Why the United Auto Workers union is poised to strike major US car makers this week

DETROIT (AP) — About 146,000 U.S. auto workers are set to go on strike this week if General Motors, Ford and Stellantis fail to meet their demands for big pay raises and the restoration of concessions the workers made years ago when the companies were in financial trouble.

Shawn Fain, the combative president of the United Auto Workers union, has threatened to strike any of the three companies that hasn't reached an agreement by the time its contract with the union expires at 11:59 p.m. Eastern time Thursday.

Both sides began exchanging wage and benefit proposals last week. Though some incremental progress appears to have been made, a final agreement could come too late to avoid walkouts by UAW workers at factories in multiple states. Any strike would likely cause significant disruptions for auto production in the United States.

Here's a rundown of the issues that are standing in the way of new contract agreements and what consumers could face if a prolonged strike occurs:

WHAT DO WORKERS WANT?:

The union has asked for 46% raises in general pay over four years — an increase that would elevate a top-scale assembly plant worker from $32 an hour now to about $47.

In addition, the UAW has demanded an end to varying tiers of wages for factory jobs; a 32-hour week with 40 hours of pay; the restoration of traditional defined-benefit pensions for new hires who now receive only 401(k)-style retirement plans; and a return of cost-of-living pay raises, among other benefits.

Perhaps most important to the union is that it be allowed to represent workers at 10 electric vehicle battery factories, most of which are being built by joint ventures between automakers and South Korean battery makers. The union wants those plants to receive top UAW wages. In part, that is because workers who now make components for internal combustion engines will need a place to work as the auto industry increasingly transitions to EVs.

“Our union," Fain has said, “isn’t going to stand by while they replace oil barons with battery barons.”

Currently, UAW workers who were hired after 2007 don’t receive definedbenefit pensions. Their health benefits are less generous, too. For years, the union gave up general pay raises and lost costof-living wage increases to help the companies control costs. Though top-scale assembly workers earn $32.32 an hour, temporary workers start at just under $17. Still, full-time workers have received profitsharing checks ranging this year from $9,716 at Ford to $14,760 at Stellantis.

Fain himself has acknowledged that the union's demands are “audacious."

But he has argued that the richly profitable automakers can afford to raise workers' pay significantly to make up for what the union gave up to help the companies withstand the 2007-2009 financial crisis and the Great Recession.

Over the past decade, the Detroit Three have emerged as robust profitmakers. They’ve collectively posted net income of $164 billion, $20 billion of it this year. The CEOs of all three major automakers earn multiple millions in annual compensation.

WHAT H AV E THE COMPANIES PROPOSED?:

A contract offer from Ford proposed a cumulative 10% pay raise over the course of the four-year contract, plus several lumpsum payments, including $6,000 to cover inflation. GM has offered 10% as well, with similar lump sums. Stellantis (formerly Fiat Chrysler) offered 14.5% wage increases over four years, without lump sums in the wage package. But it proposed lump sums to cover inflation. All offered contract-ratification bonuses but rejected the shortened work week the UAW requested.

Under its proposal, Ford said it calculated that average annual pay, including overtime and lump-sum bonuses, would rise from an average of $78,000 a year last year to more than $92,000 in the first year of a new contract.

The companies have rebuffed the union's demands as too expensive. The automakers' argument is that they will be absorbing enormous capital expenses in the coming years to continue to build combustion-engine vehicles while at the same time designing electric vehicles and building battery and assembly plants for the future.

They also contend that too lavish a UAW contract would saddle them with expenses that would force up the retail prices of vehicles, pricing Detroit automakers above competitors from Europe and Asia. Outside analysts say that when wages and benefits are included, Detroit Three assembly plant workers now receive around $60 an hour while workers at Asian automaker plants in the U.S. get $40 to $45.

In a letter Friday, Mark Stewart, Stellantis' chief operating officer, told employees that the company's offer to the union would make it financially feasible to employ workers into the next generation.

“It also protects the company’s future ability to continue to compete globally in an industry that is rapidly transitioning to electric vehicles," Stewart wrote.