According to those familiar with the costs of Ford, General Motors, and Stellantis (often referred to as the "Detroit Big Three"), the series of contract demands put forward by the United Auto Workers (UAW) would increase the labor costs of the Detroit Big Three by $45 billion to $80 billion annually, threatening their future viability.
It's reported that the series of contract demands made by UAW include a salary increase of over 40% for its members, providing pensions for all workers, increasing medical benefits for retirees, and reducing working hours without a reduction in wages.
Insiders claim these demands will nearly double the labor costs for these three companies, with the cost per hour per employee reaching over $150. They also disclosed that the $80 billion figure would cover both active workers and retirees, as the union is seeking benefits for retirees.
Marick Masters, a business professor at Wayne State University specializing in labor issues, told "Automotive News," "These costs will be unsustainable. At this level, they can't stay competitive."
Currently, Ford, General Motors, and Stellantis spend at least $64 per hour on wages and benefits for each worker, higher than the roughly $55 per hour that foreign car manufacturers (using non-union labor) spend. Notably, Tesla's labor costs are even lower, ranging between $45 and $50 per hour.
The current labor cost figures for Ford, General Motors, and Stellantis are calculated based on the number of active employees and consist of various expenses, but not all of these expenses are included in the actual wages earned by employees. These include overtime pay, shift premiums, profit-sharing, and pensions.
Masters believes that this "astonishing" cost increase could have catastrophic consequences. Masters stated, "If the Detroit Big Three agree to sign this contract, they'd be accused of poor management. You'd find investors reluctant to back these companies. Investors might discourage anyone from investing in them and have them liquidate their assets."
Although UAW Chairman Shawn Fain insists that the union sincerely hopes to achieve all the goals on its contract list, labor experts say such aspirations are unrealistic. Art Wheaton, a labor expert at Cornell University, stated, "One should approach these ideas with caution."
In a statement last week, General Motors said that UAW's demands "will threaten our ability to make the right decisions for the long-term interests of our team." Stellantis presented UAW with a proposal of its own, omitting much of what UAW had demanded. Fain criticized this as an "insult" to union members.
Wheaton stated, "The reality is, you can't achieve all the demands. Initial proposals from both sides are extreme and won't be approved. That's why there's a need for negotiation."
