U-M experts offer insights on state of UAW-Detroit Three negotiations as deadline looms
University of Michigan experts from all of its campuses are available to discuss where things stand and might be heading in the contract talks between the United Auto Workers and General Motors Co., Ford Motor Co. and Stellantis NV. Thursday, Sept. 14, is the deadline for deals between the automakers and the union’s roughly 150,000 workers.
Gabriel Ehrlich leads U-M’s economic forecasting team, known as the Research Seminar in Quantitative Economics.
“We expect the economic spillovers from a strike by the UAW against one or more of the Detroit Three automakers to start out modestly but grow over time if the strike drags on,” he said. “Our assessment is that a strike along the lines of what we saw in 2019, against a single automaker and lasting around six weeks, would not fundamentally alter the trajectory of Michigan’s economy, although it would certainly be disruptive in the short run. We do worry that a longer, more acrimonious strike, or one targeting all three Detroit automakers, would have a longer-lasting effect on Michigan and many of its local communities.”
Erik Gordon is a clinical assistant professor at U-M’s Ross School of Business. His areas of interest include entrepreneurship and technology commercialization, mergers and acquisitions, corporate governance and activism, financial services, and transportation.
“The UAW lowered its wage hike demand to the mid-30% range. That leaves plenty of room to continue negotiating, but wages won’t be the toughest item to resolve,” he said. “The demands for defined benefit plans, COLAs, an end to worker wage tiers, unionizing battery plants that are owned by joint ventures between the car companies and their battery partners, and the right to strike if a car maker closes a plant are tougher issues to resolve than the wage rate.
“The suspense is over whether the UAW will take its traditional path of striking at one company in the hope of negotiating a contract that will be the pattern for all three companies or will strike all three at once. UAW President Shawn Fain has threatened to strike at all three, but the union’s fund to pay striking workers will be depleted three times as quickly if he takes that path.”
Michelle Fecteau is director of the Center for Labor and Community Studies at UM-Dearborn.
“At this time, few doubt that UAW will strike given the distance between the union’s and management’s positions. Exactly who strikes depends on the management’s counteroffers and the UAW’s strategic decisions to make the biggest impact while preserving their strike fund,” she said. “UAW workers have seen Detroit Three upper management, like many other corporate leaders, do extraordinarily well financially for years and many understandably feel now is the time for them to get their fair share, especially lower paid, lower tier workers. This timing makes sense given the low unemployment numbers and the high favorability of unions right now.”
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Chris Douglas is an economics professor at UM-Flint.
“I still do not expect there to be a strike, but I could be wrong. A strike is in neither side’s best interest,” he said. “A strike would decimate the UAW’s billion-dollar strike fund and cost GM billions in lost revenue. The 2019 strike is estimated to have cost the company upwards of $4 billion.
“The cost now could be higher given that auto inventories have not recovered from the pandemic, so dealerships would quickly run out of autos to sell. Each side at this point should have an idea of what the other side would accept, so I continue to expect that a deal will be reached before the 11:59 p.m. Thursday deadline. Stellanis has reported that they have made progress with talks, which is consistent with my belief there will not be a strike.”
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