The United Auto Workers (UAW) is taking the next steps in expanding its influence, targeting nonunion auto factories in the U.S., including Toyota and Tesla. This move follows the UAW’s recent success in securing favorable contracts with the Detroit Three automakers. The UAW President, Shawn Fain, has indicated the union’s intention to pursue organizing drives at these nonunion plants.
Toyota’s timely wage increase
Toyota, in particular, drew attention when it announced wage and benefit increases for its workers just after the Detroit Three contract negotiations concluded. Fain suggested that Toyota’s decision was influenced by the UAW’s intention to organize its workforce. He highlighted the positive impact of the UAW’s successful negotiations, which led even nonunion auto workers to receive raises.
Challenges in organizing nonunion plants
Organizing nonunion auto factories in the U.S. has been an ongoing challenge for the UAW, primarily because many of these plants were established by foreign automakers in states with “right to work” labor laws. These laws allow workers to opt out of paying union dues. While Honda is reviewing recent auto sector wage hikes, it emphasized that the decision to unionize ultimately rests with the employees.
UAW’s ambitious organizing goals
Shawn Fain has been vocal about the UAW’s determination to extend its influence beyond the Detroit Three automakers. After achieving significant wage increases in tentative agreements with Stellantis, General Motors, and Ford, the UAW aims to take on additional manufacturers in the future.
UAW Region 8 director Tim Smith, responsible for nonunion auto factories in the southern U.S., has reported that workers at these plants have shown interest in joining the UAW. The UAW is actively tracking inquiries from Toyota workers, with many calls originating from the Toyota assembly operation in Georgetown, Kentucky.
Total compensation consideration
Smith stressed the importance of workers evaluating the total wages and benefits offered by a union rather than focusing solely on wage rates. In the past, the UAW made an unsuccessful attempt to gain support for an organizing vote at Tesla’s Fremont, California, factory.
Nonunion automakers’ strategies
Nonunion automakers, like Toyota, have maintained hourly wages comparable to those at the Detroit Three automakers but have kept overall labor costs lower by offering reduced health and retirement benefits. They also employ more temporary workers who receive lower pay. As a result, the average hourly labor costs at foreign automakers are estimated at $55 per hour, compared to the old UAW contract rate of $64 per hour.
Prospects of widening cost gaps
If Detroit Three automakers ratify agreements calling for pay increases for veteran workers, the restoration of cost-of-living allowances, and significant pay raises for temporary workers, the disparities between labor costs at unionized and nonunion automakers will likely widen further. For instance, U.S. hourly labor costs at Tesla are estimated to range from $45 to $50 per hour.
The UAW’s efforts to expand its reach beyond the Detroit Three continue to evolve, following successful contract negotiations and a renewed commitment to organizing nonunion auto factories.