The United Auto Workers Meet Electrification

The Big Three’s transition to electric vehicles will largely be driven by public investment. That doesn’t guarantee there will be good-paying jobs.

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WAYNE COUNTY, MICHIGAN – Charles Taylor wanted to tell me about his aunt.

She was a single mother who raised several children and had her own home while working at a Ford factory represented by the United Auto Workers. “Every time I went to her house, it was always fine,” Taylor said, reflecting on his childhood. “I always wondered, ‘Where does she work?’ and when I found out she worked for Ford Motor Company, I was like, ‘That’s beautiful.’”

When a similar opportunity came for him a few years ago, joining UAW Local 898 at the Ford Rawsonville Components Plant in Ypsilanti to produce battery packs for hybrid vehicles, he couldn’t turn it down. But he was hired into a much different system than his aunt.

“You have to work eight to ten years to reach $22.50 an hour,” Taylor told me. Job concessions after the Great Recession had created a two-tiered system, with new hires not afforded the same wages and benefits as the veterans. Starting wages at UAW-repped plants are below the level they were in 2007, adjusted for inflation. Taylor loves having a job covered by the UAW; he described new hires at the Rawsonville plant coming from all walks of life. But it wasn’t the same automatic path into the middle class as his predecessors had.

In July, Taylor and his friend Kyle Thomas drove a short distance to the Ford Michigan Assembly Plant in Wayne, to see Shawn Fain, the UAW’s new president, shake hands with rank-and-file members during the shift change. It was Fain’s third stop of the day at factories in the Detroit area. Before sunrise, he greeted workers at a Stellantis plant in Sterling Heights; then around noon at a General Motors Detroit-Hamtramck plant; and he was finishing up here in Wayne.

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On September 14, the UAW master agreement with the “Big Three” of Ford, GM, and Stellantis (formerly Fiat Chrysler), representing some 150,000 workers, will expire. In previous contract negotiations, the union’s president would kick things off by shaking hands with auto executives for a photo op. Fain, who was elected in March, is the first president of the union’s 87-year run to win a direct election of the members. He decided to meet with workers instead.

It was a break with a history of one-party rule by the prior leadership, which led to official corruption and what Fain’s reform movement, Unite All Workers for Democracy, has condemned as collaboration with management. “From this day forward we’re doing things differently,” Fain told local TV stations in Detroit. “It’s up to the Big Three where we end up.”

Tensions have run high. In recent weeks, Fain tore up Stellantis’s proposed contract during a livestream. Automotive analysts anticipate a strike against at least one of the Big Three; Anderson Economic Group estimates that just a ten-day strike would cost the economy $5 billion. Ford is preparing its white-collar workers to drive forklifts in parts warehouses in the event of a work stoppage.

Strikes at the Big Three are not uncommon; nearly 50,000 GM workers walked out for 40 days back in 2019. But Fain is looking to unravel the tiered system that younger members like Taylor and Thomas live under now, just as he seeks to prevent the introduction of an even lower standard for the workers of the future. Looming over the contentious negotiations is the automotive industry’s electrification, supercharged by hundreds of billions of dollars provided by the Inflation Reduction Act (IRA).

Looming over the contentious negotiations is the automotive industry’s electrification, supercharged by hundreds of billions of dollars provided by the Inflation Reduction Act.

“There’s a way for the [EV transition] to work for everybody,” Fain told me over the phone last week. “The shameful part is that the government, our tax dollars, are helping fund this transition. I have no issue with the government helping these companies transition … but it can’t be a one-sided affair. Labor has to have a seat in this too. Worker conditions need to be taken into account.”

Both industry analysts and labor historians explained to me that the automotive industry was undergoing a profound shift, comparable only to the creation of the internal combustion engine and Henry Ford’s moving assembly line. The UAW wants to use the moment to lock in a secure future for its members; the Big Three want to use it to restructure every agreement of the past.

A common refrain from union organizers is that no round of negotiations can rectify every single issue. But in the UAW’s case, whether they strike after September 14 or a contract is ratified, how the chips fall will show a sense of what the future of green manufacturing in the United States holds for workers.

“This is my first contract experience,” Taylor told me. Even as tensions escalate on both sides, he didn’t see it as a bad thing. He hopes that Ford and the other automakers recognize it’s in their interest to share the rewards of the EV transition with the rank and file.

“I think Shawn [Fain] is leading us to a place of stability and that has me excited,” Taylor said. “Because before, I didn’t see that in my near future.”

