UAW strike: Why a Detroit labor dispute runs through the South
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Patrik Jonsson Staff writer
| Savannah, Ga.
An energized labor movement has launched a rare strike against U.S. carmakers at a time of tectonic change in the industry.
For bargainers, one of the key sticking points can be found some 800-plus miles to the south of Detroit boardrooms: a massive electric car plant owned by Hyundai, with fellow South Korean company LG partnering on battery production. The plant, near Savannah, Georgia, is expected to employ 8,000 nonunion workers and open in 2025.
Why We Wrote This
Labor unions have been winning big pay gains this year. In the auto industry, nonunion factories in the U.S. South and the rise of electric vehicles have complicated the situation.
With the auto industry increasingly shifting toward electric vehicles, a central risk for the United Auto Workers (UAW) union is that jobs are flowing southward – to a region that has traditionally shunned organized labor. Already, cars from nonunion or foreign assembly plants, often with lower pay scales than the UAW, account for a large majority of U.S. sales. Yet the Detroit automakers have remained profitable.
The UAW hopes to make it easier to unionize battery plants, primarily sited in the South.
“[Georgia is] geographically ... one of the epicenters of the future of the auto industry in a new age defined by EVs,” says Harley Shaiken, a labor expert at the University of California, Berkeley. “Georgia will influence the future of Detroit.”
An energized labor movement has launched a rare strike against U.S. carmakers, as wrench-turners vow to catch up on pay and benefits at a time of tectonic change.
As bargainers failed to reach a deal by a Sept. 14 deadline, one of the key sticking points can be found some 800-plus miles to the south of Detroit boardrooms: a massive electric car plant owned by Hyundai, with fellow South Korean company LG Energy Solution partnering on battery production, rising from a former slash pine forest outside Savannah, Georgia.
Part of a massive new private and public investment in weaning the U.S. economy off fossil fuels, the plant is expected to employ 8,000 nonunion workers and open in 2025. Its very existence is one reason the United Auto Workers (UAW) union is on a collision course with the three big automakers that have U.S. roots: Ford, General Motors, and Stellantis – the owner of Chrysler, among other brands.
Why We Wrote This
Labor unions have been winning big pay gains this year. In the auto industry, nonunion factories in the U.S. South and the rise of electric vehicles have complicated the situation.
With the auto industry increasingly shifting toward electric vehicles, a central risk for the union is that jobs are flowing southward – to a region that has traditionally shunned organized labor – and toward the supply chain for the batteries those EVs require. Already, cars from nonunion or foreign assembly plants, often with lower pay scales than the UAW, account for a large majority of U.S. sales. Yet the Detroit automakers have remained profitable. The challenge for the union is how to win a pay boost for its workers while also avoiding a scenario of continued shrinkage of its ranks.
Hence a core UAW demand in these talks: concessions that would make it easier to unionize some of the 29 current or proposed battery plants primarily sited in the South.
“Electrification has changed the dynamics of bargaining,” says Marick Masters, an auto industry expert at the Mike Ilitch School of Business at Wayne State University in Detroit. “It’s very fluid, and we’re dealing with a new reality here.”
Taking a newly militant approach after Shawn Fain took over as president earlier this year, the UAW on Sept. 15 began an unprecedented work stoppage against parts of all three major U.S. automakers. Beyond the battery plants, the union seeks upgrades on health benefits, safety issues, and pay. That includes ending a post-2007 tier system put into place by Congress after the bailouts of Chrysler and GM, which has fueled anger among the working ranks in Detroit.
After union truck drivers and longshoremen won massive concessions from U.S. corporations this summer, the UAW called for a 40% pay raise and a 32-hour work week.
A tense moment for workers
But for America’s autoworkers, the audacious bid also centers on electrification. The UAW supports the nation’s overall effort to dramatically reduce dependence on fossil fuels – as long as workers aren’t left behind. “Our union isn’t going to stand by while they replace oil barons with battery barons,” Mr. Fain said recently.
