In a sign of the auto industry’s importance to the U.S. economy, the White House is taking an interest in the United Auto Workers contract negotiations with Ford, General Motors and Stellantis, which will officially begin next week.
Strong sales of new vehicles in the first half of 2023 have been instrumental in lifting the economy during a period when many economists and celebrities such as Tesla CEO Elon Musk and various cable news pundits were predicting a recession.
Analysts, such as those from Cox Automotive, have raised their forecasts for the second half of the year as the economy continues to expand.
Tension rises as talks approach
However, tensions have been rising around Detroit as the UAW’s new president, Shawn Fain, vows to reverse the concessions, dating back to 2007. The givebacks have systematically undercut the purchasing power of the 140,000 union members covered the Detroit 3 contracts as their employers earned billions of dollars in profits.
Fain also promised to eliminate tiered contracts where new union members receive smaller hourly wages for their first six years of employment, prompting analysts such as Bank of America’s John Murphy to predict a 90% chance of a strike against one of the automakers after the contracts expire September 14.
According to Politico, President Joe Biden asked Gene Sperling, veteran Democratic economist, to keep an eye on the negotiations in Detroit.
“As a White House point person on key issues related to the UAW and Big Three, Sperling will help ensure Administration-wide coordination across interested parties and among White House policymakers,” a White House official said in a statement to Politico. “Gene will work hand-in-glove with acting [Labor] Secretary Julie Su on all labor-related issues.”
The UAW’s new leadership have chastised Biden for steering hundreds of billions of dollars toward incentives for electric vehicles while its assurances the shift to EVs undermine union contracts lead to lower wages in an industry essential to blue-collar workers.
“The EV transition must be a just transition. We cannot allow a race to the bottom for America’s working families. The UAW fully supports the transition to a more climate-friendly auto industry, and we are convinced that it can be done without making workers pay the price,” the UAW said in a released over the weekend.
Union sides with companies on EPA standards
The UAW has sided with the companies in ongoing tussle with the U.S Environmental Protection Agency’s over proposed emission standards.
The Alliance for Automotive Innovation, the trade group representing 42 different carmakers and suppliers, is preparing to file objections to new rules covering greenhouse gas emissions proposed by U.S. Environmental Protection Agency
The goals laid out in the proposed regulations, which go even further than those in place in the state of California, “cannot be reached during the 2027 to 2032 because the needed materials required for electric vehicles are not available at a reasonable price,” according to the Alliance whose members include American, European and Asian carmakers from South Korean and Japan.
The proposed rules EPA published in early May cover both the GHG requirements and the criteria emission requirements. “Taken together, the proposed GHG and criteria pollutant standards are so stringent as to set a de facto BEV mandate,” according to the Alliance, which plans to file its objections officially July 5.
“We fear the proposed standards are premature and risk disrupting the market that will make the EV transition possible,” the UAW said in a filing “We urge EPA to continue to work with all key stakeholders to ensure the new rules do not disproportionately impact domestic union auto production.”
The criticism of the Biden administration, however, does not mean the union is preparing to abandon its support for the Democratic party and its liberal agenda.
The union blasted decisions by the conservative U.S. Supreme Court on affirmative action and reversing the Biden administration’s efforts to cancel student-loan debt.
“By definition, it is not the rich, but the working class, who suffer from student loan debt, taking out loans in hopes of bettering themselves and their economic prospects. In striking down student debt relief, the Court has effectively stolen $430 billion from the pockets of the working class.
“While the Court finds no issue with massive tax cuts for the rich, billions in corporate welfare, or repeated efforts to make it more difficult to vote, strike, or organize, today’s decision shows the level of disdain the Court has for the working class and poor in this country,” the union noted.
On the Supreme Court ruling on affirmative action, “No Supreme Court decision can erase the racism that permeates into every social fabric of our society. Affirmative action is necessary for a diverse workforce and a multicultural democracy that champions diversity, equity, and justice.”