2023 UAW Contract Negotiations with Ford, GM, and Stellantis
The U.S. automotive industry is a large and critical part of the U.S. economy, and nowhere is that more apparent than in the Federal Reserve’s Seventh District, home of the Federal Reserve Bank of Chicago.1 About 60% of the UAW members impacted by this year’s high-profile UAW labor negotiations with Ford, General Motors (GM), and Stellantis work in the Chicago Fed’s District.2 These three companies produce just over half of all their U.S. vehicle output, 40% of all U.S. engine plant output, and 75% of all U.S. transmission plant output in Illinois, Indiana, and Michigan—three of the five states in the Seventh District.3 Due to the substantial role of the unionized auto sector in the District economy, the Chicago Fed is closely monitoring the developments in automotive labor negotiations, and I provide background on the history and process of UAW talks with these three companies in a series of three blog posts.
This article is one in a series discussing UAW auto contract negotiations. Read the companion pieces here:
In this post, I cover the backdrop and environment for talks and what issues can and cannot be discussed in bargaining. The second post in this series will provide a summary of recent contract outcomes. And the third post will cover how contract talks typically work.
Every four years, the UAW and Ford, General Motors, and Stellantis sit down to hammer out a new labor agreement to cover the wages, benefits, and terms of employment for more than 150,000 workers throughout the United States.4 One might think of these UAW contracts as a set of three large purchase orders to secure the labor needed to assemble future vehicles, parts, and components—contracts that are collectively worth roughly $70–$80 billion over the course of the next four years.5
Backdrop and environment
While many elements of this year’s labor negotiations are similar to past years, some aspects are decidedly different. The 2023 negotiations must be considered against the backdrop of:
- The 40-day UAW strike at GM in 2019,
- A federal investigation into union and management corruption that put a federal monitor in place to oversee the UAW’s operations and put all joint labor management programs and funds in a Taft-Hartley trust to protect against future corruption,6
- Installation of new UAW leadership chosen in a historic one-member, one-vote election,
- Supply chain and other pandemic-era disruptions that have limited production,
- A tight labor market marked by record low rates of unemployment,
- Over a decade of strong automaker profits (even considering lower production volumes in the past three years), and
- A rapid run-up in inflation that has eroded purchasing power and led to declines in real wages for many workers during parts of the period after the pandemic recession.
The overall environment for this year’s talks is different, as well.
Electric vehicle shift: Most notably, automakers are amid a monumental shift to producing electric vehicles (EVs). EVs do not have engines, transmissions, exhaust systems, or many of the other parts and components UAW members currently produce. The new parts in EVs—batteries, motors, e-axles, and power electronics—are often made by workers who earn lower wages and work in plants that are not unionized. The EV transition has the UAW and its members concerned about their future wages and job security.7 Ford, GM, and Stellantis are investing billions of dollars in the EV transition—including joint venture companies to produce batteries—and will need to manage pressures on their profitability as they make fewer high-margin internal combustion engine vehicles and have not yet reached profitable scale on their EV models.
Change in strategy and tone: The new UAW leaders have declared a sharp break from past union leadership’s strategies and seek to distance themselves from previous leadership who were charged and convicted in federal financial crimes. UAW President Shawn Fain ran on a platform of “No Corruption. No Concessions. No Tiers” that resonated with the membership who elected him. In office, Fain has taken a much more adversarial tone in his public comments than recent UAW presidents. Fain and other UAW leaders have issued strong warnings that their members are willing and prepared to strike to win their contract demands this year.8
Pro-union sentiment, recent labor actions, and union wins: Public opinion in favor of labor unions has been rising since the Great Recession and reached a 71% approval rate in 2022—a level not seen since the mid-1960s.9 U.S. President Joe Biden has expressly stated his support for unionized workers, frequently declares himself “a union guy,”10 and has a policy agenda that aims to increase U.S. manufacturing investments and labor rights. Sectors of the economy that were hardest hit by the pandemic—most notably food service, travel, package delivery, and logistics—are seeing a rise in union organizing, labor actions, and contract wins. Labor disputes have increased in the wake of the Covid-19 pandemic, according to the U.S. Department of Labor.11 After a five-week strike and two failed ratification votes, UAW workers at John Deere won significant contract gains in their 2021 contract, including reinstating the cost-of-living adjustment (COLA) that had been eliminated in 2015, as well as wage, benefit, and pension gains.12
Federal policies supportive of manufacturing investment: A trio of laws were recently enacted to promote investments in U.S. manufacturing, electrical grid, charging, and EV adoption. The Inflation Reduction Act includes manufacturer and consumer incentives for electric vehicles, the Infrastructure Investment and Jobs Act contains funding for a national network of high-speed EV chargers, and the Chips and Science Act incentivizes domestic investment in semiconductors that will be needed to make vehicles in the future—whether powered by electric batteries and motors or conventional internal combustion engines.
