Labor pains: General Motors and Ford fall after the UAW pushes back against offers

Mario Tama/Getty Images News

The United Auto Workers said an offer by General Motors Company (NYSE:GM) fell far short of its demands as the labor negotiations heated up on Thursday. United Auto Workers Union President Shawn Fain called the offer “insulting" and did not back off of threatening to have the union strike against one or more automakers after the current contract expires on September 14.

Earlier in the day, General Motors (GM) said in a letter to workers that it's offering a 10% wage increase during a new four-year contract, plus two more 3% one-time payments. The Detroit automaker is also offering a $6,000 inflation payment, $5,000 more in lump sums to protect against inflation during the contract, and a $5,000 contract ratification bonus. GM said the pay raises would be the biggest since 1999. The wage offer is slightly better than one from Ford (NYSE:F) that was rejected by the union last week, but relied on lump-sum payments, instead of the annual pay raises the UAW wants.

The major UAW demands are for 46% across-the-board pay raises over four years, a 32-hour week with 40 hours of pay, and pension benefits for new hires. The UAW is expected to make another offer in response to Ford's (F) proposal. Meanwhile, Stellantis (NYSE:STLA) promised it would have a counterproposal by the end of the week.

General Motors (GM) fell 1.4% on Thursday afternoon, while Ford (F) was down 1.1%. Stellantis (STLA) dipped 0.2%.

More on the Detroit automakers

• Ford: 3 Headwinds Keep Me From Buying
• Stellantis: Winning While Mr. Market Isn't Looking
• Ford: No Reason To Buy Right Now
• General Motors: Good Financial Results Do Not Offset The Ongoing Risks
• Detroit automakers ratchet up talks with the UAW as strike deadline approaches

Comments

[Johnnyko]

So, lots of comments about moving production to Mexico, but the other option has been in place for years. Anyone driving a Buick Encore, Envision, or the new Envista (not to
mention the recent Regals, I have one) have a non-UAW built vehicle. Encores/Envista’s made in Sourh Korea, Envisions made in China.

OK, maybe the power trains are made in some US-UAW plant, but let’s see how many union leaders are driving non-UAW made…

[C13678]

@Johnnyko F makes the Maverick and Bronco Sport in Mexico. The new F Ranger is being produced in Thailand and, I believe, Argentina and South Africa. Not sure if those Ranger plants are in a position to ship product to the US. Hopefully, if the strike lingers, they can move a few trucks to the mainland for sale.

[VictorN]

Detroit auto makers would rather pay small raise plus one time amount of bonus $, rather than locking in higher raise and return of defined benefit pension.

[congressional trade researcher]

I won’t be surprised if Biden allows China to sell cars in the US at a third the price.

[Stewart Foreman]

@congressional trade researcher

I would.

[Batman163]

The few white guys - auto blue collar workers that I have had the privilege to know are under educated republican voters. Those that recently retired are still ill informed.

I know that they voted against their interests and have no shame, because they are dull of mind. The GOP hates unions and would love to see workers rights taken away.

But let's face reality. Robotics and manufacturing efficiencies that reduce the number of car parts needed will eventually drive the need for low educated labor lower and lower.

The UAW has withheld its 'support' for the democrat Joe Biden, but really where else are they going to throw their support? The GOP? LOL?

This generation of auto factory workers will be one of the last. Just like coal miners, their jobs are being replaced with machines and software.

Even auto salesmen are a relic of the past.

[Stewart Foreman]

@Batman163

There are third parties. Granted, I haven't checked in to see where 3rd parties stand with their platforms. But I would argue either Green Party or Libertarian has offered a better platforms for working low to middle class people (like unionized autoworkers) in recent years.

Certainly the UAW could have, and should have, endorsed Ralph Nader in 00', 04', and 08'.

[Mountainbarony]

Lots of posts about the Unions being the main problem, when actually it's young labor that is the issue. Even here in rural NC I'm paying $ 25-40/ hr. for
weed eating & landscape work...if you can get them..and it's largely Latino workers, with few young white bucks willing to put their phones down long enough to do the work.
How may here would take a job at GM, etc.....assuming you needed/wanted ?

[Batman163]

@Mountainbarony I doubt that ethnic labor that hardly speak english are a fair comparison.

