The fight over electric vehicles is at the heart of the auto strike

A battle between Detroit carmakers and the United Auto Workers union escalated Friday with targeted strikes at three locations, unfolding amid a once-in-a-century technology upheaval that poses major risks to companies and the union.

The strike comes as traditional automakers are investing billions in developing electric vehicles, earning most of their revenue from gasoline-powered cars. Negotiations will determine the balance of power between labor and management, possibly for years to come. This makes the strike a struggle for the future of the industry.

The established carmakers – which own General Motors, Ford Motor and Stellandis, Chrysler, Jeep and Ram – are trying to protect their profits and their place in the market in the face of fierce competition from Tesla and foreign automakers. Some executives and analysts have characterized what’s happening in industry as the biggest technological change since Henry Ford’s moving assembly line began in the early 20th century.

Nearly 13,000 UAW workers walked off the job Friday at three plants in Ohio, Michigan and Missouri. Three separate talks between unions and companies failed to reach an agreement before Thursday’s deadline. Wages are one of the biggest sticking points: The union is demanding a 40 percent pay increase over four years, but the automakers have offered roughly half.

But talks are about more than salary. Workers are trying to protect jobs as production shifts from internal combustion engines to batteries. Electric cars can be built with less labor than gasoline vehicles because they have fewer components. A positive outcome for the UAW would give the union a strong calling card if it tries to organize workers at other non-union carmakers, such as Tesla and Hyundai, which plan to build electric vehicles at a massive new factory in Georgia, as some expect. .

“The transition to EVs is dominating every part of this debate,” said John Caesa, senior managing director at investment firm Guggenheim Partners, who previously led strategy at Ford Motor.

“It’s unspoken,” Mr. Kesesa added. “But in reality, it means that the union will have a major role in the new electricity sector.”

Under pressure from government officials and changing consumer demand, Ford, GM and Stellantis are investing billions to revamp their sprawling operations to develop electric vehicles that are critical to combating climate change. But while Tesla, which dominates electric car sales, is profitable and growing fast, they’re making little profit on those vehicles.

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Ford said in July that its electric vehicle business would lose $4.5 billion this year. If the union gets all the wages, pensions and other benefits, the total compensation of its workers would be more than twice that of Tesla’s employees, the company said.

The union demands will force Ford to abandon investments in electric vehicles, the company’s Chief Executive Jim Farley said in an interview Friday. “We really want to have a conversation about a sustainable future,” he said, “not one that forces us to choose between going out of business and rewarding our workers.”

For workers, the biggest concern is that electric vehicles have far fewer parts than gasoline models and could make many jobs obsolete. Plants that make mufflers, catalytic converters, fuel injectors and other components not needed for electric cars will have to be relocated or closed.

Many new battery and electric vehicle factories are springing up and may hire workers from shuttered plants. But automakers are building more aggressively in the South, where labor laws are tilted against union organizers, and in the Midwest, where the UAW is more influential. One of the union’s demands is that workers at the new factories be covered by the automakers’ national labor agreements – which the automakers said they could not meet because the plants are owned by conglomerates. The union wants to regain the right to strike to prevent plant closures.

“We’re at the dawn of another industrial revolution, and we’re going the same way we went in the last industrial revolution — lots of profit and misery for the few and no good jobs for the many,” said Madeline Janis. Executive director of Jobs to Move America, an advocacy group that works closely with the UAW and other unions.

“The UAW is really taking a stand for communities across the country to make sure this change benefits everyone,” Ms. Janis added.

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Automakers have enjoyed record profits over the past decade, but layoffs can’t afford to lose time in the race to compete with Tesla and foreign automakers.

All three companies are already struggling to keep their electric vehicle businesses afloat. A new GM battery factory in Ohio has been slow to produce batteries, delaying electric versions of the Chevrolet Silverado pickup and other vehicles. Ford had to halt production of its electric F-150 Lightning in February this year after a battery caught fire in a pickup parked near the factory for quality testing. Stellartis won’t start selling any fully electric vehicles in the U.S. until next year.

Those issues and Tesla’s growing sales could put the union in a strong position to extract a better deal.

On Thursday, GM offered a 20 percent wage increase over four years in a sign that automakers are willing to go even further than before. That’s half of what the union wants, but far more than workers have received in recent contracts. President Biden strongly supported the union in remarks at the White House on Friday. The administration is pouring billions into plans to promote electric vehicles and doesn’t want the strike to delay the centerpiece of its climate policy.

Despite the money automakers have made in recent years, their executives express deep concern about the growth of electric vehicles, which account for 7 percent of the U.S. new car market so far this year and are on track to surpass one million sales. This year. Managers are well aware that traditional firms have a poor record of maintaining dominance after a major change in technology. Witness the way Apple edged out Nokia and Motorola as cell phones became smartphones.

Auto company executives and most industry analysts have underestimated how quickly electric vehicles will catch on, and cannot confidently predict how sales, which have fluctuated recently, will grow in the future. “I don’t think anyone could have predicted exactly what the adoption would be,” said General Motors Chief Executive Mary T. Barra said in an interview with The New York Times last month.

Speaking to “CBS Mornings” on Friday, Ms. Barra said excessive wage increases would undermine GM’s ability to continue producing vehicles with internal combustion engines while developing electric vehicles. “This is a critical moment where investment is very important,” he said.

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Still, unions and their supporters are unlikely to show much sympathy for auto executives. Ms. Barra, Ford’s Mr. Farley and Stellandis Chief Executive Carlos Tavares have received tens of millions of dollars in compensation packages in recent years. Shareholders of companies are rewarded with dividends and share buybacks.

Unions are “not going to have patience for soap operas,” said Karl Brauer, executive analyst at online marketplace iSeeCars.com.

Adjusted for inflation, wages for auto workers in the U.S. have fallen 19 percent since 2008, according to the Economic Policy Institute, a left-leaning research group.

At the same time, union officials are aware of changes in the industry and have said they don’t want to cripple GM, Ford and Stellantis as the companies try to regain ground lost to Tesla. Factories. Detroit automakers face challenges like Rivian, an Illinois start-up that makes electric pickup trucks and sport utility vehicles, as well as foreign-owned rivals such as Mercedes-Benz and Toyota, whose U.S. factories are largely absent from the South. Unionized.

“That’s the biggest challenge here,” said Mr. Brewer added, “Trying to get a long-term deal in an industry that’s going to be very uncertain and unpredictable over the next five years.”

If traditional carmakers can’t compete with Tesla and other rivals, union supporters say it’s wrong to blame workers.

“If you look at how much it costs to build an EV, labor is a very small part of the equation. The batteries are the most,” Ms. Janice of Jobs told Move America. “This idea that the UAW is going to buy Ford, GM and Stellantis out of the market is not true.”

But other analysts said a longer strike could help Tesla and foreign automakers catch up to GM, Ford and Stellantis.

“If something happens that disrupts their business, will that help emerging electric vehicle manufacturers?” said Steve Patton, who works with car companies at consultancy EY. “Who benefits from a prolonged strike?”

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