costs as they revamp their factories and companies. 

Earlier this year, Ford revealed its EV operations would lose as much as $3 billion. Stellantis CEO Carl Tavares has warned the industry since 2021 that EVs cost 40%-50% more to build than vehicles with internal combustion engines.  

Although EVs cost more to manufacture — mostly due to costs of materials and automation — they require 40% less manpower to build than ICE vehicles, according to an AlixPartners study in 2019. 

The Detroit automakers will have to close factories, cut costs, and reduce the labor force to remain profitable. The cuts are already happening. Each of the Detroit Three has initialized buyouts this year with thousands of salaried workers. Stellantis included factory employees in its buyout plan while also idling its Jeep Cherokee plant in Belvidere, IL, indefinitely in February. 

The industry is at the beginning of the transition today. From now to 2026, automakers plan to launch approximately 150 BEVs in the U.S. The UAW has to go to war now. It may not have another opportunity four years from now to get the concessions it needs to remain relevant or viable. 


Fain continues to outline the UAW’s objectives heading into the talks. He argues the Big Three have netted a combined $250 billion in profits over the previous decade, and now it is time to pay up. 

Cost-of-Living Adjustments (COLA). The UAW wants COLA reinstated this year. The union obtained COLA for all its members in the 1970s (first instituted for GM workers in the 1940s) but lost it during the Great Recession. Historically, COLA was based on a formula that ensured wages kept pace with inflation. According to Fain, rising inflation in recent years decimated the modest wage increases won in the 2019 contract. 

Reinstating COLA will add to the structural costs incurred by the OEMs — a dynamic they want to avoid. John Murphy, Bank of America’s lead US auto analyst, said during his annual “Car Wars” presentation to Detroit’s Automotive Press Assn. last month, his firm expected the Big Three to incur 25% to 30% higher labor costs over the next four years due to wage increases in the new contracts — but that calculation does not include the reinstatement of COLA, which Murphy believes is a “no-go.” 

Since 1958, UAW members have participated in annual profit-sharing bonuses, which OEM executives claimed have exceeded potential COLA since the last contract. 

GM claimed recently its compensation package is one of the best in the country. 

Jim Farley, Ford CEO, wrote in an Op-Ed in the Detroit Free Press in late June that during the previous four years, eligible UAW-represented employees earned a total of $42,000 in bonuses and profit-sharing.

“Over the past eight years, UAW-Ford employees have received wage increases plus annual inflation bonuses of $1,500 per year, which exceeded the cumulative compensation gains they would have experienced under a straight cost of living adjustment,” he said. “All-in, the average hourly UAW-represented employee at Ford earns $64 per hour in wages and benefits — or $112,000 per year.”

The OEMs and the UAW both appear willing to die on this proverbial hill. 

Tiered Wages. Domestic OEMs and the UAW agreed to adopt a two-tiered wage system in 2007 to help the industry survive the recession and compete with foreign competitors. Employees hired after 2007 are paid a lower wage and are limited to less earnings, including benefits, than those starting before 2007. 

The system is a big sticking point for the UAW, which argues it is unfair and creates a divisive environment. The UAW successfully narrowed the gap between the two tiers in 2015 and 2019 but wants to eliminate it in this round of talks. 

But the automakers want to avoid huge increases to their wage structure, which eliminating the tier gap will do. 

Job Security. The UAW is concerned about the impact of the transition to electric vehicles on its members’ jobs. Look for the union to demand OEMs guarantee they will not move jobs to foreign markets nor eliminate them as part of the EV transition. 

GM said to Automotive News last month it plans to use its existing plants to revamp its manufacturing to EVs. This may change, but GM also has said it is not planning to close any manufacturing facilities but will look to improve their efficiency. 

On the other hand, Ford is building a new $5.6 billion EV manufacturing plant in Tennessee. Fain hopes to organize the 110,000 future employees at the under-construction plant and workers at any other new EV facilities. 

In February, Stellantis idled indefinitely its Jeep manufacturing plant in Belvidere, IL — a move that rankles Fain. The plant’s future will likely be determined during the upcoming contract talks. 

A key concession for the UAW this year will be to ensure employees losing their jobs at ICE plants can transition easily into EV plants. 

Battery Plants. The domestic automakers have planned nine EV battery plants — including GM’s Ultium plant in Lordstown, OH, already in operation — by 2026. 

GM and Ford each plan to have at least four battery plants in the US, while Stellantis has announced one in Indiana — it likely will reveal one or two more battery plants in the near future. It has already begun construction on a plant in Canada. 

The plants are part of joint ventures the automakers have established that are not covered by the current national master agreements with the UAW. The 18,000 workers the plants say they will hire will be employees of the JVs and not the automakers, meaning they will not be eligible under the new contracts. 

The UAW organized GM’s Ultium plant in Ohio earlier this year. But that is a one-off contract that will not apply to future battery plants. The UAW will have to organize employees with separate agreements at each battery plant.

During a recent visit to the Lordstown plant, Fain noted that Ultium workers begin at $16.50 an hour, topping out at $22 an hour after seven years, while local Waffle House servers make more than $18 an hour. 

Ideally, the UAW would like battery plant employees to be included in the master agreements coming out of this year’s negotiations — which would be a tough win if it can get it. 

Complicating matters is the recent $9.2 billion loan Ford’s joint venture with SK On, BlueOval SK, obtained last month from the U.S. Department of Energy to build three battery plants. Fain slammed the White House for providing the loan without establishing wage or benefit conditions first. 

In 2022, GM’s joint venture with LG Energy Solutions obtained a similar $2.5 billion loan. 


Negotiations begin on Thursday with Stellantis, Friday with Ford, and Tuesday next week with GM. Fain plans to address UAW members in a Facebook Live conversation tomorrow (July 11) at 5 pm ET.

Negotiations will be difficult based on the heated rhetoric from the UAW and subsequent comments from OEM executives. Most analysts expect at least one strike, while others think workers from each Detroit automaker could hit the picket line in September. 

As of November, the UAW had approximately $815 million in its strike fund — enough to pay its 150,000 members $500 a week for 11 weeks, should a strike(s) occur.

Meanwhile, Stellantis quietly has been ramping up its inventory in recent weeks — likely to fortify its dealerships in case of a strike. Based on Cox Automotive data, its four U.S. brands have some of the industry’s highest days supply as of June – ranging from the high 80s for Dodge to nearly 100 for Chrysler. The automaker also placed its Warren Truck and Jefferson Jeep plants on critical status through October 2, which means both plants can operate up to seven days a week for 90 days.

Chevrolet is just under 50, GMC is at 60 days, and Buick is under 100. Ford’s day supply is just over 70 and Lincoln just over 100. The industry average is at 51 days supply. 

Sorry, comments are closed for this post.

Subscribe Now to The Banks Report