Standoff Over Electric-Vehicle Workers Poses Risk for Biden

President Joe Biden has been highly attuned to the politics of electric vehicles, helping to enact billions in subsidies to create new manufacturing jobs and going out of his way to court the United Automobile Workers union.

But as the union and the big U.S. automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — hurtle toward a strike deadline set for Thursday night, the political challenge posed by the industry’s transition to electric cars may be only beginning.

The union, under its new president, Shawn Fain, wants workers who make electric vehicle components such as batteries to benefit from the better pay and labor standards that the roughly 150,000 UAW members enjoy at the three automakers. Most battery plants are not unionized.

The Detroit automakers counter that these workers are typically employed in joint ventures with foreign manufacturers that the U.S. automakers don’t wholly control. The companies say that even if they could raise wages for battery workers to the rate set under their national UAW contract, doing so could make them uncompetitive with nonunion rivals, like Tesla.

And then there is former President Donald Trump, who is running to unseat Biden and has said the president’s clean energy policies are costing American jobs and raising prices for consumers.

White House officials say Biden will still be able to deliver on his promise of high-quality jobs and a strong domestic electric-vehicle industry.

“The president’s policies have always been geared toward ensuring not only that our electric vehicle future was made in America with American jobs,” said Gene Sperling, Biden’s liaison to the UAW and the auto industry, “but that it would promote good union jobs and a just transition” for current autoworkers whose jobs are threatened.

But in public at least, the president has so far spoken only in vague terms about wages. Last month, he said that when union jobs were replaced with new electric-vehicle jobs, those jobs should go to union members and pay a “commensurate” wage.

A strike could force Biden to be more explicit and choose between his commitment to workers and the need to broker a compromise that averts a costly long-term shutdown.

“Battery workers need to be paid the same amount as UAW workers at the current Big Three,” said Rep. Ro Khanna, D-Calif., who has promoted government investments in new technologies.

Khanna added, “It’s how we contrast with Trump: We’re for creating good-paying manufacturing jobs across the Midwest.”

At the heart of the debate is whether the shift to electric vehicles, which have fewer parts and generally require less labor to assemble than gas-powered cars, will accelerate the decline of unionized work in the industry.

Foreign and domestic automakers have announced tens of thousands of new U.S.-based electric vehicle and battery jobs in response to the subsidies that Biden helped enact. But most of those jobs are not unionized, and many are in the South or West, where the UAW has struggled to win over autoworkers. The union has tried and failed to organize workers at Tesla’s factory in Fremont, California, and Southern plants owned by Volkswagen and Nissan.

As a result, the union has focused its efforts on battery workers employed directly or indirectly by GM, Ford and Stellantis. The going wage for this work tends to be far below the roughly $32 an hour that veteran UAW members make under their existing contracts with the three companies.

Legally, employees of the three manufacturers can’t strike over the pay of battery workers employed by joint ventures. But many UAW members worry that letting battery manufacturers pay far lower wages will allow GM, Ford and Stellantis to replace much of their current U.S. workforce with cheaper labor, so they are seeking a large wage increase for those workers.

“What we want is for the EV jobs to be UAW jobs under our master agreements,” said Scott Houldieson, chairperson of Unite All Workers for Democracy, a group within the union that helped propel Fain to the presidency.

The union’s officials have pressed the auto companies to address their concerns about battery workers before its members vote on a new contract. They say the companies can afford to pay more because they collectively earned about $250 billion in North America over the past decade, according to union estimates.

But the auto companies, while acknowledging that they have been profitable in recent years, point out that the transition to electric vehicles is very expensive. Industry executives have suggested that it is hard to know how quickly consumers will embrace electric vehicles and that companies needed flexibility to adjust.

Even if labor costs were not an issue, said Corey Cantor, an electric vehicle analyst at energy research firm BloombergNEF, it could take the Big Three several years to catch up to Tesla, which makes about 60% of fully electric vehicles sold in the United States.

Data from BloombergNEF show that GM, Ford and Stellantis together sold fewer than 100,000 battery electric vehicles in the United States last year; in 2017, Tesla alone sold 50,000. It took Tesla another five years to top half a million U.S. sales. (The Big Three also sold nearly 80,000 plug-in hybrids last year.)

The three established automakers had hoped to use the transition to electric cars to bring their costs more in line with their competitors, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a research firm. If they can’t, he added<strong>, </strong>they will have to look for savings elsewhere.

In a statement, Stellantis said its battery joint venture “intends to offer very competitive wages and benefits while making the health and safety of its workforce a top priority.”

Estimates shared by Ford put hourly labor costs, including benefits, for the three automakers in the mid-$60s, versus the mid-$50s for foreign automakers in the United States and the mid-$40s for Tesla.

Ford’s chief executive, Jim Farley, said in a statement last month that the company’s offer to raise pay in the next contract was “significantly better” than what Tesla and foreign automakers paid U.S. workers. He added that Ford “will not make a deal that endangers our ability to invest, grow and share profits with our employees.”

Biden and Democratic lawmakers had sought to offset this labor-cost disadvantage by providing an additional $4,500 subsidy for each electric vehicle assembled at a unionized U.S. plant, above other incentives available to electric cars. But the Senate removed that provision from the Inflation Reduction Act.

Such setbacks have frustrated the UAW, an early backer of Biden’s clean energy plans. In May, the union, which normally supports Democratic presidential candidates, withheld its endorsement of Biden’s reelection.

“The E.V. transition is at serious risk of becoming a race to the bottom,” Fain said in an internal memo. “We want to see national leadership have our back on this before we make any commitments.”

The next month, Fain chided the Biden administration for awarding Ford a $9.2 billion loan to build three battery factories in Tennessee and Kentucky with no inducement for the jobs to be unionized.

Biden tapped Sperling, a Michigan native, to serve as the White House point person on issues related to the union and the auto industry around the same time. By late August, the Energy Department announced that it was making $12 billion in grants and loans available for investments in electric vehicles, with a priority on automakers that create or maintain good jobs in areas with a union presence.

Sperling speaks regularly with both sides in the labor dispute, seeking to defuse misunderstandings before they escalate, and said the recent Energy Department funding reflected Biden’s commitment to jump-start the industry while creating good jobs.

Complicating the picture for Biden is the growing chorus of Democratic politicians and liberal groups that have backed the autoworkers’ demands, even as they hail the president’s success in improving pay and labor standards in other green industries, such as wind and solar.

Nearly 30 Democratic senators signed a letter to auto executives this summer urging them to bring battery workers into the union’s national contract. Dozens of labor and environmental groups have signed a letter echoing the demand.

The groups argue that the change would have only a modest effect on automakers’ profits because labor accounts for a relatively small portion of overall costs, a claim that some independent experts back.

Yen Chen, principal economist of the Center for Automotive Research, a nonprofit group in Ann Arbor, Michigan, said labor accounted for only about 5% of the cost of final assembly for a mid-size domestic sedan based on an analysis the group ran 10 years ago. Chen said that figure was likely to be lower today, and lower still for battery assembly, which is highly automated.

Beyond the economic case, however, Biden’s allies say allowing electric vehicles to drive down auto wages would be a catastrophic political mistake. Workers at the three companies are concentrated in Midwestern states that could decide the next presidential election — and, as a result, the fate of the transition to clean energy, said Jason Walsh, executive director of the BlueGreen Alliance, a coalition of unions and environmental groups.

“The economic effects of doing that are enormously harmful,” he said. “The political consequences would be disastrous.”

This article originally appeared in <a href="https://www.nytimes.com/2023/09/13/business/economy/autoworkers-strike-biden.html">The New York Times</a>.