Union Risk for US-based Ultium Cells
Ultium Cells, a battery joint venture between LG Energy Solution and General Motors, has reached a tentative agreement with the United Auto Workers (UAW) to increase wages for workers at the Ohio factory in the United States by 25 percent. This marks the first time that the UAW, the largest automotive union in the U.S., has negotiated a wage agreement for electric vehicle battery factories in the country. Korean battery companies, which are significantly expanding their investments in the U.S. through partnerships with local car manufacturers, also appear to be facing the potential “union risk.”
The UAW announced on Aug. 24 (local time) that it has reached a tentative agreement with Ultium Cells to increase the wages of approximately 1,100 workers at the Ohio plant by 25 percent. The agreement also includes a retroactive payment, covering the increase up to the end of last year, which amounts to an additional US$3,000 (3.98 million won) to US$7,000 per person.
While the UAW did not disclose specific figures, it is anticipated that the hourly wage will increase from a minimum of US$16.50 to approximately US$20.60. The final agreement is expected to be confirmed on Aug. 27 (local time).
The workers at Ultium Cells’ Ohio plant resolved to establish a union at the end of last year and joined the UAW. The UAW has been making efforts to win over unions at electric vehicle and battery factories that are newly built or under construction across the U.S. This is crucial, as without influence, workers in traditional internal combustion engine plants may face reduced bargaining power during the transition to electric vehicles.
The UAW has been bolstering its efforts with its strong union stance. In its first wage negotiations in four years with the “Big 3” in the U.S. automotive industry – Ford, GM, and Stellantis – the UAW has been pushing for a 46 percent wage increase, a switch to a 32-hour workweek, and an increase in retirement benefits. It has also advocated for applying equal wages to workers in battery joint venture factories where wages are lower compared to those in finished vehicle plants.
As the management balked at it, the UAW has been preparing for a strike. A vote on the strike, which has been underway since last weekend, is expected to yield results shortly, and it is anticipated to pass with an overwhelming majority in favor. If simultaneous strikes were to become a reality, the U.S. consulting firm Anderson Economic Group projected that Ford, GM, and Stellantis could collectively incur losses of US$989 million over a span of ten days.
As the first major U.S. electric vehicle battery factory, Ultium Cells, reaches a significant wage increase agreement with the UAW, industry insiders are expressing concern. An industry insider said, “The three major Korean battery manufacturers have either established or are currently constructing approximately ten battery plants in the U.S. This development raises significant concerns about the potential rapid escalation of labor costs in the near future.”