UAW leadership faces historic upheaval ahead of union negotiations with Detroit automakers

DETROIT. As the Amalgamated Auto Workers prepare for highly contentious talks with Detroit automakers later this year, the union’s leadership is going through the biggest upheaval in decades.

The shuffle follows a years-long federal investigation that uncovered systemic corruption involving bribery, embezzlement and other crimes among the top ranks of the organized task force.

As part of the investigation, thirteen UAW officials were convicted, including two former presidents. As part of an agreement with the union, a federal observer was appointed in late 2020 to oversee the union and a vote was taken on a direct election process that changes its International Executive Board.

Reform group called Association of members of the UAW ran a successful campaign to elect five new representatives to the 14-member board, but not all seats are filled. By Tuesday, repeat elections will be held for three other positions, including the highest post of president.

The results mean the divided board will negotiate starting this summer, with General Motors, Ford Motor And Star. The counting of votes in the second round of elections will begin on Wednesday under the supervision of the election organizer and the federal observer, as well as other officials.

“The newly elected members were elected in an attempt to make a change,” said Art Wheaton, a labor expert at the Workers’ Institute at Cornell University. “They were not chosen to get along with each other and play well together. They were chosen in the first place because they were going to shake things up.”

Wheaton said the new faces in the meeting room create “a different dynamic” and could hurt the stability of the process, but it doesn’t change the core issues.

“It certainly creates additional stress or additional problems, but I think there will be problems, no matter who is sitting at the table.”

For investors, UAW negotiations tend to be a short-term headwind every four years, resulting in higher costs. But this year’s talks are expected to be some of the most contentious and important in recent memory, amid years of organized labor movement across the country, a union president and an industry shift to all-electric cars.

Don’t forget about ongoing economic pressures such as inflation and recession fears in the coming years, if not months. Canada’s Unifor will also be negotiating with Detroit automakers this year, further complicating and intensifying competition for investment and jobs.

“There are a lot of moving parts. It will be one of the most important negotiations since the bankruptcy in 2009,” said Christine Dziczek, Automotive Policy Advisor to the Federal Reserve Bank of Chicago in Detroit.

For Wall Street, the fear of difficult and drawn-out negotiations is already causing cost concerns.

“While the market has typically factored in the one-time impact of potential work stoppages, it may not have factored in the potential for double-digit increases in labor costs that could feature in negotiations this year,” Morgan Stanley analyst Adam Jonas said in a note. last month.

The union is expected to seek higher benefits and wages to offset inflation and reward its members for surviving much of the coronavirus pandemic by helping companies report record profits.

Automakers are expected to move away from adding fixed costs to their operations and continue to support more flexible perks such as profit sharing, which gives ordinary members larger bonuses when the company is doing well. They will also try to please the union without causing a lengthy strike.

During the latest round of talks in 2019, talks between the Detroit automakers and the UAW included a nationwide 40-day strike against General Motors. The automaker said the strike cost it an estimated $3.8 billion to $4 billion in 2019.

For the 2022 elections and the current runoff, the UAW moved to a direct election format in which every union member and retiree was allowed to vote for officers, ending the weighted delegate system in which one faction held union power in a stranglehold. elections and leaders for over 70 years.

The presidential elections were reduced to the second round between incumbent Ray Curry And Sean FeinUAW Members United candidate and local leader Star parts factory in Indiana.

Curry tried to distance himself from former corrupt UAW leaders during the election process.

In the general election, Curry received about 600 more votes than Fane. Only 11% of the ballots issued, or 106,790 ballots, were cast. However, the dissident vote was divided among five candidates, some of whom supported Fane.

By Friday, about 140,000 ballots had been received. repeat electionsaccording to the federal monitor.

“I just think the most important thing is the experience,” Curry told CNBC. “Experience will be important not only to our deals this year, but to members of lawmakers in general.”

Both candidates said they would seek an increase in member benefits, advocating for the return of the Cost of Living Adjustment, or COLA, as well as an increase.

“If we live in times of inflation, it adjusts and guarantees [workers] have some kind of benefits that shift their base salary due to what happens in the economy. This could be a good fit for us,” Curry said earlier this month about COLA.

UAW Members United performed on the platform “No Corruption. No concessions. No levels.” The latter is a reference to the tiered pay system implemented by automakers during recent talks, which participants asked to be removed.

“UAW members are fed up with concessions and company-friendly leadership. We’re going for our fair share whether the Detroit automakers like it or not,” Fein said in an email to CNBC Tuesday. “Our number one challenge is to reclaim the concessions we have given up to our employers, such as tiered pay and benefits, and job security. To win, we need to restore trust and involve every member of this union. .”