THE BIG THREE DROPPED THE BALL on the first generation of EV manufacturing, which coincided with the struggle to keep the industry alive in the Great Recession. The government stepped in at that time, too, with bridge loans and restructuring that forced incoming autoworkers to take less in the bargain.

“We gave up a lot of concessions to help the corporation out,” Nick, a 17-year UAW member at the Detroit plant, told me. “They promised us all these things back when brighter days came. It’s been a decade later and they still haven’t given us them back.”

While profits at the Big Three have totally reversed—GM saw record earnings in 2021 and 2022, and overall the companies have made $250 billion in the last ten years—the companies let Tesla and other automakers dominate electric vehicles for more than a decade, in the process losing the ability to develop in-house knowledge for future EV production. Tesla also set a precedent that EV jobs don’t have to be union jobs. But now, with the Big Three building out their EV manufacturing capacities, the UAW’s presence can’t simply be cast aside.

The industry’s electrification is in such early stages, Bloomberg New Energy Finance analyst Corey Cantor told me, that there still is no standardized way to manufacture an EV battery. It’s a toss-up between whether the average American consumer in the future will drive a lithium iron phosphate (LFP) or a lithium nickel manganese cobalt (NMC) powered vehicle. (Automakers are hedging their bets, making deals for nickel and copper as well as for lithium.)

However it shakes out, one thing is certain: Electric vehicles have fewer moving parts. This means a simpler production process, translating to less human labor on the manufacturing side. Ford recognizes that this shift will reorder its workforce. The company’s CEO, Jim Farley, has suggested that the company can vertically integrate other operations, like battery production, and retrain its workforce on those new jobs.

But what’s left out of Farley’s vision for the future of the automotive industry is the UAW’s most existential concern. Are Big Three jobs in the EV era protected under the same UAW master agreement?

The Big Three know that their battery technology capacity is behind its competitors. (So was Tesla, initially; that’s why it brought in Panasonic for a U.S. battery plant.) To meet this challenge, Cantor explained, the companies are teaming up with overseas firms with more experience, creating joint ventures. Several of them are with South Korean partners. GM and LG Energy Solution have created what’s called Ultium Cells in Lordstown, Ohio, and another GM joint venture is with Samsung SDI for a plant in Indiana; Ford and SK are teamed up for BlueOval SK; and Stellantis is working with Samsung through StarPlus Energy. (Even Ford’s in-house battery factory in Marshall, about 100 miles from Detroit, is using technology licensed from a Chinese company named CATL.)

“It’s a joint venture because both companies are putting in money in order to create the battery manufacturing plant,” Cantor told me. The South Korean companies could have just provided battery components to the automakers. However, Cantor noted, “there’s an advantage to learning from both sides.” As much as the Big Three will learn about battery manufacturing, the South Korean companies will develop a similar knowledge base for manufacturing vehicles.

The downside to the joint-venture strategy is how the Big Three are using the partnerships as a pretext for reclassifying jobs at these new facilities. In other words, jobs at joint ventures can be unionized, but they are not covered under UAW contracts with the Big Three. The argument is that the joint ventures are separate legal entities. Following that logic, the conclusion is that there is no legal path to fold workers at joint-venture facilities into the UAW’s master agreement.

In practice, the reclassification scheme amounts to the Big Three in real time racing to the bottom before the electric transition in automotive manufacturing has fully taken place.

In a statement, Stellantis told the Prospect that it “recognizes and respects the rights of all employees to decide whether to be represented by a union,” including at its jointventure facility. However, that does not mean those joint-venture jobs would be covered under the master agreement.

Electric vehicles have fewer moving parts. This means a simpler production process, translating to less human labor on the manufacturing side.

The UAW is incensed over this tactic. Before Fain’s Michigan visit in July, the UAW published a white paper entitled “High Risk & Low Pay: A Case Study of Ultium Cells Lordstown.” The report detailed chemical hazards from battery production at Ultium, with multiple safety citations and stories of workers exposed to toxic fumes and electrolytes. The solution to this, the report asserts, is the GM master agreement, which builds in health and safety standards and considerations for hazardous materials. Even in the face of contractual concessions, a master contract establishes standards that wouldn’t otherwise exist.

But Ultium began operations outside the agreement, offering starting pay of just $16.50 an hour, topping off at $20 an hour after seven years. Workers in Lordstown voted 710-16 to join the UAW. And in a statement to the Prospect, a GM spokesperson stressed their support for organizing at the joint venture. “We are proud that Ultium Cells Ohio is the first and only unionized battery plant in the U.S.,” spokesperson David Barnas said.

