The historic breakthrough of the American Automobile Union: the next target is Tesla.

They call the shots in Detroit, forcing the big three automakers to suffer heavy losses; they can directly influence the outcome of elections, forcing the White House to change its policies; they keep Elon Musk on high alert, making Tesla stay on high defense. The United Auto Workers (UAW) has achieved a historic breakthrough in the southern United States, and their next target is Tesla.

"If I join the union, I will close the factory and stop production." Viewers of the Netflix documentary "American Factory" will have a deep impression of this statement by Cao Dewang. The film, which won the Oscar for Best Documentary, objectively records the entire process of Chinese entrepreneur Cao Dewang setting up a factory in Ohio, USA, and the development of labor relations.

Over a decade ago, Cao Dewang's Fuyao Glass took over a factory that had been closed by General Motors for many years, invested over $200 million in renovation, hired more than 2,000 workers, offered wages higher than the local average, and was ready to start production on a large scale to meet the needs of local American car manufacturers.

However, Cao Dewang soon discovered the many difficulties of setting up a factory in the United States: a lack of skilled technical workers locally, the need to dispatch technical backbone from China for training, and American workers also had many complaints about the intensity of work at the Fuyao factory, unable to match the work efficiency of Chinese workers.

What annoys him even more is that the United Auto Workers (UAW) has been trying to mobilize workers to vote to join the union. This led to Cao Dewang's harsh words. What reassured him was that in the end, the Fuyao Glass Ohio workers did not vote to join the union.

Why are American companies so resistant and afraid of union organization? Why is Tesla, led by Musk, so highly vigilant and determined to resist and prevent union propaganda, even at the risk of being punished?

Volkswagen Tennessee factory joins the union

The National Labor Relations Board (NLRB) announced last Friday that Volkswagen's car assembly plant in Chattanooga, Tennessee, has voted to join the UAW. Volkswagen has also recognized the results of this vote.

In the three-day vote, nearly three-quarters (73%) of the 3,613 workers who voted at the factory supported joining the UAW union. This is the third union vote at Volkswagen's Tennessee factory in the past decade. In 2014 and 2019, the previous two union votes did not reach the simple majority vote required to establish a union.

The Chattanooga plant is Volkswagen's largest factory in the United States, built and put into operation in 2011, initially producing the Passat model, and in recent years shifting to produce the SUV model Atlas, and starting production of the electric vehicle ID 4 two years ago. Most of the Volkswagen models sold in the United States are mainly from Mexican factories; under the US-Mexico-Canada trade agreement, cars assembled in Mexico enter the United States duty-free.

After voting to join the UAW union, the workers at the Tennessee factory issued a statement celebrating their victory. "People in high positions told us that Chattanooga is not the place to form a union, and now is not the time to form a union. But we won the union vote, and it's time for workers in the South to stand up and fight for a better life."

It is worth mentioning that this is the first car workers' union established in the southern United States in eighty years, and it will undoubtedly lead to a chain breakthrough. The next target for the UAW is more than a dozen other car factories in the southern states, including Toyota, Honda, Hyundai, Nissan, Mercedes-Benz, BMW, Volvo, and others.

Therefore, the largest labor union organization in the United States, the AFL-CIO, also congratulated the union vote at the Volkswagen factory, calling it a historic milestone victory for union organization in Tennessee and the southern United States.

Mercedes-Benz's assembly plant in Woodstock, Alabama, will undergo a union vote next month and is likely to become a new member of the UAW. The UAW is optimistic about the voting prospects because over half of the workers at the factory have already signed in support of forming a union.

This breakthrough in the southern region is significant for the UAW because their influence is mainly concentrated in the Great Lakes region, especially with the Detroit Three automakers, whose dozens of factories have already joined the UAW. However, the UAW has consistently failed to make headway in the more than a dozen automobile assembly plants in the southern United States.

This is because the laws in the southern states of the United States tend to favor protecting corporate interests and setting up more obstacles to the establishment and expansion of unions. For example, all southern states in the United States have "Right to Work" laws, which allow workers to decide whether to join a union and pay union dues. This law greatly restricts the influence of unions and weakens their bargaining power in negotiations between labor and management.

