The UAW‘s list of contract demands — including more than 40 percent raises for members — would increase labor costs for the Detroit 3 by $45 billion to $80 billion a year and threaten their future viability, according to calculations by people familiar with the companies’ costs.
The demands, which also include pensions for all workers, more retiree health benefits and fewer hours for the same pay, would nearly triple labor rates to more than $150 an hour per employee at all three companies, the sources said.
“Those costs would be unsustainable,” Marick Masters, a business professor at Wayne State University in Detroit who specializes in labor issues, told Automotive News. “They could not remain competitive at that level.”
Today, Ford Motor Co., General Motors and Stellantis spend at least $64 per hour on each worker’s wages and benefits. That’s more than the roughly $55-per-hour cost at the transplant automakers that use nonunion labor.
Hourly labor costs for Tesla Inc. are believed to be even lower, between $45 and $50 per hour.
Today’s labor cost figures are based off the number of active employees and are comprised of multiple expenses, not all of which go into employee take-home pay, including overtime, shift premiums, profit-sharing and pension payments, among other things. The $80 billion figure would include both active workers and retirees, according to sources, since the union is seeking multiple retiree benefits.
Bloomberg reported the cost increase calculations late Tuesday.
Masters said such “phenomenal” cost jumps could have disastrous consequences.
“They would be accused of mismanagement if they conceded to contracts with those costs,” Masters said. “You would find that investors would be loath to support the companies. They would probably discourage anyone from investing in them and have them liquidate their assets.”
Still, labor experts say such a scenario is unrealistic, despite UAW President Shawn Fain’s insistence that the union is sincere about achieving everything on its list.
“You should take those estimates with a grain of salt,” said Art Wheaton, a labor expert at Cornell University.
GM, in a statement last week, said the UAW’s demands “would threaten our ability to do what’s right for the long-term benefit of the team.” Stellantis sent the union its own set of proposals, omitting most of what the UAW is seeking, which Fain blasted as an “insult” to members.
“You won’t realistically achieve all of those demands,” Wheaton said. “Both sides have extreme initial offers that will not pass. That’s why you bargain.”
