UAW scrambles to save jobs, but layoffs loom

The last time the UAW signed national contracts with the Detroit 3, in 2015, the industry was at its peak and assembly lines churned to keep up with surging demand for light trucks.

This time, the union is scrambling to save thousands of jobs from being eliminated or lost to Mexico and other lower-wage countries.

Fiat Chrysler Automobiles has revealed plans to open Detroit's first new assembly plant in almost 30 years. But that bright spot is largely overshadowed by plant shutdowns at General Motors and the prospect of more job losses over the course of the union's next contract, with analysts expecting the North American economy to continue slowing.

Auto executives are bracing for the potential of a recession before 2023, when another four-year deal with the UAW would expire.

"From the worker side, they want some stability," said Josh Murray, a Vanderbilt University assistant sociology professor who coauthored a book about the rise of the auto industry and the UAW. "They're afraid their plants are going to be shut down and they're going to lose their jobs. I think this is the biggest concern of workers in the UAW at this point, that the industry seems to be heading toward another downturn. They at least want to protect what they have."

The UAW's primary sore spots are the GM assembly plants in Lordstown, Ohio, which stopped production in March, and in Detroit, which has not been assigned any work after January 2020. The company also has "unallocated" smaller powertrain plants near Detroit and Baltimore.

Shortly after Lordstown shut down, GM announced $700 million for three other Ohio plants that would create some 450 jobs. GM also has touted a bevy of smaller investments in other plants, after what has become a common routine for the Detroit 3 in contract years to help win workers' support.

But this year's layoffs and other production cutbacks since 2015 have, for the first time, left GM with the smallest UAW membership among the Detroit 3.

FCA, whose UAW membership has more than doubled since 2011, should be in a more comfortable negotiating position than GM, said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich. FCA has said its $4.5 billion investment in southeastern Michigan to usher in the next phase of Jeep products will create 6,400 jobs in the area over the next few years.

At the same time, the company cut 1,400 jobs at its Jeep Cherokee plant in Belvidere, Ill., after seven years of operating it around the clock on three crews.

Ford Motor Co., meanwhile, has been laying off salaried workers but keeping hourly employment relatively steady while shuffling some production among its plants.

Ford in November said it would eliminate shifts at assembly plants in Michigan and Kentucky, offering to transfer affected workers to nearby operations. It also has made some sizable investments, including $1 billion at its Chicago assembly and stamping plants to launch the redesigned Ford Explorer and new Lincoln Aviator.

The growing number of layoffs has clouded the mood inside assembly plants where workers were earning record profit-sharing checks amid the market's resurgence since the Great Recession.

Despite the bonuses — which over the last four years totaled about $21,500 per worker at FCA, $33,400 for Ford and $45,500 at GM — the union still wants to make up for a decade of stagnated base wages that preceded the raises included in the 2015 contract, Dziczek said.

"They did give up a decade of wage gains that didn't happen because of the situation the industry was in," she said. "Those were some rip-roaring good sales years, ... and they were not seeing wage increases. There's still folks who are like, 'We've got to get back what we didn't get.' "

Analysts said the continued investments despite fears of a slowdown show automakers are still playing the long game.

"Even with a potential economic slowdown over the near term, the longer-term outlook for the economy remains strong," Charlie Chesbrough, senior economist for Cox Automotive, said in May. "The U.S. has positive population growth and massive economic resources, and thus remains a viable option for manufacturing investments."

Although there are concerns a recession is approaching, Chesbrough says that doesn't mean the vehicle market will collapse. The effect on auto sales depends on the type of downturn and its severity, he said, noting that U.S. sales topped 17 million in 2001 amid an eight-month recession.

The industry isn't anticipating a repeat of 2009, when credit availability dried up and consumers were unable to make large purchases such as vehicles and homes.

Dziczek said the auto industry isn't like other sectors and record results aren't always a cause for celebration.

"Many industries have a record year, and pop the champagne and have a big party, but we freak out," she said. "We're like, 'OK, that means next year's not. The other shoe's going to drop and we're on the downward trend.' "