Therefore, many foreign automakers choose to establish factories in the southern states of the United States away from the Great Lakes region, not only to obtain lower costs and a more powerful regulatory environment but also to avoid union influence. Tesla's factories are located in California and Texas.

Of course, in addition to regulations favoring businesses and hindering the expansion of union organizations, these states also provide more incentives for attracting investment from automakers. For example, to attract Rivian to invest $5 billion in building a factory and creating 7,500 jobs, the government of Georgia and Atlanta provide up to $1.5 billion in various incentive policies.

A six-week strike resulted in a one-fourth increase in wages.

The confrontation between corporate giants and union organizations has always been a tradition in the United States. In the United States, union organizations are more like intermediaries between businesses and workers, collecting union dues from workers, representing workers in labor negotiations with businesses, and advocating for maximizing benefits for workers. Take the UAW as an example, their union dues are 1.44% of workers' wages, and the total compensation of UAW President Shawn Fain is as high as $454,300.

Obviously, no company wants to see its employees forming a union because it means they will face strong negotiating pressure from the union in the future, forcing them to increase wages and benefits. Major corporate decisions also have to be negotiated with the union, and factories cannot be closed arbitrarily. In cases of unsuccessful negotiations, unions can even organize collective strikes and engage in tough confrontations with companies.

One important factor why the Detroit Three are at a disadvantage in their competition with Japanese automakers is the UAW: not only are labor costs significantly higher than those of Japanese carmakers, but important corporate decisions also need to be negotiated or even compromised with the union. This is also the fundamental reason why Musk strongly opposes the entry of the UAW into Tesla.

However, from the perspective of workers, union organizations are the most effective means to maximize their own interests. Only through union organizations with strong political influence and negotiation capabilities can ordinary workers strive for as many benefits as possible in their game with corporate giants. Without the strong bargaining power of the UAW, Detroit autoworkers would not be able to enjoy much higher wages and benefits than workers in other industries.

Every four years, the UAW has to renegotiate labor agreements with the Detroit Big Three. Due to the inability to reach a labor agreement, from September to October last year, UAW mobilized more than 50,000 workers to hold a 46-day strike at more than 40 factories in the United States, causing the three major automakers to suffer economic losses of over $5 billion.

Initially, UAW demanded a pay raise of up to 40% for workers, which was strongly opposed by the car companies. General Motors and Ford argued that a pay raise of over $100 billion would lead to bankruptcy and not be in the long-term interest of the workers. However, UAW countered that in the past few years, the compensation for executives at the car companies had increased by over 40%, while the workers' pay had only increased by 6%, which was clearly unfair.

After the strike continued for six weeks, the Detroit Big Three finally could not withstand the losses and eventually accepted a labor agreement to raise workers' pay by 25%. This was the largest pay raise for UAW in over 20 years. Over the next four years, the basic annual salary for UAW workers will reach $85,000 (excluding overtime pay).

Forcing the White House to adjust environmental policies

Among many industry unions in the United States, UAW has the most special political influence. This is not only because of the significance of the automotive industry to the U.S. economy and employment, but also because UAW has nearly a million active and retired union members, as well as their family members, directly influencing millions of votes. Moreover, the Great Lakes region where UAW is located is the most critical swing region in U.S. elections, directly influencing the election results.

Although UAW caused heavy losses for the Detroit Big Three in the labor agreement, sometimes they also align with the interests of traditional car companies. In April last year, the U.S. Environmental Protection Agency mentioned in its preliminary opinion on new emission standards that by 2032, the sales of electric vehicles in the United States should account for 67%. This mandatory requirement was subsequently opposed by both traditional car companies and the union.

UAW President Sean Van publicly issued a warning, expressing concerns about the Biden administration's electric vehicle transition plan, and they needed to carefully consider whether to support Biden's reelection. For Biden, losing the endorsement of UAW is unimaginable, as it directly relates to the success or failure of millions of worker votes and their families and friends.

The final emission standards issued by the U.S. Environmental Protection Agency this year significantly lowered the requirements for electric vehicles, not only omitting specific requirements for the proportion of electric vehicles to be produced by car companies (the previous plan was to set a mandatory 60% proportion), but also not setting a clear deadline for the ban on the sale of gasoline vehicles, as California or the European Union did. According to the new emission standards, car companies in the U.S. market can continue to sell various gasoline vehicle models. This may disappoint many radical environmental organizations.

