The deadline to reach a deal before a possible strike against the Detroit Three automakers is fast approaching.
The United Auto Workers says it will stage a walkout against any company that has not reached a tentative agreement with its negotiators by 11:59 p.m. Thursday.
Ball State University economist Michael Hicks is a manufacturing expert. He said the union is in a relatively strong position.
"Time favors the union on this. Demand for vehicles is pretty strong and so this would be a really bad time — right at the beginning of a new model year — to have a 30-day idling of factories, which would really be 45 days because it takes time to get the lines back up and running after they've been shut down for a period like that."
Hicks said UAW workers at the Detroit companies have seen real wages fall over the past two decades, and wages are also not keeping up with inflation. He suspects the negotiators for the car companies are prepared to offer a significant wage hike — but they'll be leery of similarly significant increases in retirement benefits like pensions. That's because those are fixed costs that the company must shoulder, in good times and bad.
While the union has a fairly strong hand in the talks this year, Hicks said the union has long-term concerns about maintaining employment numbers. It's unlikely that demand for vehicles will grow based on U.S. population growth, especially as younger people increasingly move to cities where they may not need a car. And Hicks said the industry is transitioning to electric vehicles. It takes fewer workers to build an electric vehicle than one with an internal combustion engine.
"At the end of the day, all of the arrows point down in terms of the demand for auto workers over the next two decades."
Both sides have begun preparing for a strike. Workers are signing up for times on the picket lines, and car companies have increased inventories on dealer lots.
UAW President Sean Fain is expected to provide a Facebook Live update on the progress, or lack thereof, in the negotiations on Wednesday at 5:00 p.m. Those details could provide clues about whether a strike is imminent, against one, two, or all three of the companies.
A simultaneous strike against all three has never happened in UAW history.
