[Unions fear that the auto industry is using the transition toward
EVs to advance a second shift away from well-paying jobs.]
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THE REAL ISSUE IN THE UAW STRIKE  
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Ronald Brownstein
September 15, 2023
The Atlantic
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_ Unions fear that the auto industry is using the transition toward
EVs to advance a second shift away from well-paying jobs. _

, Chip Somodevilla / Getty

 

The United Automobile Workers’ strike against the Big Three
manufacturers that began earlier today is exacerbating the most
significant political vulnerability of President Joe Biden’s drive
to build a clean-energy economy.

A trio of bills Biden passed through Congress during his first two
years in the Oval Office has generated a torrent of private-sector
investment into clean-energy projects
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But so far most of that green investment and the jobs it will create
are flowing into red-leaning communities that are generally hostile to
both the Democratic Party and labor unions.

Congressional Democrats provided all the votes for the legislation
that is catalyzing the rapid growth of the new green economy. But with
so many of the new energy projects benefiting red places, many people
in progressive circles worry that this historic transformation will
fail to generate either sufficient political rewards for the president
and congressional Democrats, or as many good-paying, blue-collar jobs
as Biden has repeatedly promised.

Fear that the shift to electric vehicles will reduce the number of
quality jobs in the auto industry is the backdrop for the strike the
UAW launched at midnight today. In both public and private, union
officials have made clear their belief that the auto industry is using
the technological transition to mask a second, economic, transition.
They worry that the companies are using the shift from
internal-combustion engines to carbon-free electric vehicles to
simultaneously shift more of their operations from high-paying union
jobs mostly in northern states to lower-paying, nonunion jobs mostly
in southern states.

Moreover, the union and its allies worry that the massive federal
subsidies Biden’s agenda is providing the companies for the EV
transition is inadvertently underwriting that transition toward
lower-wage and nonunion plants. As Shawn Fain, the UAW’s new
president, put it earlier this week
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“There’s a lot with the EV transition that has to happen, and
there’s … hundreds of billions of our taxpayer dollars that are
helping fund this, and workers cannot continue to be left behind in
that equation.”

As the strike approached, the Biden administration took conspicuous
steps to respond to those concerns by announcing a suite of
multibillion-dollar Department of Energy loans and grants designed
to  incentivize the auto companies to convert existing, unionized
plants to EV production.

“The president’s policy position is absolutely clear: He’s
pro-union,” one senior White House official, who asked not to be
identified while describing internal discussions, told me. “He
thinks that companies that are receiving the benefits should respect
the right to organize, should not interfere with workers’ ability to
exercise that right, and he wants to see these jobs be good union
jobs. From a policy perspective there is no daylight between the
president’s policy preferences and where the UAW is, or the other
unions are.”

The challenge for the Biden administration in delivering on that
pledge is the decisions that the auto companies and other industries
are making in response to the bills he signed to promote more
domestic investment
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the bipartisan infrastructure law, a measure to encourage more U.S.
production of semiconductors, and the Inflation Reduction Act, which
contains federal assistance for the domestic manufacture and
deployment of low-carbon energy sources.

The tax subsidies and federal grants and loans in those bills have
triggered a towering wave of new domestic investments across a broad
range of industries producing clean energy. The big auto manufacturers
alone have announced nearly $90 billion in spending on manufacturing
facilities to produce EVs in just the past two years, according to the
Center for Automotive Research, a nonpartisan Michigan-based think
tank. Suppliers to the companies, including firms producing
semiconductors for automotive use, are investing billions more in the
EV transition. Brookings Metro, a nonpartisan think tank, calculated
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total private-sector investment in EV manufacturing under Biden has
reached nearly $140 billion. This building surge dwarfs the typical
amount of annual investment in the auto industry over the past quarter
century, but still likely represents only a down payment on what’s
ahead. “There’s a lot of innovation that is going to happen over
the next 20 years, in terms of product, process, technology,” Alan
Amici, the center’s president and CEO, told me.

