Why September will be a momentous month for US industry
It is one of the great set-piece moments in the US industrial calendar.
At the start of pay negotiations, which take place every four years ahead of the expiry of existing contracts in September, the leaders of the big three US carmakers traditionally shake hands in front of the cameras with the leader of the United Auto Workers (UAW) union.
The tradition goes back almost a century: Wayne State University in Detroit, America’s car-making capital, has unearthed photographs dating back to the 1930s showing the UAW leaders of the time shaking hands with a leader from Ford, Chrysler or General Motors.
The then UAW president Ron Gettelfinger and Ford president Alan Mulally take part in the ceremonial handshake in 2007
This was the precursor to another established tradition under which the UAW would select a lead company with which to negotiate. Then, once a deal had been struck, the other carmakers would follow the first company’s lead in a process known as ‘pattern bargaining’.
So it was a seismic moment when, in July this year, the UAW’s new president, Shawn Fain, declined to take part in the handshake.
Instead, he held what were described as a “member’s handshake”, during which he met with workers at the big three (Chrysler is now owned by Stellantis, also the parent company of European carmakers Peugeot and Fiat) as they came off their shifts.
It was intended to lay down a marker to the carmakers that this was a very different UAW leadership.
Mr Fain, 54, was narrowly elected president of the UAW in March this year on a platform of promising a tougher approach to pay negotiations.
His victory, over the existing president Ray Curry, was historic in that it was the first in which the president, and other leading officials, were chosen by a direct ballot of members rather than in a proverbial smoke-filled room in which delegates chose the leadership.
Shawn Fain, pictured in July, shaking hands with members outside a Ford assembly plant in Michigan
Mr Fain, in winning, toppled a faction of the union that had controlled it for decades.
On being elected, Mr Fain – who began his career as an electrician with Chrysler – immediately served notice on the carmakers that he did not intend this to be business as usual, declaring: “We’re here to come together to ready ourselves for the war against our one and only true enemy: multibillion corporations and employers that refuse to give our members their fair share. It’s a new day in the UAW.”
If that didn’t make the carmakers sit up and take note, Mr Fain’s refusal to take part in the traditional handshake did, as he told the union’s 389,000 members on his social media feed: “I’m not shaking hands with any CEOs until they do right by our members, and we fix the broken status quo with the big three. The members have to come first.”
For good measure, he very publicly threw a Stellantis pay offer in a bin.
Mr Fain’s approach is making waves on Wall Street.
There are real concerns that Mr Fain – who carries around with him one of his grandfather’s payslips from Chrysler in 1940 – will bring out his members at all three carmakers if a deal is not reached by the time the existing contracts expire on 14 September. Such action would be unprecedented.
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Members at the three have voted for strike action in the event of negotiations breaking down, by an average of 97%.
Strikes would cause immense disruption at a time when the carmakers are having to invest billions in electrification while trying to cut their costs in response to inflation.
Yet, with Wall Street putting the odds of strike action at the big three as better than events, the two sides look set for collision.
The UAW is not only seeking to restore past benefits lost in previous pay negotiations, but also to cut the working week to 32 hours.
It is also seeking a significant pay rise, the extent of which it has not made public, but which has been reported by the Wall Street Journal as 46%.
That would severely hobble the big three’s competitiveness against foreign rivals, from Germany and Japan – which tend to have less union representation in their workforces, as well as the likes of non-unionised Tesla.
Some 150,000 of the UAW’s members work for Ford, GM and Stellantis but strikes at all three would be huge because the union has traditionally singled out an individual carmaker for strike action rather than attacking several targets at once. It would also be a risk.
The union has a strike fund of $900m (£716m) – half of which would be eaten by a six-week stoppage in which striking members at the big three were each paid $500 (£398) a week.
That is why it has been suggested that Mr Fain may adopt another tactic, bringing out its members at the car parts makers instead, in time depriving the big three of components and forcing them to temporarily close plants while still having to pay workers.
UAW President Shawn Fain
That, though, would also be a risk for the UAW, as it is not nearly as well represented among the parts makers.
Mr Fain’s election is not just rattling Wall Street – but also in Washington. Mr Fain has refused to say whether the union will endorse and provide support to Joe Biden as he seeks re-election to the White House next year.
He told the Boston Globe at the weekend: “I’ve tried to be clear with people: The days of us just freely giving endorsements are over. Our endorsements have to be earned.”
Those comments speak to his unease that, as the Biden administration offers huge subsidies to businesses involved in the transition to net zero, it is not doing so with sufficient protection for carmakers.
He was particularly unhappy at a $9.2bn (£7.3bn) loan awarded by the Biden administration in June to a joint venture between Ford and a South Korean company to build three battery factories in Kentucky and Tennessee.
Mr Fain felt the loan should have come with strings attached on wages and working conditions.
He told the Globe: “We support a green economy. We have to have clean air, clean water, but this transition has to be a just transition. Workers can’t be left behind.”
Mr Fain’s election must also be seen in the context of changing circumstances in America’s unions.
The powerful Teamsters union, like the UAW, has also jettisoned the ruling faction that has run it for decades in favour of more radical leadership. Its aggressive stance is credited with having won it a pay deal with United Parcel Services reckoned to be the most generous in the company’s history.
Part-time workers at UPS were awarded a reported 50% pay rise while other concessions agreed by the company included a promise to instal air conditioning in all of its trucks.
