Al Root
It's a monumental day for the U.S. auto industry as organized labor tries to establish a beachhead in the South.
Results from the Volkswagen unionization vote run by the National Labor Relations Board should be known by late Friday evening.
The plant where people are voting for or against United Auto Workers representation is in Chattanooga, Tenn. It employs about 5,500 workers and makes the all-electric ID. 4, as well as the Atlas and Atlas Cross Sport.
After securing record labor deals with Ford Motor, General Motors, and Stellantis last fall, UAW President Shawn Fain vowed to expand his membership base.
"One of our biggest goals coming out of this historic contract victory is to organize like we've never organized before," said Fain in October. "When we return to the bargaining table in 2028, it won't just be with the Big Three, but with the Big Five or Big Six."
The deals signed with Ford, GM, and Stellantis -- the Big Three -- run through April 2028 and include total wage increases of some 25% over the life of the contract.
The UAW has roughly 370,000 active members, down from a peak of about 1.5 million near the end of the 1970. There are 600,000 retired members.
Expansion would be a coup. It could also help narrow labor-cost gaps between northern, primarily unionized auto assembly plants and southern, mainly nonunionized auto plants.
Specific data about total compensation including wages and benefits is difficult to come by. But in general, unionized workers in the U.S., across all industries, earn about $200 more a week than their nonunionized counterparts, according to the Bureau of Labor Statistics.
Very roughly, that can be the difference of a couple hundred of dollars per car. It doesn't seem like much, but Ford generated an North American per-car operating profit of about $400 in 2022. (Ford changed its segmented reporting in 2023, moving away from geographic details.)
Whatever happens on Friday, the UAW doesn't plan to stop in Tennessee. A union vote at the Mercedes-Benz plant in Tuscaloosa, Ala., is scheduled to begin on May 13. It employs about 6,100 workers.
Overall, there are about 1 million workers at auto assembly and parts manufacturing plants in the U.S., with about 300,000 working in vehicle manufacturing. Roughly half are unionized. Most of the membership is concentrated at Ford, GM, and Stellantis.
It looks like that percentage will be going up. Things are changing in the American auto industry. It isn't all about EVs and hybrids either. It's about labor.
Ford and GM shares are up about 25% and 60% from November lows reached just before union members voted to ratify the contracts. The S&P 500 is up about 15% over the same span. That fits the historical pattern: U.S. auto maker stocks tend to underperform leading into and during UAW negotiations, and recover after.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 19, 2024 08:03 ET (12:03 GMT)
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