[Mountainbarony]

@Batman163 wage-wise......they are.
That's part of the problem.
How much will you charge me to cut brush on a hillside ?...as much as an assembly line worker ? Regardless of your native language ......

[MAYHAWK]

The union demands are absolutely ridiculous.

[bturley]

The timing of the Union demands is ridicules! Car builders have their hands full just dealing with the electric revolution! Big mistake, big mistake!!

[Jeronimo Tucson]

Doesn’t look good for the UAW and Big Auto. Times have changed.
I’m not paying for their increase. I’m already paying for the Inflation Reduction Act.

[Institutional Working No More]

As EV Mustangs sit unsold on dealer lots….oh, and when the power blackouts come don’t try to charge your car….even during power conservation warnings charging an EV is anti-virtue signaling…..be a good boy and ride your bike…lol

[nhsully88]

Union demands have priced new automobiles out of reach for many. And they are demanding so much more. Let them strike, I do not plan to buy a GM product due to cost and quality issues.

[jpsnakes]

In the current state of affairs, employees have the upper hand with regards to wages. Until companies draw the line and put the in the unemployment line, this will not change. The alternative is wages will increase and cost will be passed on to the customer, inflation will continue to grow to match the wage levels.

[jo blo5664]

@jpsnakes "...passed on to the customer..." who is increasingly being priced out of the new vehicle market. Not a good business model basing ones' sales on $80K+ pickup trucks.

[Plutonius X]

The union demands are clo wn world.

Insanity.

[Downtown10]

I certainly don’t mind anyone having serious job skills (intellectual or physical) getting a fair wage. Your electrician gets a nice wage because he has years of experience and knowledge that you and I likely don’t, so it’s deserved. But it bugs me when workers like McD employees want a family supporting wage for a job that anyone can be taught in a day or two. These are minimum wage jobs that 14 year olds used to do just fine.

I saw today on CNBC that the big 3 already pay $60+/hr (probably includes benefits) vs. $50+ for foreign automakers and $40+ for Tesla.

My question is: In todays auto plants just how skilled does an average worker need to be? In videos, the assembly line seems to require only the most basic modular assembly skills, especially with most components made by third parties and shipped to the auto plants. This would seem to be a job that most anyone can do, with no education and minimal training. Is that accurate? Is their salary set by supply and demand given their job skills, or have they just lucked into a situation where the union has gotten them salaries well beyond what their talents and value to the company would dictate? Are their job skills more like your electrician or the cashier at the drive-through?

[BDCMart]

@Downtown10 Nice post. These are semi skilled workers getting far more than their market rate. The auto makers would like to dump the unions but the government won’t let them.

[Johnnyko]

@Downtown10 agreed. At what point will all US- based “Big 3” plants end up in non-UAW Mexico, or they all go bankrupt paying $20-25/hour more than others mentioned?

[jo blo5664]

@Downtown10 If the Big 3 were producing vehicles that weren't of such questionable build quality...but they're not.

[ihookem]

Has anyone else noticed that companies that hire unions have stock prices that just don't do very well? I got rid of Kimberly Clark a few months ago too, and with I would have sold GM at the same time .Would have gotten 40 buclks a share and good ridance. I wont buy any company that hires union employees. Also, 6 1/2 hrs. ago I bought at 34. I am up 3% with divies. How bout we at least get some divies back???

[jon coyne]

Tesla has them by the balls rn

[StevenZimmerman.Realtor]

46% raises over four years, a 32-hour work for 40 hours of pay ... Bidenomics !

[Udith Fonseka]

why are not all auto plants already in Right to work States?

--

[C13678]

@Udith Fonseka Correct me if I am wrong but many of the non union plants are in right to work states - Kentucky, Alabama, Georgia etc. probably a few more that I am not aware of. Ask Toyota, Honda, Kia, VW etc. how they are doing with the hourly wage and benefit issue ?

[Deebeeng]

Fire them all. Start over with no union. Let the free market dictate it

[Udith Fonseka]

Wage per hour worked--they want the best part of Double?

Move your entire operations to areas to States outside the Union's control.
(check with Canada's bargaining units first just in case they are still sane)

It will be cheaper in the long run.

[Amenecker]

Let them strike, let them strike!! Their demands are inane…looks like more production going to Mexico regardless of outcome….don’t have to speak English to tighten a bolt…