Now that the UAW-Detroit 3 automakers' labor strike is essentially settled, to echo Fareed Zakaria, “here's my take.” UAW president Shawn Fain is clearly taking a victory lap. This week, he appeared on Brian Sullivan's CNBC Last Call program, reiterating many of the same messages heard during the highly publicized negotiations with Detroit automakers. Fain even introduced a new slogan that signals the union's intentions for the future - “the UAW bump.”
Fain highlighted that Toyota recently announced a 9% pay increase for its factory workers starting in 2024. According to Fain, Toyota will also reduce the time for new workers to reach the full pay scale from 8 years to 4 years. This exemplifies Fain's “UAW bump,” which already is having a positive impact on labor at non-unionized auto factories in the U.S. When pressed by Sullivan about attempts to unionize automakers like Toyota and Tesla, Fain left the impression that those efforts would indeed be forthcoming.
Labor in the U.S. is experiencing a successful moment. Art Wheaton, the director of labor studies at Cornell, recently stated, “It's been a good year for unions.“ As reported by CNN, some union gains have been achieved without resorting to a labor walk-out. The Teamsters used the threat of a strike to secure improved wages for its members at UPS. Similarly, the International Longshore and Warehouse Union negotiated a 32% pay increase over the six-year life of its new contract without a strike.
Had anyone asked a Detroit 3 automotive CEO at the beginning of their negotiations with the UAW if they would agree to the final terms of the UAW deal, all of them would have said no. Detroit automakers underestimated the team on the other side of the table. They did not anticipate the UAW’s strategy, tactics, and execution. In fact, the old playbook of automotive negotiations was discarded and replaced by a different, very public bargaining approach by the UAW, which seemed to catch Detroit automakers by surprise.
With a deal now in place, I believe the UAW might become Detroit’s best labor cost friend, however. Any labor cost disadvantages faced by Detroit automakers today could be minimized if the UAW succeeds in organizing non-unionized auto factories, including Tesla factories. For years, the UAW has failed to organize other automakers. However, this “labor moment” might present the best opportunity in decades for the UAW to reverse its losing record in organizing. If that happens, it will be a win not just for the UAW, but also for Detroit automakers.
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