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GM electric car push could mean fewer and lower paying jobs

by Ace Damon
GM

Tom Krisher, Associated Press

Posted on September 21, 2019 at 10:24.

DETROIT – If US consumers abandon electric vehicle fuel burners, the United Auto Workers union is in trouble.

Thousands of jobs in engine and transmission plants across the industrial Midwest would disappear, replaced by smaller workforces in clean, squeaky automated factories that mix chemicals to make batteries.

The union is aware of this possibility as it negotiates for the future as much as it does in contracts with General Motors. Meanwhile, more than 49,000 union workers are on strike against the company and have closed its factories in the last six days.

GM CEO Mary Barra has promised a "fully electric future," with the company undergoing a painful restructuring to raise money in part to develop 20 electric models it plans to sell worldwide by 2023.

In the contract negotiations, GM has offered to build an electric vehicle battery factory in Lordstown, Ohio, where the company is closing an assembly plant. The automaker, according to one person informed of the offer, wants the plant to be run by a joint venture or a battery company. It would be far fewer union workers who would receive less than $ 30 per hour that UAW members make on assembly lines, said the person, who did not want to be identified because the contract details are confidential.

For the union, getting the best salary in Lordstown is crucial because battery jobs may one day supplant many of GM's 10 US engine factories, which now employ more than 10,500 workers per hour. Also at stake is the future of the union, which has lost high-paying jobs over the past 30 years, said Sam Abuelsamid, a Navigant Research analyst with the auto industry.

"I understand why the UAW would reject this deal," said Abuelsamid. "To accept a lower wage level for employees of Lordstown or any other factory where GM wants to do something similar, I think it would be foolish for them."

For the company, however, lower wages are needed to keep costs competitive with other automakers that will hire battery cells and pack manufacturing for non-union factories that pay less than the UAW's salary, Abuelsamid said. GM is also expected to reign in spending while trying to sell more electric vehicles, which are now more expensive than gas-powered ones, he said.

The company will not provide details on how many workers would be employed at the Lordstown battery factory or how much will be paid. But the figure is nowhere near the $ 30 an hour maximum wage at the assembly plant, which two years ago employed 4,500 people making the Chevrolet Cruze compact car.

The only GM plant comparable to the proposal in Lordstown is now in Brownstown Township, Michigan. About 100 UAW workers took LG Chem-made battery cells in western Michigan and combined them into packages for the Chevrolet Volt rechargeable gas electric car. The Volt was canceled last spring and now 22 remaining workers make hybrid batteries and assemble autonomous vehicle equipment.

In 2009, the UAW agreed to a lower salary of $ 15 to $ 17 per hour in Brownstown to help start the Volt.

While there is potential for growth if sales of electric cars take off and more batteries are needed, no one is sure when or if this will happen in the US. Few are predicting that Barra's "all-electric future" is coming soon, and the Trump government has proposed reversing fuel economy requirements.

All-electric vehicles currently account for about 1.5 percent of new US vehicle sales, and LMC Automotive expects it to rise to just 7.5 percent by 2030. The forecasting company does not see electric vehicle sales reaching 50 percent. % of market by at least 2049.

Overall, it is a different story. Navigant sees sales growth from just over 1 million last year to 6.5 million by 2025. The increase is expected because of government incentives and fuel economy regulations in China.

GM now loses thousands in every Chevy Bolt electric car it sells and has failed to mass produce enough to reduce the cost. Without high volume production, it is difficult to reduce the price. Paying total union wages in Lordstown would increase the costs.

"You can't be at a cost disadvantage in a market that is still in its infancy," said Jeff Schuster, senior vice president of LMC.

Even if the union succeeds in earning higher wages at battery factories, engine and transmission jobs will someday begin to disappear, Abuelsamid said. He estimates that it will take only 25% to 50% of today's engine and transmission workforce to build battery cells, packages and electric motors. GM and other companies could also continue to outsource cells and battery packs to non-union factories, as GM now does for Bolt.

It is not yet known whether the union will position itself on electric vehicles in this round of contract negotiations. You may decide that you do not want to set a lower wage precedent that could spread to Fiat Chrysler or Ford. But if you can preserve health insurance and get pay increases, job guarantees, more profit sharing, and a way for temporary workers to work full time, that could lead to future contract negotiations, Schuster says.

"The final path (for electric vehicles), in our opinion, is so far that I'm not sure it has to be dealt with now," he said. "I don't know if it has to be what keeps an agreement at this stage."

Workers at the powertrain mills know their future is in jeopardy, said Tim O'Hara, UAW president in Lordstown. He expects the union to try to protect as many higher-paying jobs as possible.

"It's on many people's minds about the electric future," said O'Hara. "The goal is always to have the same kind of work with benefits and wages that you start."

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