Mr Fain is clearly optimistic that he has the wind to his back and can secure similar wins for his members. If he succeeds, other union leaders will be taking note.
It is why the month of September promises to be a momentous one for US industry.
A household energy supplier has failed, weeks after it attracted attention from regulators.
Rebel Energy, which has around 80,000 domestic customers and 10,000 others, had been the subject of a provisional order last month related to compliance with rules around renewable energy obligations.
The company’s website said it was “ceasing to trade” but gave no reason.
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Industry watchdog Ofgem said on Tuesday that those affected by Rebel’s demise did not need to take any action and would be “protected”.
Customers, Ofgem said, would soon be appointed a new provider under its supplier of last resort (SoLR) mechanism.
This was deployed widely in 2021 when dozens of energy suppliers collapsed while failing to get to grips with a spike in wholesale energy costs.
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The last supplier to go under was in July 2022.
Ofgem said new rules governing supplier business practices since then had bolstered resilience.
These include minimum capital requirements and the ringfencing of customer credit balances.
The exit from the market by Bedford-based Rebel was announced on the same day that the energy price cap rose again to take account of soaring wholesale costs between December and January.
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Tim Jarvis, director general for markets at Ofgem, said: “Rebel Energy customers do not need to worry, and I want to reassure them that they will not see any disruption to their energy supply, and any credit they may have on their accounts remains protected under Ofgem’s rules.
“We are working quickly to appoint new suppliers for all impacted customers. We’d advise customers not to try to switch supplier in the meantime, and a new supplier will be in touch in the coming weeks with further information.
“We have worked hard to improve the financial resilience of suppliers in recent years, implementing a series of rules to make sure they can weather unexpected shocks. But like any competitive market, some companies will still fail from time to time, and our priority is making sure consumers are protected if that happens.”
Harrods is urging lawyers acting for the largest group of survivors of abuse perpetrated by its former owner to reconsider plans to swallow a significant chunk of claimants’ compensation payouts in fees.
Sky News has learnt that KP Law, which is acting for hundreds of potential clients under the banner Justice for Harrods, is proposing to take up to 25% of compensation awards in exchange for handling their cases.
In many cases, that is likely to mean survivors foregoing sums worth of tens of thousands of pounds to KP Law, which says it is working for hundreds of people who suffered abuse committed by Mohamed al Fayed.
Mohamed al Fayed. File pic: PA
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Under a redress scheme outlined by the London-based department store on Monday, which confirmed earlier reports by Sky News, claimants will be eligible for general damages awards of up to £200,000, depending upon whether they agree to a psychiatric assessment arranged by Harrods.
In addition, other payments could take the maximum award to an individual under the scheme to £385,000.
A document published online names several law firms which have agreed to represent Mr al Fayed’s victims without absorbing any of their compensation payments.
KP Law is not among those firms.
Theoretically, if Justice for Harrods members are awarded compensation in excess of the sums proposed by the company, KP Law could stand to earn many millions of pounds from its share of the payouts.
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‘Many more’ likely abused by Fayed
A Harrods spokesperson told Sky News on Tuesday: “The purpose of the Harrods Redress Scheme is to offer financial and psychological support to those who choose to enter the scheme, rather than as a route to criminal justice.
“With a survivor-first approach, it has been designed by personal injury experts with the input of several legal firms currently representing survivors.
“Although Harrods tabled the scheme, control of the claim is in the hands of the survivors who can determine at any point to continue, challenge, opt out or seek alternative routes such as mediation or litigation.
“Our hope is that everyone receives 100% of the compensation awarded to them but we understand there is one exception among these law firms currently representing survivors who is proposing to take up to 25% of survivors’ compensation.
“We hope they will reconsider given we have already committed to paying reasonable legal costs.”
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Responding to the publication of the scheme on Monday, KP Law criticised it as inadequate, saying it “does not go far enough to deliver the justice and accountability demanded by our clients”.
“This is not solely a question of compensation but about justice and exposing the systematic abuse and the many people who helped to operate it for the benefit of Mohamed al Fayed and others.”
Seeking to rebut the questions raised by Harrods about its fee structure, KP Law told Sky News: “KP Law is committed to supporting our clients through the litigation process to obtain justice first and foremost as well as recovering the maximum possible damages for them.
“This will cover all potential outcomes for the case.
“Despite the Harrods scheme seeking to narrow the potential issues, we believe that there are numerous potential defendants in a number of jurisdictions that are liable for what our clients went through, and we are committed to securing justice for our client group.
“KP Law is confident that it will recover more for its clients than what could be achieved through the redress scheme established by Harrods, which in our view is inadequate and does not go far enough to compensate victims of Mr al Fayed.”
The verbal battle between Harrods and KP Law underlines the fact that the battle for compensation and wider justice for survivors of Mr al Fayed remains far from complete.
The billionaire, who died in 2023, is thought to have sexually abused hundreds of women during a 25-year reign of terror at Harrods.
He also owned Fulham Football Club and Paris’s Ritz Hotel.
Harrods is now owned by a Qatari sovereign wealth fund controlled by the Gulf state’s ruling family.
The redress scheme commissioned by the department store is being coordinated by MPL Legal, an Essex-based law firm.
Last October, lawyers acting for victims of Mr al Fayed said they had received more than 420 enquiries about potential claims, although it is unclear how many more have come forward in the six months since.
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