For Democrats, the rub is how much of this capital is flowing into
red places
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to unions and represented by House and Senate Republicans who voted
against the legislation that triggered the investments. (Every House
Republican this spring also voted to repeal all of the Inflation
Reduction Act’s incentives for clean-energy production.) The biggest
recipients of the new investments include more red states than blue
ones, Brookings has determined
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Red states are receiving so many of the new projects partly because
they have lower tax rates and electricity costs. But most analysts
agree that companies have also channeled so much of their new
investments toward red states because most of them have “right to
work” laws that make it more difficult for unions to organize.

In the auto industry, this preference for states resistant to unions
has translated into a surge of investment in the South. Brookings
Metro calculated that the South has attracted 55 percent of the total
private investment in electric vehicles and batteries under Biden.
That’s more than double the portion of the new clean-vehicle
investment that has flowed into the Midwest, whose existing auto
plants are largely unionized. That torrent of new money includes plans
to build EVs or their batteries by Hyundai and Rivian in Georgia,
Toyota in North Carolina, Tesla in Texas, BMW in South Carolina,
Mercedes-Benz in Alabama, General Motors in Tennessee, and Ford in
Tennessee and Kentucky.

The EV investments announced so far are projected to generate at least
65,000 jobs across the region, Stan Cross, the
electric-transportation-policy director for the Southern Alliance for
Clean Energy, told me. Far more job growth is virtually certain in the
years ahead, Cross said, largely because such investment patterns are
self-reinforcing: Companies that provide parts for the big
manufacturers are already locating around their new southern plants,
such as the $1 billion in investment announced by suppliers near
Hyundai’s Georgia facility.

This southern EV boom is reinforcing a long-term shift in the auto
industry’s center of gravity that has weakened the UAW’s position.
Heavily unionized, Democratic-leaning Michigan still employs many more
people in the industry than any other state. But starting in the
mid-1990s in plants by Mercedes in Alabama and BMW in South Carolina,
the industry’s employment has steadily shifted to the South. Since
the early ’90s, the South’s share of total auto-industry
employment has roughly doubled from 15 to about 30 percent, while the
Midwest’s share has fallen, from 60 to about 45 percent, Karl
Kuykendall, a regional economist at S&P Global Market Intelligence,
told me. Kuykendall said he “would not be surprised” if the pace
of this regional transition accelerates as the companies move deeper
into the technological transition to electric vehicles.

Hardly any of the auto plants in the South are unionized. And wages
even for manufacturing workers are much lower in the region and in
other red states than in the Midwest, as Michael Podhorzer, a former
political director for the AFL-CIO, has calculated. The disparity
between largely union and nonunion regions across the U.S. creates an
enormous challenge for the UAW. In the strike that began this morning,
it is seeking a raise of about 40 percent over the next four years,
and the restoration of automatic pay increases for inflation, as well
as health and retirement benefits that it surrendered when the
companies faced bankruptcy amid the 2008 financial crisis. But even if
the union succeeds at winning a favorable contract, that could just
increase the incentive for the auto industry to shift more jobs to
nonunion plants across the South.

While foreign automakers have invested heavily in the South, the
fabled Big Three domestic auto manufacturers (General Motors, Ford,
and Stellantis) still mostly rely on facilities across the industrial
Midwest. But the announcements by Ford and GM that they plan to build
battery plants in Kentucky and Tennessee may signal a shift in that
strategy. As important to the UAW, Ford, GM, and Stellantis are
structuring their EV-battery plants, in the North and the South, as
joint ventures with foreign partners that are not subject to the
national labor agreement the companies are now negotiating. The union
has to negotiate separate contracts with those plants—where the
companies are offering much lower wages than in their unionized
facilities.

“From all evidence, automakers appear to be utilizing the shift to
electric vehicles to do everything in their power to lower job quality
for the very workers they are relying on to make this transition
happen,” Jason Walsh, an executive director of the BlueGreen
Alliance, a coalition of labor unions and environmentalists, told me.
Those concerns have prompted the UAW to demand in the contract talks
that the auto companies guarantee that workers now building
internal-combustion-engine vehicles will be assured jobs as the
companies switch toward manufacturing more EVs.

Early on, the Biden administration appeared somewhat obtuse to these
concerns, even though Biden has sympathized more overtly with
organized labor than any other Democratic president in decades.
Speaking before a Silicon Valley industry group in early June, Energy
Secretary Jennifer Granholm turned heads among labor leaders when she
said the administration was “agnostic”
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choose to site their clean-energy investments.

