[NEWS IN FOCUS] UAW demands pose threat to Korean battery makers

With multi-billion dollar joint projects with big U.S. automakers agreed, Korea's major battery makers are on high alert in the wake of the United Auto Workers (UAW)'s call for a wage hike.

United Auto Workers President Shawn Fain, left, talks with autoworkers outside the General Motors Factory Zero plant in Hamtramck, Michigan on July 12. [AP/YONHAP]

With multi-billion dollar joint projects with big U.S. automakers agreed upon, Korea's major battery makers are on high alert in the wake of the United Auto Workers' (UAW) call for a wage hike.

UAW President Shawn Fain is in a strong position to make gains in the talks with the big three — General Motors, Ford and Stellantis — and even go on strike if the talk falls apart, which has a deadline of Sept. 14.

With workers at Ultium Cells' Ohio battery plant having already voted to join the UAW, workers at the remaining Ultium factories and plants of Samsung SDI and SK On are likely to be included in the national talks. Ultium Cells is a 50:50 joint venture between LG Energy Solution and GM.

“Starting with the Ohio plant, the UAW is making frantic attempts to extend its influence on the EV battery manufacturing factories, which are currently dominated by Korean battery makers,” said Kim Pil-soo, an automotive engineering professor at Daelim University.

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

“The UAW, representing 400,000 workers in the auto space, is a very powerful union that can even exercise their influence in presidential elections,” Kim said. “This is where Korean battery makers should keep a close watch if they want to expand their business in the North American region.”

Bank of America's auto analyst John Murphy has put the odds of an autoworker strike at "better than 90 percent."

Whether the two parties reach an agreement or a strike is launched, large financial expenses remain a threat in both scenarios.

In 2019, when a negotiation failure between GM and UAW caused a 40-day strike of around 49,000 workers, it cost GM around $3.5 billion.

“LG Energy Solution’s labor costs, which currently stand at around $13 per kilowatt hour, will double to $20 per kilowatt hour in 2025 when half of its production comes from the North American factories,” said Hwang Sung-hyun, a researcher at Eugene Investment & Securities.

“LG Energy’s margin will fall from the current $9 per kilowatt hour to $3 per kilowatt hour.”

Ultium Cells battery plant in Lordstown, Ohio. [LG ENERGY SOLUTION]

Tensions have grown after the UAW issued a report last month titled “High Risk and Low Pay,” pinpointing that Ultium Cells’ plant in Lordstown, Ohio, has “a real danger that hundreds of billions in taxpayer dollars will subsidize an EV industry that underpays and endangers workers”.

It criticized the factory’s working conditions where workers earn only $16.50 an hour compared to GM factory workers that on average receive $32 per hour.

The report also exposed the factory’s safety issues giving a few examples of scenarios where employees suffered toxic fumes and chemical hazards.

Fain’s stance is strongly supported by 28 U.S. senators including Senate Majority Leader Chuck Schumer and Senator Bernie Sanders who sent a joint statement to the CEOs of three major automakers and heads of their joint ventures to embrace the workers of their battery plants in the national UAW contract.

The BlueOval SK Battery Park Kentucky in Glendale, Kentucky. SK On and Ford are building two EV plants there. [SK ON]

“We urge you to announce that all EV workers at these joint ventures will be folded into the national UAW contract,” the letter read. “It is unacceptable and a national disgrace that the starting wage at any current American joint venture EV battery facility is $16 an hour... just above the poverty level for a family of four.”

“American workers, especially those working full-time in 21st-century state-of-the-art manufacturing, should not make poverty-level wages.”

Joint ventures include Ultium Cells, which either runs or has been involved in the construction of three battery plants in the United States, BlueOval SK, a venture between SK On and Ford Motor with three plants, and StarPlus Energy, a venture between Samsung SDI and Stellantis with two plants.

The UAW also blasted the U.S. government for offering up to $9.2 billion in low-cost loans to Ford and SK On for the $11.4 billion joint EV battery plants in Kentucky and Tennessee.

The massive “giveaway” is to “create 7,500 low-road jobs with no consideration for wages, working conditions, union rights or retirement security,” Fain said in a statement.

BY SARAH CHEA [chea.sarah@joongang.co.kr]