Receive free Electric vehicles updates
We’ll send you a myFT Daily Digest email rounding up the latest Electric vehicles news every morning.
Detroit is on strike. As of last Friday, the United Auto Workers of America, which represents roughly 40 per cent of all industry employees in the US, is taking on the “big three” car manufacturers: GM, Ford and Stellantis (formerly Chrysler) with the aim of bringing electric vehicle workers under the union banner.
Auto industry strikes are always significant, but this one is especially so.
The unions are not just fighting for a few more bucks. This battle may determine not only the future of the clean energy transition in the US, but potentially the outcome of the 2024 presidential election, and the future of the Democratic party. It’s a worthy battle, but also a very, very risky one.
The first point to consider is how and where electric vehicles get made. While President Joe Biden’s initial climate change executive order and the climate stimulus bill that first passed through the House of Representatives were explicitly pro-union, the wording of the final Inflation Reduction Act (which, despite its name, is a climate bill) supported “domestic” labour rather than stipulating the use of union labour.
This change was not only due to pushback from Joe Manchin, the Democratic senator from West Virginia who played a key role in ensuring that the IRA was passed. It was also the result of strong lobbying by foreign multinationals, many of which want to use the American South — where many new EV jobs are heading since labour and environmental standards tend to be lower in these states — as, in effect, their own personal China.
The fact that this race to the bottom is happening on America’s home turf is one reason behind the strike. The UAW wants to ensure that workers who make electric batteries and other components in the new EVs get union benefits.
This is in some ways a life-or-death battle for the union. The EV transition is already predicted to significantly lower the number of jobs in the automotive sector in the short term, since you simply don’t need the same number of components and thus workers on an assembly line as you do to manufacture cars with internal combustion engines. Ford chief executive Jim Farley told the Financial Times back in 2022 that the EV transition might require 40 per cent fewer workers.
Some people — even some who promote the interests of workers — might say: “Who cares where the jobs are put as long as they are in the US?” But there are big political reasons why it matters.
That gets us to the second point, which is the possible impact on the 2024 presidential election.
Union membership has declined hugely in the US over the past several decades, but it still represents a key part of the Democratic voting coalition. One of the reasons Donald Trump was elected in 2016 was because union labour in swing states such as Pennsylvania voted for him.
Union officials have done a lot of ground work since then to try to educate members about the former president’s failure to follow through on the promises he made to workers. But if Biden is unable to end the strike, Trump could be the beneficiary — and American democracy the loser.
For this reason, I worry about the ambition of these strikes. On the one hand, you can hardly blame the autoworkers — who made significant concessions during the 2008 financial crisis and its aftermath — for wanting a larger share of the hundreds of billions in profits booked by the big three, which have risen 92 per cent in the past decade. Biden himself said last week that “record corporate profits” require “record contracts” for workers. If he is pushed out of office in 2024, it won’t be only American unions that lose.
Either way, the strikes and the EV transition in general are hastening a moment of reckoning for the Democratic party. The wealthy coastal progressives who drive the Teslas that represent 60 per cent of all EVs sold in the US often care more about fixing climate change than labour rights. But if the Republican party nominates Trump and he wins, neither the planet nor workers will be safer.
How can Biden square this economic and political circle? Perhaps by expanding the focus from the UAW demands to the need for a broader global coalition around carbon pricing and labour standards.
While some would argue that China flooding Europe with EVs in violation of World Trade Organization rules matters less than getting more cheap EVs on the road, the tough political truth is that if western countries are perceived as selling out their own workers, we’ll see a harder and broader swing towards Trump-style autocratic populism.
A better idea would be for the US and Europe to come together and set joint labour and environmental standards on how EVs are made. This would help avoid a race to the bottom with either China, or each other, and put tariffs on vehicles that don’t adhere to them.
Those standards should account for the total carbon load of production — I would want to know, for example, how much coal-powered electricity or forced labour is used to make all clean energy inputs, whether they come from China or elsewhere.
The stakes are too high for another race to the bottom.
rana.foroohar@ft.com
Source: Economy - ft.com
