Saturday, December 2, 2023

Opinion | Settle the auto strike before it crashes the EV revolution

Opinion | Settle the auto strike before it crashes the EV revolution

Already almost a week old, the United Auto Workers’ strike against the three big Detroit-based carmakers could soon escalate. That is in large part because the stakes in this labor-management conflict are higher than usual, for the workers, the companies and, indeed, the country. The outcome could help determine how and whether major U.S. automakers prosper in the coming transition to electric vehicles.

The UAW so far has selectively targeted just one assembly plant each at Ford, General Motors and Stellantis, with 12,700, out of a total 150,000 union members, walking out. UAW President Shawn Fain, however, has blasted the companies for what he says is intransigence and warned of wider stoppages Friday unless there is “serious progress” in the talks. What really needs to happen is for both sides to get serious about settling this strike. An extended labor conflict is in no one’s best interest: not the American consumer, who already finds it difficult to get an affordable new vehicle; not the U.S. economy, which can ill afford disruptions as the Federal Reserve tries to bring inflation down without triggering a recession; not the companies; and, last but not least, not autoworkers themselves.

The entire U.S. automotive industry — the Big Three as well as Japanese, German and Korean companies with nonunion workforces here — faces an expensive, complex shift to electric vehicles. The Biden administration is subsidizing it through the Inflation Reduction Act and mandating it via a proposed emissions standard that could require two-thirds of all new cars sold to be electric by 2032. The UAW strike is in part a consequence of this transition and, unless resolved intelligently, could hamper it.

The union has been lukewarm about moving from internal combustion engines to batteries. Its attitude is based on rational self-interest. Batteries take fewer workers to build than engines and transmissions; industry analysts project that the EV transition could shave 30 percent off the auto sector’s labor force. Electric vehicles and battery plants have so far been the forte of difficult-to-organize nonunion companies such as Tesla, or joint ventures between U.S. automakers and international firms.

Among more conventional trade-union demands related to wages and benefits, the UAW is seeking a “just transition” to EVs, which could include a right to strike over plant closings — bound to occur as production shifts to EVs — and compensation when closings cannot be avoided. Mr. Fain has also talked about extending the union contract to battery plants operated by the Big Three’s joint ventures.

The union’s economic demands are understandable, especially given the impact of recent inflation and longer-term stagnation in the auto sector’s wages. The UAW has a strong case for a significant wage increase — maybe not 36 percent over four years, as it’s demanding, but probably more than the 20 percent or so the companies propose. The two-tier wage structure, under which new employees get significant less than veterans, could also be modified, perhaps by shortening the time between when a worker is hired and when he or she qualifies for the higher tier. The companies are highly profitable, as the UAW slogan — “Record profits, record contracts” — implies.

Yet it’s simplistic to suggest the companies are so flush that they can assume much higher permanent labor costs, in the form of defined-benefit pensions or the union’s proposal that workers made jobless by plant closings should get paid for community service work. High costs for such items were part of the reason General Motors and Chrysler (Stellantis’s corporate ancestor) went bankrupt and took a federal bailout during the Great Recession; they could damage the companies’ competitiveness today.

Yes, some companies might have shown political cluelessness by awarding their executives huge pay packages (albeit lower for the Ford and GM CEOs last year than in 2021). However, their argument that retained earnings are needed for investment in new EV production reflects reality, not corporate greed. Tesla’s hourly labor costs are about $45; for nonunion plants in the South, it’s $55 or so. The Big Three, which spend about $65 an hour on labor, are already struggling to compete. And that’s before taking account of booming auto industries in Mexico and China. Surely the UAW understands it would be folly to make it harder for unionized companies to keep up.

Mr. Fain’s militant new posture has shaken up Detroit and caused discomfiture in the White House, where President Biden has voiced measured sympathy for the workers but undoubtedly — and understandably — frets the possible political downside of an extended walkout. An unintended consequence of the strike has been to create an opening for former president Donald Trump to court the union rank and file by blaming all their problems on Mr. Biden’s EV push. And yet in a sense, the UAW chief has done a public service by drawing attention to the sacrifices his members have absorbed, and by dramatizing the trade-offs and tensions within the transition to a greener economy. He and his union have made their point. What really counts, though, is making a deal.

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Editorials represent the views of The Post as an institution, as determined through debate among members of the Editorial Board, based in the Opinions section and separate from the newsroom.

Members of the Editorial Board and areas of focus: Opinion Editor David Shipley; Deputy Opinion Editor Karen Tumulty; Associate Opinion Editor Stephen Stromberg (national politics and policy); Lee Hockstader (European affairs, based in Paris); David E. Hoffman (global public health); James Hohmann (domestic policy and electoral politics, including the White House, Congress and governors); Charles Lane (foreign affairs, national security, international economics); Heather Long (economics); Associate Editor Ruth Marcus; Mili Mitra (public policy solutions and audience development); Keith B. Richburg (foreign affairs); and Molly Roberts (technology and society).

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