AutoBeta(AutoBeta.net)09/13 Report--

This could be another "black swan" incident in the US auto industry.

It is reported that nearly 150000 members of the United Auto Workers (UAW) and the three major Detroit automakers, Ford, General Motors and Stellantis, still have "great differences" on the new labor contracts. If an agreement cannot be reached by the deadline, the union will consider going on strike at individual factories of the two companies.

According to the data, UAW is one of the largest workers' associations in the United States, with 146000 members in GM, Ford and Stellantis groups, accounting for about 56 percent of the total number of workers in the US automobile industry. It is understood that the contracts of UAW workers are re-signed with the three major vehicle factories in North America every four years, and the last labor negotiation was in September 2019, but the negotiators initially failed to reach an agreement. The UAW leader's 40-day general strike against GM brought GM a loss of more than $3.6 billion in profits.

In July this year, a new round of labor contract negotiations began, but the negotiations between UAW workers and the three major vehicle factories in North America are also not smooth. If the two sides fail to reach an agreement on the latest labor agreement, then UAW workers may trigger a new round of strike, which will also bring high losses to the whole car factory.

It is understood that Ford has made the latest offer in response to the United Auto Workers (UAW) wage increase request, and is the "most generous" pay increase plan in 80 years, including providing workers with a pay rise, abolishing graded wages, providing inflation protection, five weeks of paid leave, 17 days of paid leave, higher pensions, and continuing to invest in American factories. But there is no plan to make concessions on the requirement of working four days a week.

Jim Farley, CEO of Ford Motor, said that the team has begun active negotiations with the workers' union, and this time the benefits of workers have been significantly improved. It is optimistic that the two sides will hope to reach an agreement that they do not want a strike, but they are also ready to strike. At present, UAW has not reached any agreement with Stellantis, GM or Ford.

In the past two years, persistently high inflation in the United States has brought tremendous pressure on the working class. Data show that between September 2022 and August 2023, there were 70 strikes involving more than 100 people and lasting more than a week, an increase of 40 per cent over the previous year.

Earlier this year, Fane, chairman of UAW, presented a list of requests to each carmaker, including salary increases of more than 40 per cent and defined benefit pensions. If American automakers agree to all the demands of UAW, it will increase by $45 billion to $80 billion a year, so in the four-year agreement, American automakers reject most of the requirements, but if they refuse all of them, it will also trigger a new round of strikes and face huge losses. However, the strike does not mean the purpose of the new labor agreement negotiations, the action is only to force Detroit automakers to compromise on wages, if it seems that Ford, GM and Stellantis will have to pay more anyway, it is just a matter of more or less.

In addition to causing huge economic losses, the workers' strike will also cause a big blow to the automobile development in the United States, and even affect the global automobile industry. Ford, General Motors and Stellantis Group are American auto companies in Detroit, which have a high market position in the global automobile market. if the vehicle factory goes on strike and shuts down production for a long time, the relevant parts companies will also face the risk of no demand and associated shutdown.

The president of UAW said that the UAW would negotiate with the company around the clock until an agreement was reached, but there was a limit. Ford CEO Jim Farley said there was a plan for the highest pay rise in 80 years, but there was a bottom line for sustainability not to succumb to all UAW's demands.

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