TradeEdge Exchange:Why the transition to electric cars looms large in UAW talks with Big 3 automakers

"Every auto job a good job."

It's a statement that United Auto Workers have TradeEdge Exchangebeen carrying on signs lately as the union and the Big Three Detroit automakers engage in confrontational negotiations ahead of a Thursday deadline.

The sign seems, at first, to have nothing to do with batteries — until you notice that the "EV" is bright blue.

It's a subtle sign that while the contract talks are over wages, benefits, quality of life and job security, the auto industry's seismic transition to electric vehicles is interwoven into all these topics.

Automakers — spurred in part by generous government tax credits — are pouring billions of dollars into developing and producing EVs.

And although EVs are not explicitly at the heart of the union negotiations, they are affecting them in all kinds of ways.

Here's how.

Both sides agree more EVs are coming

The debate is not about whether automakers should transition to EVs.

Automakers are committed to rapidly scaling their production of EVs in response to government and investor pressure to cut carbon emissions and slow climate change.

The United Auto Workers union is not trying to resist this transition.

"We support a green economy. You know, we have to get behind this. We have to have a planet that we can live on," UAW President Shawn Fain said at a virtual rally this past weekend.

However, he said, the transition made it more crucial that both assembly line workers and battery workers (some of whom are unionizing with the UAW under separate contracts) have pay, benefits and guarantees as good as auto workers used to have.

"If we don't secure this work and we don't secure it at ... Big 3 standards, it's not going to be a good future for anyone," he said.

The Big 3 say the transition to EVs limits what they can offer

The UAW initially asked for more than 40% raises, as well as the return of pensions, cost of living increases and certain job security provisions. They cited enormous profits by the automakers and the hefty pay earned by the CEOs to make the case for big gains for workers.

That's not how auto companies see it. They argue that despite high profits, they cannot afford the union's demands — and that the high cost of the electric transition is a big reason why.

Analysts say the automakers' stance is not entirely incorrect.

"There is some truth to this," says Ed Kim, an analyst with AutoPacific. "Yes, they've been very profitable, but they're also, at the same time, very eager to reinvest those profits into their EV product development."

The union wants more guarantees; the companies, flexibility

Auto companies have already pointed to the high cost of EV transition to explain painful cuts, like when Stellantis – the parent company of Chrysler — shut down a plant in Belvidere, Ill., citing the high cost of the EV transition.

But Patty Ellison, whose shift at that plant was cut in 2019, didn't buy it. Stellantis made $18 billion in profit last year and has continued to announce record profits since.

"It sounds like an excuse to me," she said. "If they're going to make electric vehicles, why can't we make them there in Belvidere?"

Ellison used to work on the production line for the Jeep Cherokee, and as we spoke, she was driving a cherry-red Cherokee she helped produce – the auto workers' dream, she said, of owning the car you helped build.

But she was also living an auto workers' nightmare. She took a transfer to Michigan when her shift was cut at Belvidere, and during an interview with NPR, she was making the 5-hour drive back to Illinois, where her husband and other family and friends still live. She gets back about once a month.

"It pretty much turned my whole life upside down," she says of losing her job at Belvidere.

Some of the union's demands center on more protections for workers because of the upheaval auto workers experience when plants are idled or shut down. The union proposed a program to pay workers to do community service if a plant is idled, as well as the right to strike over plant closures.

Companies say they need to have the flexibility to shut down or move operations – again, often citing the challenges of the EV transition when they make that case.

The EV transition is raising fears of job cuts

Ellison would be happy to build an electric vehicle. The UAW is trying to get production back at Belvidere, and odds are good that a new vehicle built there would be an EV.

But there's one thing that gives her pause about the switch: "They say it takes less people to build electric vehicles than it does a combustion vehicle," she notes, cautiously.

The UAW as a whole is concerned about this. Several years ago, it summed up the challenge in a white paper: "EV powertrains are mechanically simpler than ICE powertrains," the union wrote, referring to internal combustion engines. "This simplicity could reduce the amount of labor, and thus jobs, associated with vehicle production."

That's a challenge for the union — and a cost-cutting opportunity for the automakers.

At the same time, the switch is creating many more jobs in battery plants – and, driven by federal incentives, a huge number of battery plants are popping up in the U.S.

Organizing those plants and raising pay for those workers is a major priority for the UAW. But one big challenge for the union is that many of those plants are joint ventures between the autoworkers and other companies, complicating organizing efforts, and many are located in the right-to-work South.

Federal money could be a lever for labor

The federal government is spending billions of dollars to accelerate the transition to electric vehicles, and to incentivize more of that production to come to the U.S.

The UAW has been pressuring the Biden administration to make sure that workers, not just corporations, feel a benefit from that federal money.

The UAW has not yet endorsed Biden's bid for reelection, saying the administration needs to earn that backing. And the union was furious about federal incentives pouring into non-unionized plants with few labor restrictions.

On Labor Day, the Biden administration announced more than $15 billion in funding to convert auto plants to make EVs and emphasized that high-paying and unionized companies would have a leg up in applying for that money.