Both traditional car companies and UAW welcomed the official emission standards compromise made by the U.S. Environmental Protection Agency. After obtaining concessions from the Biden administration, UAW once again stated that they would support Biden's policy for reelection. Biden also invited UAW President Sean Van to the State of the Union address, further strengthening his relationship with the union.

After the union vote at the Volkswagen plant in Tennessee, President Biden issued a statement congratulating the historic expansion of UAW and once again proclaimed himself as a friend of the workers. "I am honored to have worked with auto workers in the past to fight for historic expansion, and now I am proud to establish a union at the Volkswagen plant with auto workers."

Musk strictly guards against unions

It is worth mentioning that the three major electric vehicle newcomers, Tesla, Rivian, and Lucid, have not joined UAW. Currently, Tesla has car assembly and battery factories in Fremont, California, Austin, Texas, and Nevada, and these factories have never held union votes.

UAW has been waging a long-standing battle against Tesla. As early as February 2017, workers at the Fremont factory in Silicon Valley began preparing to form a union, distributing propaganda materials to workers and submitting a petition to Tesla to create a union. The workers accused the Tesla factory of excessive labor intensity and lack of safety protection, resulting in multiple worker injuries.

Musk treated this as a major threat. According to court documents, he, who was extremely busy, personally met with four worker representatives the next day, trying to persuade them to abandon the idea of forming a union. Musk then personally instructed Tesla's HR director, Gaby Toledano, on how to "isolate" these few worker leaders, transferring them from the factory to serve as "safety issue commissioners" to prevent them from contacting other workers.

In addition, Tesla took a series of measures to prevent union propaganda activities. The Fremont workers issued regulations prohibiting workers from wearing union logos on their clothes and distributing union propaganda materials in the parking lot. In addition, Tesla fired a worker representative who demanded the formation of a union.

Subsequently, labor organizations filed a lawsuit, and in 2019, a local judge in California ruled that Musk's anti-union actions and public statements violated the laws regarding the formation of unions. The judge ordered Musk to publicly read the following legal provisions to the workers: "U.S. federal law grants you the following rights: to form, join, or assist a union, to choose worker representatives to negotiate with us, to collectively protect and defend interests with other employees, or to choose not to participate in these activities."

As of now, workers at Tesla in California and Texas have not joined the UAW union. "If Musk had not taken effective measures and allowed workers to join the union that year, Tesla would not have been able to make workers work overtime and rush to assemble the Model 3 day and night. The company might have collapsed that year," said an engineer at Tesla's Silicon Valley research department.

At the beginning of this year, Tesla decided to give a raise to the workers at its US factory. UAW President Sean Van released a statement emphasizing that while it is a good thing that Tesla is giving workers a raise, the raise is far below expectations. Furthermore, the post-raise compensation for Tesla workers is lower than the standard for UAW union members, and the working hours for Tesla workers are also higher than those for UAW workers.

Clearly, the achievement UAW is most proud of is the 25% raise for workers at the Detroit Three achieved through a strike last year. After the raise, the hourly wage for Tesla workers is $22-29, while the hourly wage for Detroit Three workers in the UAW union is $25.25-36. Furthermore, according to the previous wage agreement, by 2027, the hourly wage for UAW workers will reach $30.60-42.95.

Previously, Tesla workers refused to join the union, mainly because they believe in Tesla's growth prospects. Even though the compensation is not high and the work intensity is high, they believe that by sticking with the Tesla factory, they can benefit from performance-based stock options as Tesla's stock soars.

Elon Musk does not hide his contempt for the UAW. In 2022, he criticized the UAW on the Twitter platform for stealing millions of dollars from workers, while Tesla made many workers millionaires through stock options. "The UAW's slogan is to work hard to steal money from auto workers!"

However, Tesla is now facing a dilemma of declining sales, with its stock price falling by more than 40% this year. Last year, it canceled employee stock options, and recently announced a global workforce reduction of 10%. Now, does Tesla still have enough appeal to workers to continue resisting joining the UAW?