US electric-car maker faces Swedish union shock

Tesla faces its first ever strike after refusing to negotiate with the Swedish trade union IF Metall.

A strike has erupted at Tesla, the notoriously anti-union car manufacturer. Perhaps not surprisingly, the strike is in Sweden, one of the most unionised countries. According to the confederation IndustriALL, it is the first formal labour industrial action against Tesla anywhere in the world.

The strike was initiated by the trade union IF Metall. For five years Tesla’s Swedish subsidiary, TM Sweden, had refused to negotiate a collective agreement for its employees in repair shops across the country. The first strike notice was limited to union members among Tesla’s own employees, about 120 mechanics and service technicians (there are no Tesla factories in Sweden).

But, after a meeting between TM Sweden and IF Metall, summoned by the National Mediation Office last Tuesday, the company’s representatives withdrew from further negotiations, citing corporate policy not to sign collective agreements in any country. In response, IF Metall immediately expanded its strike notice to all repair shops servicing Tesla vehicles in Sweden—not only Tesla’s own.

An additional 470 workers at 16 work sites will be affected in this next phase of the strike, starting on Friday. No union members in the targeted shops will be allowed to do any work on Tesla vehicles—including servicing, repairs or preparing new cars for shipping to the thousands of customers waiting for their brand-new Teslas (Sweden’s top-selling car).

More could be in store for Elon Musk’s company, unless it heeds union demands. When employers refuse to engage in collective bargaining, Swedish unions can resort to strikes and other forms of industrial action. Options include bans on new hires or overtime work and even solidarity strikes by other unions.

Labour-market model

A precedent hinting at what Tesla could be up against stems from 1995, when Toys’R’Us entered the Swedish market and initially refused to sign a collective agreement with the retail union, Handelsanställdas Förbund. The company eventually conceded after three months of strife, including solidarity strikes when other unions blocked all deliveries, refuse collection, postal services, bank payments and other vital parts of the firm’s operations. The action was even supported by unions in many other countries, which encouraged their members to boycott Toys’R’Us products.

Although the IF Metall strike as yet concerns relatively few workers, it is of prime importance for Swedish unions, which see it as necessary to safeguard the country’s recognised labour-market model. One of its institutional pillars is agreements, usually at the sectoral level, which cover 90 per cent of all employees.

Cutting labour costs by refusing to negotiate collective agreements is generally considered unfair competition in Sweden, by unions and employers alike. Unions also see it as a potential downward pressure on wages and working conditions in other companies, in the long run undermining the model itself.

In the Swedish model not only workers are organised—employers are also organised in employer associations, bound by those collective agreements. This means that Tesla could simply offer its employees the sectoral collective agreement by joining the Swedish Confederation of Transport Enterprises. The employer confederation has indeed informed Tesla of this option but to no avail. In other words, the pressure on Tesla to adapt to the Swedish model does not only come from unions but from the employer side as well.

Another reason why the conflict is of such significance for the unions is that Tesla is emblematic of the rapidly growing electric-vehicle market. Securing collective agreements for jobs created in the industrial transition is one of the most reliable ways to make sure that green jobs will also be good jobs—a vital union concern.

Symbolic significance

But the conflict has symbolic significance for Tesla, too. The material cost to the company of a Swedish union contract would of course be negligible: it would only affect one or two in a thousand of its 120,000 employees worldwide. But Musk might see the symbolic price as much higher: a concession in Sweden could bolster union demands in countries where a larger portion of Tesla’s employees work.

In fact, Swedish unions are not the only ones applying pressure to the company. Earlier this month, Bloomberg cited the newly elected president of the powerful German industrial union, IG Metall, who directed a sharp comment at Tesla. ‘You need to be careful. The rules of the game are different here,’ Christiane Benner said, referring to the company’s attempts to obstruct union organising at one of its factories near Berlin, employing a tenth of its global workforce.

Meanwhile, in the United States, the rolling United Auto Workers strikes since mid-September at the ‘Big Three’ Detroit vehicle manufacturers—General Motors, Ford and Stellantis—have affected over 40,000 workers and racked up costs beyond $9.3 billion, according to Forbes. While Tesla is not unionised and thus is not a target, its leadership is likely monitoring developments closely. Some stock analysts and other car makers say that Tesla stands to benefit from the conflict, as they foresee higher labour costs for the Big Three.

Tesla already controls approximately 60 per cent of the market for electric vehicles and, according to CNN, the Big Three pay their workers 20 to 30 per cent more than Tesla’s $55 hourly wage including benefits. If the UAW manages however to negotiate an attractive union contract for its members—Ford and Stellantis have tentatively agreed deals involving wage increases of 25 per cent, which yesterday it was reported General Motors was echoing—it could boost union interest among Tesla workers as well.

And clearly there is interest. Several UAW attempts to organise Tesla workers have however failed, partly due to the company’s unlawful practices to curb unionisation efforts.

Political considerations

Aside from the economic dimensions, there are political considerations too. It is not unlikely that politicians will start to realise that union contracts are crucial to fighting inequality and ensuring decent jobs in the rapidly growing electric-vehicle industry. The US president, Joe Biden, even joined a UAW picket line in late September.

Seen against the backdrop of union surges in key Tesla markets and in the context of efforts to promote a just transition, the seemingly small Swedish strike takes on greater import. While its outcome is highly uncertain, what is clear is that the union-busting methods Tesla has employed in the US will not be tolerated in Sweden.

IF Metall would not have taken the risk to challenge Tesla unless it was highly motivated and had carefully considered its options. Atle Høie, general secretary of IndustriALL, which represents 50 million workers in 140 countries, put it this way: ‘Elon Musk’s business model is to avoid respecting human rights. Now he is taken on by one of our strongest unions. We must defeat the Tesla business model, and Sweden is the best place to start.’