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Why 13,000 auto workers in the US have gone on strike

Around 13,000 auto workers went on strike on Friday (September 15) following the breakdown of negotiations over better pay raises and benefits between the United Auto Workers (UAW) union and the three large US automakers — General Motors, Ford Motor and Stellantis, the parent of Chrysler, Jeep and Ram.

The strike isn’t a full-scale walkout as only a small percentage of the union’s roughly 150,000 members walked off the job at a GM assembly plant in Wentzville, Missouri; a Ford factory in Wayne, Michigan, near Detroit; and a Stellantis Jeep plant in Toledo, Ohio. However, if the union and automakers don’t reach a deal soon, it may expand.

What is the union demanding?

The union is seeking a 40% wage increase over four years — a top-scale assembly plant worker gets about $32 an hour right now, according to a report by the Associated Press. The amount is meant to compensate for the low hikes given to the auto workers in recent years and the compromises the union made by letting go of certain benefits after the 2008 financial crisis.

For instance, “For years, the union gave up general pay raises and lost cost-of-living wage increases to help the companies control costs,” the AP reported. Moreover, UAW workers hired after 2007 don’t get defined-benefit pensions.

The union is now seeking the reinstatement of cost-of-living adjustments and pensions for all workers. It has also demanded shorter work hours, as well as an end to varying tiers of wages for factory jobs — although top-tier workers get $32 per hour, new hires get up to only $17 an hour.

The union leaders have noted that their demands are “audacious” but they claim the companies can easily afford to raise workers’ pay significantly. The ‘Big Three’, as GM, Ford, and Stellantis are known as, have recorded massive profits in the past 10 years. In the first half of 2023, Stellantis, Ford and GM reported profits of $11.6 billion, $3.7 billion and $5 billion, respectively, The New York Times said.

What have the companies offered?

As of September 14, GM is offering a 20% wage increase over four years. Ford has offered the same amount. The last known offer from Stellantis was 17.5%, but the company has since made another, the AP said.

The union has dismissed the proposals, saying they are inadequate. The automakers, on the other hand, have called the demands too expensive.

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“They (the three companies) say they will spend vast amounts of capital in the coming years to continue to build combustion-engine vehicles while at the same time designing electric vehicles and building battery and assembly plants for the future, and can’t afford to be saddled with significantly higher labour costs,” the news outlet further added.

What happens next?

Talks are scheduled to take place between the companies and the UAW on Saturday (September 16). Speaking to the media, UAW President Shawn Fain said, “We’re not going to wreck the economy. The truth is we are going to wreck the billionaire economy”.

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But he has also warned that if the automakers continue to negotiate in “bad faith or continue to stall or continue to give us insulting offers”, then the strike will expand.

How does the strike affect consumers?

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If the strike continues for three weeks or more, the prices of cars may rise. At the end of August, the three automakers collectively had enough vehicles to last for 70 days, according to the AP report.

Once the companies start to run short of cars, consumers could go to nonunion automakers, who would be able to charge them more.

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The strike has come at a time when car prices have already been increasing in the US, and the average interest rates on auto loans have been rising — making it harder for consumers to afford cars, The NYT said.

(With inputs from AP and the NYT)

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