Tougher in approach than his recent predecessors, Mr. Fain refused a traditional handshake to open the talks, has thrown early proposals in the trash can, and has taken on all three automakers in bargaining at once – instead of the traditional push for a pattern at one to replicate with the others.
Both sides have sizable war chests to carry a deep strike. But both sides also have made some concessions and have strong motivation to forge a deal.
The question of organizing battery plants looms large, as the union demands rights to organize at plants that any of the Detroit carmakers own jointly with other companies.
“This is a very dynamic and complex environment that touches everything, touches everyone, or will,” says Robert Charette, a veteran systems engineer in Virginia who has studied the EV transformation. “We’re trying to change core elements of our economy at scale, in really short time frames.”
One sign of upheaval is the South Korean-owned “Metaplant” here in coastal Georgia. The Hyundai plant, with battery production aided by partner LG, is rising at dizzying speed to potentially put 300,000 electric cars on the road a year starting in 2025. Some 20,000 people could be employed by the plant and its contractors, transforming a local economy dominated by the Port of Savannah, paper mills, and tourism.
In part, this reflects Biden administration subsidies that promote a greener economy. It also reflects Republican governors in the South who see a different shade of green – dollars that can help buoy state economies, provide jobs, and raise median wages. Georgia kicked in about $2 billion in tax breaks for the Savannah-area plant.
“[Georgia is] geographically ... one of the epicenters of the future of the auto industry in a new age defined by EVs,” says Harley Shaiken, a global labor expert and emeritus professor at the University of California, Berkeley, in an email. “High noon – or, more accurately, high midnight – in Detroit will have considerable implications for Georgia, as Georgia will influence the future of Detroit.”
Professor Shaiken adds in an interview, “What happens in these [labor] talks has a lot of implications way beyond” U.S. automakers. For one, research finds that when unions win higher wages, nonunionized plants also tend to raise wages to compete.
Only 16% of auto workers in the United States today are unionized – compared with nearly 60% in 1983.
Yet U.S. labor more broadly has found new momentum following a pandemic that laid bare stubborn economic inequities in the U.S.
Just this summer, the UAW won an organizing effort at Ultium Cells, a joint effort by GM and LG in Lordstown, Ohio. That plant reveals the stakes: When GM closed the factory for car assembly in 2019, the average pay was $32 an hour. Those assembling batteries on the line today start at barely half that rate, according to Professor Masters at Wayne State University.
Given the union’s history of fighting for a foothold in the South, its current demand regarding battery plants is “a reasonable one,” says American University economist Stephen Silvia, author of “The UAW’s Southern Gamble: Organizing Workers at Foreign-Owned Plants.”
Reverberations in politics
The UAW, for its part, has withheld its endorsement of President Joe Biden pending the outcome of the negotiations.
Last week, Republican presidential front-runner Donald Trump appealed directly to UAW workers in Michigan to oppose their own union’s support of electrification.
Former President Trump lost to Mr. Biden in auto-heavy Michigan in 2020, but he won the state narrowly in 2016.
“The only acceptable policy for UAW members should be the complete and total repeal of Biden’s catastrophic EV mandate,” Mr. Trump’s campaign wrote. “President Trump looks forward to doing exactly that on his first day back in the Oval Office.”
Analysts say an EV reversal is unlikely. Yet efforts to put the brakes on the EV transformation could resonate if many perceive a gap between government-guided policy and consumer preferences or worker needs.
“We saw how powerful of an idea it is: In 2016, Trump carried Michigan by 10,000 votes,” says Professor Shaiken. “It was his ability to get autoworkers to give him a chance that made him president. So [his message] could well resonate.”
Still, amid a rising focus worldwide on reducing emissions of heat-trapping gases in the atmosphere, for many, the question is less about whether the industry is transitioning than about what it will look like – for workers as well as for consumers.
“Right now, things are on a very fine line,” says Mr. Charette, the systems engineer. “We’re heading into a period where there are no experts. It’s seat of the pants.”
Editor’s note: Since its initial publication on Sept. 14, this story has been updated in two places that mentioned the possibility of a strike or work stoppage, to reflect that a strike has begun.
