Shawn Fain, the president of the United Auto Workers, and Carlos Tavares, CEO of Jeep maker Stellantis NV, agree on at least one thing: The auto giant has a hard time getting some US factory workers to show up for their shifts.
(Bloomberg) — Shawn Fain, the president of the United Auto Workers, and Carlos Tavares, CEO of Jeep maker Stellantis NV, agree on at least one thing: The auto giant has a hard time getting some US factory workers to show up for their shifts.
They just don’t align on how to solve it.
Stellantis has made fixing absenteeism a priority in contract talks with the UAW for its 43,000 unionized workers. The absentee rate at its US plants was 23% last year, according to a copy of the company’s initial contract proposal reviewed by Bloomberg. Absent workers led to $217 million in lost sales in 2021 and 2022, the company estimated.
Running plants more efficiently could allow Stellantis to be more generous at the bargaining table — and that could help the US economy dodge a potential multibillion dollar hit from a strike. The current UAW contract expires on Thursday. To reach a deal, the automaker and the union will need to resolve how to plug the gap when employees fail to punch in.
Stellantis wants to link raises and profit-sharing payouts to attendance and make paid sick days count against vacation time, according to its opening proposal. The automaker, formed by the 2021 merger of Fiat Chrysler and France’s PSA Group, also wants to use more lower-paid temporary workers to cover for absences.
Yet the UAW says the use of temps, who are unionized but eligible for less time off than full-time employees, is at the root of the problem. The union says unplanned absences have been rising because workers are so burned out, they take days off even when the company won’t grant them.
“Most of this issue with absenteeism is self-inflicted,” Fain said in an interview in Detroit last month. “They want to throw more temps at this — the temp situation is why they’re in the predicament they’re in.”
Stellantis’s 23% absentee tabulation includes unscheduled off days, vacation and sick days, as well as workers who arrived late. Just counting unplanned absences, the number is 11%, according to a person familiar with the matter. The UAW says Stellantis is exaggerating the no-show problem by counting vacation and medical leave. Higher wages and more paid time off would improve attendance, the union argues.
Absenteeism is a longstanding challenge in the auto industry, a consequence of long hours, irregular shifts and repetitive motion that exacts a physical toll on workers. Over the past three years, Covid-19, parts shortages and a tight labor market have also had automakers struggling to meet demand for new vehicles.
Ford Motor Co., which spends about $1 billion more a year on labor than General Motors Co. and Stellantis, believes it can address absenteeism in contract talks and doesn’t see the issue as its top priority, according to people familiar with the company’s bargaining strategy who asked for anonymity to discuss internal matters. Neither Ford nor GM would disclose absenteeism rates.
While all three automakers have been exchanging economic proposals with the UAW as talks gain steam, they were still far apart on key issues like wages as of Tuesday.
“As with any negotiation, each party’s proposals can change over time as discussions continue to find common ground. The final agreement often looks different from where each party started,” said Stellantis spokesperson Shawn Morgan.
Temp Tension
The absenteeism fight is one of several thorny issues in the contract talks that reflect competing visions for American auto jobs.
Tavares, who has made Stellantis the most profitable of the Detroit Three in part by tightly managing expenses, wants an expanded pool of lower-paid workers as he navigates the transition to electric vehicles. The Portuguese executive says EVs will cost 40% more to make than combustion cars, a burden he can’t pass to consumers.
Ahead of his first bargaining face-off with the UAW, Tavares railed against the “brutality” of stricter emissions rules, according to Fain.
Fain, who worked at Fiat Chrysler for nearly two decades and became president of the UAW by a narrow margin this spring, wants to restore wages and benefits lost in the 2008 financial crisis.
Read more: Stellantis CEO Won’t Rule Out More Job Cuts as EV Shift Bites
Most car manufacturers use temporary workers to cover vacations or ramp up for a vehicle launch. In the past decade, some Detroit automakers have increasingly turned to temps while offering buyouts to older, more expensive employees, in an attempt to close a cost gap with foreign brands.
Foreign automakers lean heavily on temporary labor at their US plants, which aren’t unionized, and enforce attendance rules more strictly so unplanned absenteeism is lower, said Dennis Cuneo, a former Toyota Motor Corp. executive who helped set up its US manufacturing base.
At Stellantis, temporary workers start at $15.78 an hour. They have no guaranteed path to a full-time production job, which starts at $18.04 and tops out at $31.77 after eight years. Ford and GM temps start at $16.67 an hour, and the companies are required to convert them to full time after a certain period.
Full-time workers at Stellantis start out with at least a week, or 40 hours, of vacation time each year. Temps, also known as supplemental workers, are eligible for two days of paid time off and three days unpaid time off, subject to staffing needs, after they’ve worked about four months. After a year, temporary workers are entitled to a week of paid time off and three days of unpaid time.
Among the Detroit Three, Stellantis has the highest proportion of temporary employees, accounting for about 12% of workers, according to people familiar with the matter. The temp rate at GM is about 10%, and about 3% at Ford, said the people, who asked not to be identified discussing nonpublic information.
‘So Overworked’
Stellantis’s plant in Sterling Heights, Michigan, where roughly 5,000 hourly workers make the Ram 1500 pickup, the company’s top-selling vehicle in the US, is a microcosm of its labor tension. Stellantis has eliminated more than 400 positions there this year, and laid off about 170 people since May, the result of efficiency studies carried out by Chief Manufacturing Officer Arnaud Deboeuf.
The local union has accused plant managers of manipulating staffing data and using more temps than the contract allows in order to meet aggressive headcount reduction goals, according to a March 30 letter reviewed by Bloomberg.
Stellantis said it uses supplemental employees consistent with the provisions in the collective-bargaining contract.
Read more: Stellantis CEO’s Relentlessness Reemerges as Car Dynamics Shift
One thing that’s bedeviled auto executives trying to clamp down on absenteeism is the Family and Medical Leave Act, or FMLA, a 1993 law that allows workers who’ve put in enough hours to take up to 12 weeks of unpaid leave.
At the new Jeep plant on Mack Avenue in Detroit, Tasha Bennett, a shop steward, said temporary workers are using family leave to get around a lack of vacation days.
“We are overworked, so overworked, and that’s why people don’t come to work,” Bennett said at a practice picket line last month. Temporary laborers “are forced to work upwards of 12 hours a day, every day,” she said, which means they qualify for leave faster.
Workers take leave “because they’re not able to take any days off,” she said.
Manufacturing executives say the FMLA lets employees skip work without facing consequences. Colin Lightbody, a former negotiator for Fiat Chrysler who retired in 2018, said he watched absenteeism get worse in his last 10 years.
“Twenty percent of the employees are driving 80% of the absenteeism,” he said. “You just have to address the people that are abusing it. It’s a small group.”
–With assistance from Keith Naughton, David Welch and Albertina Torsoli.
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