But Ultium Cells’ acting president Alex Eom told Sen. Sherrod Brown (D-OH) that there was no “viable” or “practical” means to cover Ultium workers under the GM contract. “We have communicated that position to the UAW and remain committed to bargaining a fair agreement that allows Ultium Cells, our employees and the UAW to succeed in the EV future,” Eom wrote in a letter.

Fain, who joined the UAW as a Chrysler electrician in Indiana, characterized the Big Three’s framing of the joint ventures as entirely separate entities as misleading. He told me about instances in the past where Big Three automakers teamed up with other companies and honored existing UAW contracts. “When I worked for Chrysler, there was a joint venture with ZF at the Marysville [Michigan] axle plant. They were covered by the national agreement. The employees were leased to ZF but they were Chrysler employees.”

“It’s criminal that a worker at Ultium in Lordstown is starting at $16.50 [an hour],” Fain continued. “That person will have to work 16 years to make what [General Motors] CEO Mary Barra makes in a week. I don’t call that a just transition.”

“WE’RE TALKING ABOUT WHERE THE VALUE of the credits exceeds the capital expenditures and exceeds the wage bill,” Greg LeRoy, founder of the federal contracting watchdog organization Good Jobs First, told me. “Those are historically exceptional ratios.”

When I spoke with LeRoy and another researcher at Good Jobs First, Jacob Whiton, the two had recently published a report, “Power Outrage,” examining the cost of subsidies from the Inflation Reduction Act’s $200 billion Advanced Manufacturing Production Tax Credit program, otherwise known as 45X. “It’s on steroids now,” LeRoy said.

The 45X program won’t be exclusive to EV manufacturing; the Department of Energy defines its use for “clean energy component[s] domestically produced.” As long as the automakers realize the domestic production requirements, according to conservative estimates, 45X could subsidize one-third of the costs for EV battery manufacturing. The subsidization ratio could even increase as the automakers more efficiently build EVs.

Cantor explained how 45X is applied in two stages: first for the battery cell, and then the battery module. Manufacturers are eligible for up to $35 per kilowatt-hour (kWh) of a battery cell’s capacity. Then manufacturers can receive $10 per kWh based on the battery module’s capacity. If a battery module doesn’t use cells, the $35 per kWh is rolled into the module credit. The tech, energy, and finance law firm Orrick, Herrington & Sutcliffe, LLP gave the example of a 75kWh battery pack being eligible for up to $2,625, plus another $750 for the module.

Those credits are for future production, but in the first year since the IRA passed, the money has already flowed. The Department of Energy’s Loan Programs Office, using an expansion in funding under the IRA, has doled out large sums for battery plants across the country, including a whopping $9.2 billion loan for Ford’s BlueOval SK joint venture. That figure, the largest the U.S. government has given to an automaker since the Great Recession bailouts, almost covers the entire buildout of the three proposed BlueOval battery plants in Kentucky and Tennessee.

Private investment has ramped up in the sector as well, chasing the public subsidies. Cantor’s team at BloombergNEF estimates $72 billion in pledged EV investments over the past year, more than half of it for battery manufacturing. Enough factories have been scheduled in the Southeast that some observers are calling it the Battery Belt. An estimated 5.68 million EVs will be produced in the U.S. and Canada annually by 2030, according to a dashboard produced by Wellesley College’s James Morton Turner, with 1,071 gigawatt-hours (GWh) of battery cells.

The private funding is being spurred by the IRA’s consumer rebates for EVs. Automakers have incentives to produce batteries domestically and ensure final assembly in the United States, so consumers qualify for the full $7,500 EV purchase tax credit.

“This is a spending spree by Uncle Sam in the states like we’ve never seen before. We can say that with confidence,” LeRoy told me. He added that states and local governments have announced an additional $13 billion in EV manufacturing, a number he guesses is an undercount because of the lack of quality contracting disclosure rules.

Despite subsidies taking different forms, Whiton told me, it all translates one way or another into reduced investment costs borne by manufacturers. But aside from the bully pulpit, nothing in the IRA guarantees that jobs created by its tax credits are “good-paying union jobs,” as the White House likes to put it. In other words, it’s at the company’s discretion whether workers see subsidies through higher wages and improved benefits.

LeRoy and Whiton calculated in their report that battery factory subsidies will range from $2 million to $7 million per job over the ten-year duration of the 45X program. One of their case studies is the $3.5 billion BlueOval Battery Park in Marshall, Michigan. So far, the facility has been awarded $1.7 billion in state and local government subsidies, in addition to qualifying for an expected $6.7 billion in federal 45X credits. Yet wages at the battery plant will average around $45,000 a year.

