General Motors (GM) and the United Auto Workers (UAW) have reached a tentative agreement, marking the end of an unprecedented six-week campaign of coordinated strikes. The strikes have successfully secured record pay increases for workers at the Detroit Three automakers, heralding a historic win for the labor movement.
This accord follows similar agreements reached in recent days between the UAW and Ford Motor and Chrysler-owner Stellantis. These negotiations represent a significant victory for auto workers who have experienced years of stagnant wages and painful concessions following the 2008 financial crisis.
The UAW’s President, Shawn Fain, expressed the union’s confidence that the strike effectively secured maximum concessions from General Motors. In a video address, Fain said, “We wholeheartedly believe our strike squeezed every last dime out of General Motors. They underestimated us. They underestimated you.”
The UAW officially suspended its strike against the Detroit Three. UAW local leaders will convene in Detroit to consider the deal with GM before presenting the terms to all union workers for ratification.
These new contracts will significantly raise costs for the automakers. Both the companies and some analysts have expressed concerns that these deals will make it harder for the Detroit Three to compete with electric-vehicle leader Tesla and nonunion foreign brands like Toyota.
GM has agreed to a package of wage increases similar to those agreed upon with the other two automakers. Pay for veteran workers is set to rise by 33%, and GM will provide $2,500 in five payments to retirees through 2028. Pension benefits were a notable point of contention in the negotiations between the UAW and GM, as GM has a larger number of retirees than Ford or Stellantis.
The UAW’s strategic move to strike GM’s engine factory in Spring Hill, Tennessee, on Saturday was hailed as the “knockout blow” that pushed GM to reach the agreement.
The contract represents a reversal of years of efforts by GM to create lower-paid groups of UAW workers in units such as component plants, parts warehouses, and electric vehicle battery operations. Instead, the agreement ensures that workers at GM’s battery joint-venture with South Korea’s LG Energy will be under the national agreement. Workers at GM’s component operations are set to receive pay increases of up to 89%.
The contract also places restrictions on the use of lower-paid temporary workers, aiming to eliminate the existence of a permanent underclass of temporary workers at GM.
In addition, the UAW has gained greater influence over the investment decisions of the companies. The union secured the right to strike over potential plant closures. While all three companies have stated that they do not plan to close existing factories as they shift to electric vehicles (EVs), the new contract could obligate them to keep unprofitable plants open during periods of economic downturn or slow sales for new models.
The series of walkouts, which began on September 15, drew the participation of nearly 50,000 workers, representing approximately one-third of the UAW’s members at the Detroit automakers. This strategy of escalating strikes resulted in billions of dollars in losses for the Detroit Three and their suppliers.
The UAW’s leaders have framed the contract fight as part of a broader movement aimed at reversing decades of economic setbacks for working-class Americans. Analysts like Patrick Anderson of the Anderson Economic Group agree that this outcome extends beyond the auto industry, signaling to the entire nation that unionized workers can demand and achieve substantial wage increases.
However, the new contract will substantially increase labor costs for GM, amounting to $7 billion over 4.5 years. In turn, these costs may be passed on to consumers, making it challenging for automakers to absorb the full extent of the expenses. They will need to seek efficiencies or adjust production of more expensive vehicles to accommodate higher labor costs.
U.S. President Joe Biden and politicians from both parties have expressed support for the UAW as the union’s fight gained popularity with voters. This support is crucial for Michigan, a key swing state in the 2024 presidential election. In Michigan, the UAW’s endorsement is conditional upon support for the union’s cause, although the formal endorsement for Biden’s re-election has not been granted.
This agreement is a historic win for the UAW and its members, underscoring the power of unions and collective bargaining in securing better wages and working conditions while contributing to the success of iconic American companies. President Biden has emphasized that it is a testament to the strength of the labor movement, demonstrating its capacity to promote the well-being of American workers and revitalize the middle class.
The UAW’s dedication to labor organizing at various automakers remains steadfast, and the negotiations anticipated in 2028 with the “Big Five or Big Six” will likely sustain this positive momentum. According to UAW President Shawn Fain, “Our actions have demonstrated to the companies, the American public, and the global community that the working class is far from finished in their struggle. In reality, we are only at the beginning.” This noteworthy progress underscores the enduring influence of labor unions and their role in shaping the economic environment for American workers.
