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Home / Business / GM's electrical ambitions rattle beneath the surface of the UAW strike

GM's electrical ambitions rattle beneath the surface of the UAW strike



Even if

General motors
Co.


GM -0.27%

and United Auto Workers union come closer to solving their biggest labor confrontation in decades, a bigger, unresolved question is the inevitable pain for American workers from GM's long-standing EVs.

GM's need to release cash to invest in electricity has led to deep costs in its core business, including the decision to close four US factories – a major friction point in GM's longest walkout since 1

970.

For UAW, the harsh reality of a major transition affecting the automotive industry cannot be avoided: Building electric vehicles requires far fewer workers, which makes it almost impossible to avoid job losses and pay cuts. In addition, fewer components are needed, and many of them are imported.

This means that the union, which represents about 225,000 workers at US carmakers and suppliers, is facing a battle to play a key role in the industry's electrically focused future.

The engine and gearbox have long been the core of the car – and a sector that employs hundreds of thousands in the United States. But electric cars have fewer moving parts and are less complicated to assemble, which requires about 30% fewer workers to build compared to a gasoline motor car, say analysts and industry leaders.

Morgan Stanley

Estimates Widespread adoption of electric vehicles worldwide can eliminate 3 million jobs in the automotive industry.

The closed factories are the most visible sign of the GM Chief Executive

Mary Barra & # 39; s

focus on redirecting capital to develop electric and driverless cars, capital-intensive games with an uncertain gain. GM plans 20 new electric models, mostly in China, over the next few years, partly financed by plant closures and other features aimed at increasing cash flow by $ 6 billion a year.

GM Chief Mary Barra at the opening of GM-UAW contract talks in July in July in Detroit.


Photo:

Bill Pugliano / Getty Images

"We are willing to make tough and strategic decisions not only to fulfill our commitments but to secure the company's future," Barra told analysts earlier this year.

Almost all of GM's sales in the United States are gasoline-powered cars today. and that is not expected to change anytime soon. But signs of the transition to electricity are everywhere. For example, the company's luxury brand Cadillac recently changed the mark on the rear of the vehicles to reflect a torque measurement – an appealing feature of driving electric cars – rather than horsepower or engine size. its two Detroit rivals –

Ford Motor
Co.

and

Fiat Chrysler Automobiles

NV – Over time, it could outsource much of the mechanical casings of an electric car to nonunion suppliers. Today, most of the batteries installed in a plug-in car are purchased from

LG
Corp

,

Panasonic
Corp

and other Asian based suppliers.

At the negotiating table, UAW's role in GM's electric vehicle plans has been a rallying point. GM floated a proposal to build a new electric car battery plant in Ohio, near one of its closing facilities, and hopes to fill some of the factory jobs lost earlier this year, people close to the talks said. [19659015] Workers mount Chevy Volt electric vehicles and Opel Amperas in Hamtramck, Mich.


Photo:

Bill Pugliano / Getty Images

But the plant will probably employ hundreds of UAW workers, numbering hundreds, compared to the more than 3,000 unionized employees who assembled compact cars at the Lordstown, Ohio plant just a few years ago. Jobs would also pay less, people said near the calls: Around $ 15-17 per hour to be competitive with other, non-uniform battery cell plants owned by

Tesla
Inc.

and LG, the people said, far less than the nearly $ 30-hour hour at GM's Lordstown plant.

GM's proposal for the battery plant has already frustrated some workers.

Brian DiRenzo, age 37, one of the thousands of workers affected when GM closed the Lordstown plant in March, says he has no interest in working on a battery cell plant due to lower pay and holding out hope of the Lordstown factory being revived. "Workers deserve a car in that facility, not some fake battery system," he said.

While it is still uncertain how fast the demand for electric cars will grow – or whether battery costs will fall enough to make them affordable – almost all major car companies are moving to electrify their car setup.

Together with GM,

Volkswagen
AG

,

BMW
AG

and other major car manufacturers are investing heavily in electricity, bolstered by tougher emission standards in Europe and China. Ford, which is also restructuring its business to cut costs, has said it will spend $ 11 billion on electrified models through 2022.

Labor leaders in the United States and Europe are trying to preserve jobs by pushing car companies and suppliers to build electric cars and parts domestically .


GM's Trial-and-Error Path to Electrics

General Motors has been experimenting with electric cars for more than 100 years.

1912: GM produces 682 electric trucks with lead acid and nickel-iron batteries.

General Motors

1 of 9


In Germany this week, workers beamed when Volkswagen opened the doors to a new line to produce battery cells at the Salzgitter engine factory. A few years ago, VW committed itself to an agreement with the Union to produce three electric vehicle models in Germany by converting factories it would otherwise have closed down.

When

Porsche
AG

deciding where to build their first all-electric car, the Taycan sedan introduced this month, convincing executives to take a cut in their annual bonuses to persuade management to build the car in Stuttgart.

UAW is pushing for similar moves in the United States

"We want new investments in technology and products that help us stay in front and training to ensure our workers are competitive," UAW President

Gary Jones

said at the union's negotiating convention in the spring.

Gary Jones, president of the UAW, addresses the federal negotiation convention in Detroit in March.


Photo:

Carlos Osorio / Associated Press

Beijing requires car companies to sell a minimum number of electric vehicles. In the EU, the high cost of car manufacturers to comply with tighter emissions regulations over the next decade represents "the greatest risk to the EU's automotive industry in recent memory," according to analysts at Evercore ISI.

Composite, car companies spend around $ 225 billion globally to develop electric cars over the next few years, estimates consultancy AlixPartners. Electric vehicles still account for less than 2% of total US sales today, and even bullish forecasts expect their market share to remain below 20% in 2030.

The capital crushes industry consolidation. A now merged bid between Fiat Chrysler and

Renault
SA

This year was driven by the need for scale to compete in electric cars and other burgeoning technologies.

China is GM's largest market in sales, increasing the pressure to expand electric vehicles in major markets to leverage its scope.

Baojun E100 and E200 all-electric battery cars on a lot operated by GM and its local partners in Liuzhou, China.


Photo:

aly song / Reuters

Globally, 42% of GM's factories produce engines or gearboxes, signaling that efforts to cool their manufacturing operations can lead to significant costs as well as labor, says Credit Suisse analyst

Dan Levy

said it in a report this week.

GM President

Mark Reuss,

an engineer and professional racing track tester, sees a possible end for gasoline engines. He says GM has thrown away almost all the efficiency it can from them, and that electricity is the only way to make tougher emissions regulations globally.

"I don't know where to spend money anymore" on gasoline engines, Mr. Sa Reuss said in an interview.

GM President Mark Reuss, on the right, sees a possible end to gasoline engines.


Photo:

jonathan serious / Reuters

Scott Harwick, an electrician at GM's Detroit-based assembly plant, is hopeful that the plant will have a new life producing electric vehicles. GM dealers have raised the prospect of contract talks about building an electric pickup at the plant, people say near the talks.

"We would like to have an electric pickup here," said Mr. Harwick, 49, during a break from the picket lines last week. "I don't care what it is – we just want something that sells."

Write to Mike Colias at Mike.Colias@wsj.com

Share Your Thoughts

How can car workers position themselves as a valuable resource for companies switching to electric cars? Join the conversation below.

Corrections and Reinforcements
Volkswagen opened a battery cell line at a motor factory in Germany this week. An earlier version of this article described the failure of a previous engine system (September 27)

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