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| Ultium Cells' electric vehicle battery plant in the U.S. state of Ohio / Courtesy of LG Energy Solution |
By Park Jae-hyuk
LG Energy Solution (LGES) is expected to face difficulties in boosting profitability as it has to pay more to workers at an electric vehicle (EV) factory in the U.S. state of Ohio, operated by Ultium Cells, the Korean battery maker's joint venture with General Motors (GM).
Ultium Cells said Thursday (local time) that it tentatively agreed with the United Auto Workers (UAW) union to increase the factory workers' wage by 25 percent on average. The agreement is considered significant as the factory is the first U.S. EV battery plant to be represented by a union.
Given that the UAW unveiled a plan to negotiate new labor conditions, health and safety, seniority rights and various other issues, Ultium Cells may shoulder a heavier financial burden.
"This interim wage increase is only the first step as we progress towards a fair and comprehensive contract for the dedicated UAW Local 1112 Membership as a result of the bargaining process," UAW Local 1112 Chairman Josh Ayers said.
According to Ultium Cells, the interim wage increase will be retroactive, and active current hourly employees will receive back pay for every hour worked since Dec. 23, 2022. Any current employee who has worked since Dec. 23 can receive payments of $3,000 to $7,000, based on hours worked.
"This agreement is a significant and meaningful step as we continue to negotiate collaboratively and in good faith with the UAW to reach a comprehensive contract," Ultium Ohio Plant Director Kareem Maine said.
LGES declined to comment on this issue.
Based on strong support from U.S. President Joe Biden, the UAW has flexed its muscle throughout this year against Korean battery manufacturers by urging their joint ventures with U.S. carmakers to raise wages and guarantee job security.
Earlier this year, the UAW criticized StarPlus Energy, a joint venture between Samsung SDI and Stellantis, for not informing union leaders in advance of the construction of the Kokomo factory until a day before the announcement.
SK On, which will build a factory in Tennessee in collaboration with Ford Motor, is also facing pressure from the union, as UAW President Shawn Fain said the 11,000 workers that will be hired for the joint venture should hold union membership.
Amid the U.S. government's support for the union, however, the Korean battery firms have had to maintain a cautious stance, in order to avoid any disadvantages to their operations there.
Industry officials expect Samsung SDI and SK On to follow suit after LGES.
"Korean battery firms have no choice but to continue making efforts to reach an agreement with the union. The management cannot conflict with the unionized workers nor neglect them," a battery industry official said on condition of anonymity.
In such a scenario, the companies will suffer further declines in their profitability during the latter half of this year, because their European clients are expected to postpone purchases during the third quarter amid a slow demand for EVs.
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