The gap between the sheer amount of money on the table for manufacturers and the quality of job it translates into is the IRA’s weakest link. “The states where these facilities are located should be publicly saying that in exchange for such subsidies the company should allow for voluntary [union] recognition votes,” LeRoy suggested.

THE UAW SUPPORTED THE INFLATION REDUCTION ACT, but leaders have grown wary with each new development, and the way the auto companies are using the transition to attempt to rewrite standards on benefits, pay scales, and even basic safety. When the Ford joint venture loan was announced, Fain blasted it for giving “no consideration for wages, working conditions, union rights or retirement security … Why is Joe Biden’s administration facilitating this corporate greed with taxpayer money?”

Earlier this month, the UAW laid out contract demands for the Big Three in a rare public session. (Fain called them “the members’ demands,” another attempt to draw distinctions with the old way of doing business.) They include requests to eliminate tiers over wages and benefits, restore cost-of-living allowances and retiree medical benefits, offer more paid time off that would effectively establish a four-day workweek, give the union the option to strike over closed factories (like the recent idling of a Stellantis Jeep plant in Illinois, one of 65 plant closures in the past 20 years), transition all temporary workers into permanent status, and institute 40 percent wage increases over the duration of the next four years. The last demand raised alarms from the companies, but the UAW calculated it as equivalent to the 40 percent rise in CEO pay at the Big Three over the previous four years.

The demands break with the behind-closed-doors concessions negotiated by leadership in recent decades. They also attempt to leverage the giant public subsidies the industry is poised to receive in the next several years, arguing that workers deserve their share from a business deemed central to U.S. economic security. The UAW has been quick to point out the disconnect between corporate executives and the rank and file; the union has condemned Stellantis COO Mark Stewart for taking a vacation at a “mansion” in Acapulco, while workers log 12-hour shifts.

Stellantis told the Prospect that they were “committed to working constructively and collaboratively with the UAW,” and that they want to “fairly reward” employees. “However, it will be critical to find common ground that doesn’t jeopardize our ability to continue investing in the affordable products, services and technology that our customers want and that would allow us to continue providing good jobs here at home,” a company spokesperson said. A spokesperson for Ford noted they had the highest representation of UAW workers in America, and added, “We look forward to working with the UAW on creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever.” GM said in a statement that they have been “working hard with the UAW every day to ensure we get this agreement right for all our stakeholders.”

Last week, Fain said that the contract negotiations were moving too slowly. A strike authorization vote has been called for this week. Organizers have already begun providing strike training classes at the major plants; the union held a solidarity rally on Sunday and expects to run practice pickets, like the Teamsters conducted during their UPS negotiations. While some industry observers don’t expect a strike of Ford, GM, and Stellantis simultaneously, which would be unprecedented, the moment of transition for the auto industry is similarly without equal.

President Biden, who met with Fain privately at the White House in July, has carefully weighed in on the Big Three negotiations. He asked for automakers and the UAW to come together and “forge a fair agreement.” The statement continued: “I support a fair transition to a clean energy future. That means ensuring that Big Three auto jobs are good jobs that can support a family … as we move forward in this transition to new technologies, the UAW deserves a contract that sustains the middle class.”

Notably, the statement does not explicitly speak to the Big Three automakers spinning off battery production through joint ventures. As it currently reads, the statement does not disrupt the Big Three’s narrative that jobs at joint ventures are separate from traditional Big Three plants. Gene Sperling, a White House economic adviser and Michigan native, has been dispatched as a liaison between the union and the Big Three.

Biden has some vulnerabilities with autoworkers. First of all, auto production is the linchpin of the president’s industrial-policy strategy, and his agenda of providing good jobs and reduced carbon emissions at the same time. Second, about 1 in 3 UAW members voted for Donald Trump in 2016 and 2020, the union estimates. The UAW has not yet endorsed Biden for re-election. Meanwhile, Trump is campaigning on the EV transition being a catastrophe for workers, in an open play for UAW member votes. (Fain has said a second Trump term would be a disaster.)

I asked Fain what he made of Biden’s statement. “It’s a good start, but we still got a ways to go. We’re in a fight with the Big Three,” he said. He continued that he appreciated Biden’s acknowledgment of how the UAW has helped support the creation of a middle class. But he was careful to note that it was just a starting point. If Biden wanted to, he could further his support: “When it comes to endorsements … they’re not gonna be freely given.”

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