UAW and Unifor negotiating simultaneously: Unifor—the union that represents Ford, GM, and Stellantis workers in Canada—negotiated a three-year contract in 2020, which puts them at the bargaining table at the same time as the UAW for the first time since the 2009 auto-rescue contract addendums. The two unions have similar bargaining goals. However, since both unions need future investments in their plants, they may also find themselves competing to win the commitments they are seeking.
(Almost) Everyone at the table is new: While all the individuals leading 2023 UAW talks for the union and the company have expertise in negotiations, only four of the ten top bargainers have directly led national bargaining in their current roles: Ford Chairman Bill Ford, GM CEO Mary Barra, Stellantis COO Mark Stewart, and UAW-Ford Vice President Chuck Browning.
U.S. labor law determines what can and cannot be on the table
When a union and company negotiate a new contract, there are a set of topics that U.S. labor law categorizes as mandatory—the two sides must negotiate a satisfactory outcome for both sides in each of these areas:
- Wages and compensation: base wages, shift premiums, overtime, piece rates, bonuses (including profit or gain sharing programs), lump sums, incentives, holiday pay, paid time off, vacations, insurance, severance pay, pensions, and other items counted as compensation, such as supplemental unemployment insurance programs.
- Schedules: daily schedules, working hours, breaks, holidays, and vacation scheduling.
- Work rules: a broad category of rules including those that govern health and safety, employee discipline, monitoring, including drug or alcohol testing, smoking policies, and “any policy that may have compensation, discipline, or job security implications.”
- Work assignments and job protections: job assignments, layoffs, transfers, and recall rights.
- Grievance and arbitration: a procedure to resolve labor-management disputes.
There are other topics that U.S. labor law permits to be subjects of bargaining. These include topics that may be discussed and agreed upon but either side can refuse to make them part of their agreement. These topics include provisions about how a workplace might become unionized for workers not already in the bargaining unit or at other sites in a national agreement, expanding the bargaining unit, how contracts are to be ratified, training funds, political action funds, interest arbitration, how prospective employees apply for jobs, benefits for workers who have already retired, and use of a union label on the product or service produced.
Finally, there are topics that are not legal to discuss in bargaining. These generally concern management’s right to run the business, to choose suppliers and contractors, to hire and fire workers, language that would discriminate against protected classes of people, or closed-shop provisions.
In the case of the UAW negotiations with Ford, GM, and Stellantis, there are several sets of negotiations going on simultaneously. First, there are the national bargaining tables at each company—where issues that are common to all workers within a company are discussed and agreed upon. Generally, these include a common wage scale at each automaker (usually very similar if not the same at all three), benefits, seniority and transfer rights, and investment and job security provisions. Then there are the local negotiations. These take place at each plant or worksite and concern the issues specific to each site. They may include topics such as work assignments within a plant, flexibility within and across job classifications, and plant amenities, such as break rooms, parking, and food services. In the United States, the national agreement and local agreements do not have to be resolved simultaneously. This differs from the situation for Unifor in Canada, where labor and management must reach an agreement on local and national contracts at the same time.
In my next post, I will provide a summary of recent auto contract negotiations.
Notes
1 The Seventh District is made up of Iowa and most of Illinois, Indiana, Michigan, and Wisconsin.
2 Federal Reserve Bank of Chicago staff estimate based on automaker employment data. Stellantis is the current name (since 2021) of the automaker that was known as Chrysler (pre-1998), Chrysler LLC (2007–09), Chrysler Group LLC (2009–14), DaimlerChrysler (1998–2007), and Fiat Chrysler Automobiles (FCA) (2014–21).
3 Wards Informa and S&P.
4 Since 2003, these contracts have renewed on a four-year cycle. Prior to 2003, contracts generally lasted for three-year terms.
5 Federal Reserve Bank of Chicago staff estimate.
6 In the 2019 UAW contracts with the three automakers, the funds and assets of the joint programs were placed into trusts created under the Taft-Hartley Act of 1947 to allow for greater transparency and stricter financial reporting and oversight. These funds are used for labor-management activities, joint training programs, safety, and diversity and inclusion initiatives, as well as employee assistance and tuition reimbursement programs. More information available online.
7 More information available online here and here.