Her department, perhaps reflecting that perspective, a few weeks
later approved more than $9 billion
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federal loan guarantees to Ford and a Korean partner to build their
EV-battery plants in Kentucky and Tennessee, two right-to-work states.
Fain, the union president, immediately issued a statement
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the loan guarantees and declaring that the administration was
“actively funding” a “race to the bottom” in wages and
benefits “with billions in public money.”

Fain’s message appears to have been received. The administration’s
tone was different in late August, when the Energy Department
announced that it was making available $2 billion in grants and $10
billion in loan guarantees under the Inflation Reduction Act (as well
as another $3.5 billion in grants under the infrastructure bill) to
subsidize the conversion of existing plants to make electric vehicles
and their batteries. “We are going to focus on financing projects
that are in long-standing automaking communities, that keep folks
already working on the payroll, projects that advance collective
bargaining agreements, that create high-paying, long-lasting jobs,”
Granholm told reporters at the time
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That message reflected Biden’s own priorities, the senior White
House official told me this week: “All I would say is, the president
is not ‘agnostic’” about where the clean-energy investments are
flowing. “He’s the president for all of America. But all of
America ought to respect the right to organize. He is trying to move
the system toward good-paying jobs and more union density.”

Labor allies agree the administration is now focusing more on the
potential challenges for workers in the EV transition than it did
earlier in Biden’s presidency. The late-August Energy Department
announcement “is a very clear indication that the Biden
administration is hearing what union workers are saying and is trying
their best to be responsive to that,” Walsh said.

The problem for the administration is that it has limited tools to
shape how the auto companies make their investments. Generally, under
the kind of federal loan and grant programs that Granholm made
available in August, the administration can encourage companies to
preserve existing plants and also to remain neutral in labor
organizing campaigns when the firms open new clean-vehicle facilities.
All indications point to Biden using that leverage more aggressively
than he did earlier in his presidency. Over time, the senior White
House official said, the administration “has strengthened its
negotiating posture” to demand “stronger community benefits”
from companies seeking the loans or grants.

But the Inflation Reduction Act’s biggest incentives for building
electric vehicles are generous tax credits for both producers and
consumers. And those credits are available to companies that build and
source a specified share of their materials for EVs domestically
whether or not they use union labor. When the House passed its version
of the Inflation Reduction Act in 2021, it included another $4,500 tax
credit to consumers for EVs built largely with union labor, but
Senator Joe Manchin of West Virginia, a Democrat, insisted on the
removal of that provision
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one price for his vote that allowed the overall package to pass the
Senate.

That now looks like an extraordinarily consequential concession.
“This is happening because Joe Manchin pulled the union requirements
out of the IRA and that really opened the door to this perverse
situation where, by law, the administration has constraints about how
far it can push to ensure that there are going to be good quality jobs
in this transition,” says Adam Hersh, a senior economist at the
Economist Policy Institute, a left-leaning think tank.

Looming over all these maneuvers is former President Donald Trump’s
relentless attack on Biden’s clean-energy agenda. In speeches, Trump
has repeatedly declared that Biden’s intertwined proposals to
promote EVs will “kill countless union autoworker jobs forever,
especially in Michigan and the Midwest
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Trump, and some of the other 2024 GOP candidates, have pledged to
repeal the IRA’s clean-energy incentives as well as Biden’s
proposed fuel-economy standards for cars and light trucks, which would
require the companies to massively shift their sales toward EVs over
the next decade. In effect, Trump is presenting the transition to EVs
as another example in his broader claim that the left is seeking to
uproot and transform America as his supporters know and understand it.

While many labor leaders have endorsed Biden for a second term, Fain
has pointedly withheld the UAW’s endorsement. And Fain has publicly
warned
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Trump’s denunciation of the EV transition could find a receptive
audience among his members if the union can’t win a generous
contract and strong guarantees of job security. Given the importance
of the industrial Midwest to the president’s reelection hopes, Biden
may have nearly as much at stake as Fain in the outcome of this
strike.

_RONALD BROWNSTEIN is a senior editor at The Atlantic and a senior
political analyst for CNN._

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