BELVIDERE, Illinois, July 5 (Reuters) – A shuttered Illinois Jeep assembly plant will be at the center of a power struggle between the United Auto Workers union and Detroit’s automakers as the manufacturers double down on cutting costs to fund an accelerated transition to electric vehicles.
When the Stellantis (STLAM.MI) factory in the northern Illinois town of Belvidere was idled in February, it left union members in shock as they had not expected the shutdown until June.
“They wanted to reduce us even more which seemed like an impossible feat,” Matt Frantzen, the local union president in Belvidere, said of the decision following a prior elimination of two work shifts at the factory. “We were seeing the writing’s on the wall.”
The threat of more plant closures is just one item on a contentious agenda as negotiators for Detroit’s automakers and the UAW formally start negotiations in mid-July to replace an expiring four-year contract.
Legacy automakers face billions of dollars in losses on EVs over the next several years, analysts said, as they replace high-volume combustion vehicles with low-volume EVs powered by expensive batteries.
General Motors (GM.N), Ford (F.N) and Stellantis executives have said they must reduce labor costs as they overhaul U.S. factories to build EVs to match Tesla (TSLA.O) and other non-union manufacturers.
UAW President Shawn Fain has countered there should be no jobs lost because of the shift to EVs. Fain and UAW leaders have used social media and visits to Washington to turn the spotlight on the Detroit automakers’ robust profits and hefty pay packages for executives, rather than the cost of the shift to EVs.
Fain has called for substantial pay hikes for workers, and for restoring cost-of-living adjustments and ending lower wages for new workers. His agenda and the combative rhetoric of his campaign to build support have many industry executives and analysts factoring in a strike once contracts expire in September.
The real question is how long will UAW workers stay off the job, said Mark Wakefield, co-head of AlixPartners’ automotive practice.
“I am very concerned about it,” Wakefield said last week. “It doesn’t look good at the moment. It’s very difficult to forecast. Is it a week or two, or three or four months.”
GM CEO Mary Barra and Ford CEO Jim Farley have sought to defuse tension with the union. Both have signed off on multibillion-dollar investments in U.S. factories where UAW members build combustion vehicles, and both have said they want to bring workers along as they shift toward EVs.
‘GET TO THE TABLE'”It’s important that we actually get to the table and we start to problem solve,” Barra told CNBC in a recent interview.
In an opinion piece published in the Detroit Free Press last week, Farley said the automaker’s management and union workers “share common goals – reaching a new deal that allows us to stay ahead of the changing industry landscape, protecting good-paying jobs in the U.S. and continuing to offer…
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