Talks between unionized workers and the Big Three auto makers are progressing slowly ahead of the current four-year contract’s Sept. 14 expiration, in contrast with recent labor successes.
United Parcel Service Inc.
UPS,
employees on Tuesday approved a new five-year contract, about a month after reaching a tentative deal that averted a strike that would involve about 340,000 UPS workers. Earlier this week, American Airlines Group Inc.
AAL,
pilots did the same.
Thousands of auto workers are casting their votes this week on whether to authorize a strike at the Big Three — Ford Motor Co.
F,
General Motors Co.
GM,
and Stellantis NV
STLA,
Worries around contract negotiations have dragged on the stocks of all three auto makers in recent weeks.
The talks have been tense, and started off with UAW President Shawn Fain breaking the tradition of shaking hands with auto companies’ executives at the start of contract talks in mid-July and instead the union instituted the “members handshake.” Fain, widely described as a firebrand, also famously chucked in the trash a Stellantis offer.
Analysts at Evercore ISI put the odds of a strike at the Big Three as greater than 50%, and said that the next three weeks will be “crunch time” for the UAW and the companies to begin to frame an agreement to avoid a prolonged strike.
Auto workers represented by United Auto Workers “have significant bargaining power,” but they are also facing “economic realities” that UPS’s teamsters and pilots at American and other U.S. airlines do not, said Harry Katz, a professor of collective bargaining in Cornell University.
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Ford, GM and Stellantis are making solid profits and “have a lot to lose if their plants get shut down,” Cornell’s Katz said. Auto workers are not easily replaceable, and if the UAW calls for a strike, workers are unlikely to cross the picket line, he said.
At the same time, around half of the vehicles on U.S. roads today are not built by unionized U.S. workers, either as imports or made in the U.S. in plants that are not unionized, Katz said. The percentage of unionized workers at independent auto-parts makers has dwindled in recent years to an estimated 5% of that workforce, he said.
Tesla Inc.
TSLA,
has for years fended off efforts to unionize its plants, and earlier this year the National Labor Relations Board ordered the electric-vehicle maker to reinstate an employee fired in connection with labor organizing and said Chief Executive Elon Musk must remove a three-year-old tweet urging against unionizing.
The growing popularity of EVs is among the issues that the UAW leadership has to confront, Katz said. Battery-making factories usually are not unionized, and there’s less labor involved in shifting production to EVs, Katz said.
UAW labor negotiations have been “the dominant discussion topic” among investors after the companies posted their second-quarter results, Dan Levy at UBS said in a note.
That “has broadly pressured auto stocks; all else is deemed to be secondary in importance,” and that overhang over the stocks is likely to persist “so long as rhetoric is further intensifying,” Levy said.
The UAW has said that “record profits mean record contract” and workers’ demands include a 46% wage increase spread out as a 20% increase upon ratification and four additional increases, the elimination of wage tiers, and a 32-hour work week.
Shares of Ford and GM have lost 13% and 21% so far in the quarter, compared with a retreat of around 0.5% for the S&P 500 index
SPX.
Stellantis shares, which also trade in European stock exchanges, are up 4% in the period.
This story originally appeared on Marketwatch
