Autos

GM strike highlights how shift to electric cars puts future auto jobs at risk

Key Points
  • Some 48,000 unionized GM workers are on strike.
  • The shift to electric vehicles could cost the UAW 35,000 jobs in the next several years according to their own study.
  • Electric cars require fewer parts, workers and time to build.
Engines assembled as they make their way through the assembly line at the General Motors (GM) manufacturing plant in Spring Hill, Tennessee, August 22, 2019.
Harrison McClary | Reuters

One of the greatest unknowns with ongoing labor negotiations between the United Auto Workers union and General Motors isn't about pay or benefits.

Electric vehicles are upending the industry, saving some jobs as factories are retooled to build zero-emission vehicles but costing many times more in the long run. It's a top concern for union leaders as they negotiate a new labor deal for 158,000 unionized workers at the three Detroit automakers: Ford, General Motors and Fiat Chrysler.

GM CEO Mary Barra announced plans last November to cut up to 14,000 jobs, wind down five plants in North America by the end of this year and shift the company's workforce and lineup to build more electric and autonomous vehicles.

"We are transforming our workforce through salaried and executive reductions as we move to an all-electric future," she told investors in outlining the company's new strategy in January. "These actions are also helping us fund the race to lead in the EV and AV technology development as automakers and tech companies alike compete to unlock new and potentially lucrative revenue streams through mobility services."

Some 48,000 GM workers are currently on strike as the UAW negotiates a new labor contract that could save some of those factories from closing down.

Not only is the industry grappling with falling consumer demand for cars, its shift to EVs will also cost even more jobs. EVs are simply easier to build and require fewer parts without an engine. The UAW expects the move away from gas engines could cut 35,000 jobs over the next several years, according to a research study conducted by the union last year. That means the union is essentially negotiating for new products that could eventually mean less jobs for its members.

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"EV powertrains are simple compared to internal combustion engines," UAW Research Director Jennifer Kelly said during a conference in March to discuss upcoming contract talks with GM, Ford Motor and Fiat Chrysler. "The simplicity could reduce the amount of labor, and thus jobs, associated with vehicle production."

Internal combustion engines can require thousands of parts while electric "engines" and drivetrains only require a few hundred, according to the study. Less parts mean less assembly jobs for workers.

The situation represents a modern paradox in manufacturing. In order to create the "jobs of the future," as UAW leaders have referred to them, GM and other automakers are expected to have to cut or alter many of the ones that exist today.

The new jobs will likely pay more than those they replace but require more skilled workers and additional training than traditional assembly jobs, something the union has said its members are willing and ready to do.

"I will tell you that the UAW is excited to be part of the evolving workforce: EV propulsion and energy storage; autonomous vehicles and related components, new mobility businesses and joint ventures," UAW President Gary Jones said when opening negotiations with GM in July.

Whether or not automakers and the UAW are ready for such a change in manufacturing could be determined with the union's ongoing negotiations with GM. The automaker last year announced plans to end production and potentially close up to four U.S. assembly plants, including large assembly plants in Ohio and Michigan, that impacted roughly 14,000 union members.

As part of a potential deal with the union, the company told union negotiators it could produce an all-electric pickup to Detroit-Hamtramck Assembly in Michigan and battery cell production for all-electric vehicles at or near Lordstown Assembly in Ohio, according to a person familiar with the talks. The Lordstown plant was shuttered in March and the Detroit-Hamtramck is slated to halt production in January.

The new work, according to details of a potential deal with the union released by GM on Sept. 15, would assist in adding 5,400 new jobs to its union workforce over the next four years — a far cry from the amount of jobs that were impacted by the automaker's plans.

"I've been in electric vehicle plants they don't take as many workers to assemble," said Michelle Krebs, a senior analyst at Autotrader, who toured the Audi E-Tron plant in Belgium last year. "It's very quiet. There's not many people in the plant because basically you build the vehicle and then you slide the battery under the floor in their case and there are a lot less parts."

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The all-electric pickup and battery production are part of GM's plan to introduce 20 new, all-electric models by 2023, eventually phasing out gas- and diesel-powered cars altogether.

It's not just GM that's making these moves either.

The job losses would bleed into other countries as well. Even a moderate shift to electric mobility could leave up to 75,000 Germans out of work by 2030, even after creating 25,000 new jobs, Germany's Fraunhofer Institute for Industrial Engineering IAO said in a study last year.

Ford CEO Jim Hackett, when discussing electric engines with investors in 2017, told investors the shift to electric could cut the time needed to build an electric car by 30%, compared with conventional vehicles, according to Reuters.

Hyundai's auto union chief, Ha Bu-young also didn't mince words when he told Reuters last year that the company's shift to electric could cut jobs at the Korean automaker by as much as 70%.

"Electric cars are disasters. They are evil. We are very nervous," he said at the time.