White House takes steps to avoid damaging auto strike

The White House is closely monitoring the upcoming labor talks in the US auto industry, negotiations that could put it at odds with the traditional support of a major union. So President Joe Biden is tapping a trusted adviser, Gene Sperling, to serve as the administration's point person in upcoming labor negotiations between the United Auto Workers union and the nation's three unionized automakers.

Sperling has been a top economic adviser in both the Carter and Obama administrations, and a point person in the Biden administration's efforts to battle Covid.

"As a White House point person on key issues related to the UAW and Big Three, Sperling will help ensure Administration-wide coordination across interested parties and among White House policymakers," a White House official confirmed to CNN.

Sperling, the official added, "will work hand-in-glove with Acting [Labor] Secretary Julie Su on all labor-related issues." He will need to coordinate across multiple White House offices and other stakeholders across government for this new task.

The three contracts between the UAW and General Motors, Ford (F) and Stellantis, which sells cars and trucks under the Dodge, Ram and Chrysler brands, are due to expire September 14. Traditionally the UAW will select one of the three companies to go first and have the other two put on hold while it concentrates on reaching deal that the union will then push for from the other two automakers as part of a "pattern."

The last round of negotiations in 2019 resulted in a strike at GM by nearly 50,000 union members that lasted about six weeks, costing the automaker nearly $3 billion. There was even greater cost to the overall economy in the Midwest due to the impact on GM suppliers and local businesses in the towns where GM plants are located. Beyond that, Anderson Economic Group, a Michigan think thank estimates that UAW members lost $835 million in wages during the strike and federal and state income and payroll tax collections were nearly $350 million.

All three automakers are investing billions of dollars as part of a transition from traditional gasoline powered vehicles to electric vehicles. Such a move would allow them not only to meet tough new emissions rules, but also to build cars with less need for labor because of fewer moving parts. Ford estimates the shift to EVs will reduce the hours of work needed to build a car by one third. So the shift to EVs, supported by the Biden administration, is a major concern of the UAW heading into these talks.

Biden has already been endorsed for reelection by the AFL-CIO, the nation's largest labor federation, with Liz Shuler, the group's president, describing him as "the most pro-union president in our lifetimes." But the UAW, which is part of the AFL-CIO, has held off on joining other unions in endorsing Biden so far.

The UAW has not been pleased by the Biden administration's financial support of the industry's planned transition to EV production in the future. Many of the jobs building EV batteries pay a fraction of what union-represented jobs at Big Three engine plants now pay.

Last month Shawn Fain, the union's newly elected president, blasted a $9.2 billion loan that Ford and South Korean battery manufacturing partner SK received from the federal government to build three electric vehicle battery plants, two in Kentucky and one in Tennessee.

"We have been absolutely clear that the switch to electric engine jobs, battery production and other EV manufacturing cannot become a race to the bottom," Fain said in a statement from the union. "Not only is the federal government not using its power to turn the tide - they're actively funding the race to the bottom with billions in public money."

"These companies are extremely profitable and will continue to make money hand over fist whether they're selling combustion engines or EVs," Fain said. "Yet the workers get a smaller and smaller piece of the pie. Why is Joe Biden's administration facilitating this corporate greed with taxpayer money?"

The UAW's anger at Biden administration financial support for EV production is the reason why the administration has turned to a trusted insider like Sperling this early in the process, said Patrick Anderson, president of Anderson Consulting Group.

"It's not the economics at stake," he said. "It's a sign of the political sensitive nature of these talks."

The auto talks are not the only ones that pose a risk to the US economy. UPS and the Teamsters union had a marathon negotiating session end at 4 am Wednesday with no deal in sight between the two sides.

The current UPS contract expires July 31, and the union rank and file has already authorized an August 1 strike without a new deal. With 340,000 Teamsters at UPS a strike would be the largest single-employer strike in US history and could have even greater economic impact that a walkout at one of the unionized automakers as it snarled the nation's only recently recovered supply chain. An estimated 6% of the nation's gross domestic product moves in UPS trucks.

Asked about its involvement in those talks, the White House responded, "We are in touch with both parties and remain optimistic that they can reach a mutually beneficial agreement."

Sperling, who has spent more than a decade serving at the highest levels of federal government, came to the White House months into the Biden administration, serving as the coordinator overseeing the implementation of the $1.9 trillion Covid relief law, a job that required getting money out the door quickly, maximizing its impact, and coordinating closely with state and local officials.

He has previously served in the Treasury Department and as National Economic Council director under both Presidents Bill Clinton and Barack Obama. Sperling, a Michigan native, was deeply involved in the Obama administration's efforts to steer Detroit out of its 2013 bankruptcy, working with city and Michigan officials.