A Just Transition for Auto Workers? Negotiating the Electric Vehicle Transition in Germany and North America

German Industrial Policies

Through the 2010s, Germany’s transition to BEVs was slow, largely because of the automotive industry’s weight in the national economy. Despite offshoring to regions with lower wages, German producers of ICEVs and their powertrain components maintained consistent employment (Schwarz-Kocher, Krzywdzinski, and Korflür 2019). The political influence of manufacturing unions and automakers, reinforced by Germany’s tripartite traditions, contributed to this inertia. This resistance is evident in the unsuccessful Nationale Plattform Elektromobilität (National Platform for Electric Mobility) project initiated in 2010 and later renamed Nationale Plattform Zukunft der Mobilität (National Platform for the Future of Mobility), which intended to boost BEVs but was criticized as “half-hearted” (Haas 2021) and stymied by industry and union opposition (Meckling and Nahm 2018).

Starting around 2020, the German government adopted a clearer policy to promote BEVs. The Dieselgate scandal of 2015 was one catalyst, which put pressure on German automakers to change their technological and product strategies and weakened their lobbying capacity at the EU level (Mujkic and Klingner 2019). The immediate trigger for the policy shift was the tightening of EU emission regulations. Initially introduced voluntarily in the late 1990s, the European fleet-wide carbon dioxide emission standards have evolved into mandatory regulations, accompanied by financial penalties for non-compliance. In 2020, the European Commission introduced stricter emission regulations, targeting 100% carbon dioxide emission reduction in new cars by 2035. These regulations became effective with EU regulation 2023/851 in 2023. Although the German government still advocated exceptions—including permitting ICEVs powered solely by “e-fuels” after this deadline (Galgóczi 2023)—the overall push from the EU level is for BEVs.

The German government has recently introduced several industrial policies to develop domestic BEV production capabilities. These policies are restricted by EU-level regulations, notably competition law and state aid rules (Meunier and Mickus 2020; Lechowski et al. 2023). The most important ones are:

From the perspective of the “just transition” debate, these programs do little to ensure that new BEV-related jobs are high quality. This approach is in contrast to the Biden administration’s discourse and the objective of the Inflation Reduction Act (IRA), which explicitly emphasizes creating “good jobs.” It also diverges from the broader trends in Europe toward using ecological and social criteria in public procurement, such as paying wages according to collective bargaining agreements (Jaehrling and Stiehm 2022). At the EU level, the “strings” attached to state aid programs for industry aim to reduce inter-regional economic disparities by targeting subsidies at lesser-developed regions.

Worker Protections in the Workplace and Labor Market

Independent of industrial policy, worker voice in Germany already benefits from strong institutional support. Workers elect representatives to the corporate board (Aufsichtsrat), who join in corporate-level strategic decision-making and access information not available to the public. Works councils have statutory rights to information and joint decision-making over plant-level restructuring. They often create additional structures to coordinate across the whole corporation and involve themselves more deeply in corporate decision-making than is required by law; with World Works Councils and European Works Councils, trade unionists have extended some of these practices from within their own companies to the international stage.

IG Metall’s policy agenda includes strengthening regulations that promote worker voice, further building on an already solid legal framework. Rules governing layoffs are centrally important. Works councilors facing job cuts in their plants have the right to negotiate an Interessenausgleich and Sozialplan, including a detailed timeline for restructuring and compensation and job-search assistance for laid-off workers (Laßmann and Riegel 2017). Some instruments are subsidized by the government, whereas others are permitted but not funded. Typical instruments include:

Collective bargaining plays a role in all of this. For most automotive workers, wages, working time, and other working conditions are set through the sectoral agreement for the metal and electrical industry between IG Metall and Gesamtmetall (the Federation of German Employers’ Associations in the Metal and Electrical Engineering Industries). This agreement also governs the conditions and procedures of concession bargaining for troubled firms through “opening clauses.” In some cases, IG Metall negotiates directly with the individual firm. The current sectoral agreement for the metal and electrical industry includes provisions for future-oriented agreements (Zukunftstarifverträge) that enable works councils and IG Metall to proactively request plant-level negotiations about investment and future products with management. The sectoral agreement includes a yearly lump sum payment (Transformationsentgelt), which amounts to 27.6% of monthly pay.

These institutional resources give German trade unionists many advantages. They are better positioned to participate in workplace negotiations and influence corporate strategy than their North American counterparts. The high costs of mass layoffs deter plant closures, and instruments such as Kurzarbeit give them resources to keep workers employed. Other government-backed schemes help workers who are laid off, most notably through retraining.

Change in industrial relations institutions, however, has taken place more slowly than changes in industrial policies. Significant numbers of German workers are employed under “atypical” work arrangements and therefore normally excluded from the instruments discussed above (Hassel and Schröder 2021). “Core” workers directly employed by large firms on permanent contracts are well protected, but workers at the “periphery” (i.e., those on temporary contracts or working for temporary employment agencies) are not (Holst, Nachtwey, and Dörre 2010). Also, in new workplaces, the governance of wage and working conditions is subject to negotiation and contestation. IG Metall activists seek to establish worker representation and initiate collective bargaining, and they may or may not succeed.

Active Involvement of IG Metall

Above we examined Germany’s institutions that encourage worker participation within companies and collective bargaining over wages and hours. They also mitigate the risk of unemployment to workers and help maintain their skills. However, these institutions do not in themselves prevent job loss or ensure high job quality and have in fact been under pressure due to offshoring and outsourcing (Greer and Doellgast 2017). Much depends on what the union does.

IG Metall has considerable power resources to shape the BEV transition, extending beyond the institutional framework (see Refslund and Arnholtz 2022 for an update on power resource theory). In 2023, it had just over 2.2 million members, 2,600 staff, and 260 offices across Germany (IG Metall 2023). It also has a near-monopoly in union membership and bargaining in its jurisdiction, which includes steel, textiles, wood, electrical goods, machine tools, shipbuilding, aerospace, trains, automotive, as well as related logistics, staffing, repair shops, and other services. Union members in work contribute 1.0% of their gross earnings in union dues, with much lower dues for students, trainees, and workers who are unemployed or on medical or parental leave. Strikes happen regularly but are normally brief: In 2018, for example, 418,123 working days were lost, and 574,740 workers participated, the highest numbers since 1993—but only 186 of these workers were on strike for more than 7 days (Gesamtmetall 2023). IG Metall has a commanding presence in works councils: In 2022 its members secured 76% of seats in the metal and electrical sector works council elections (IG Metall 2022).

The union brought these power resources to bear in October 2021 when it mobilized 50,000 members for a nationwide day of action to support the transformation of manufacturing (IG Metall 2021). This action was timed to coincide with the formation of the incoming federal government. IG Metall organized a large demonstration next to the Reichstag building in Berlin, in which senior politicians answered questions posed by trade union leaders in front of a noisy crowd of union members. Similar events were held in other German cities. Under the overarching slogan “Germany must remain an industrialized country!,” the union presented demands in four areas:

Beyond the 2021 day of action, an important part of IG Metall’s strategy has been maintaining close working relationships with government and corporations. This tripartism is present not only at the level of national government but also at the level of German states and local governments. In the Land Berlin, for example, the union participates in a steering group with industry federations and local government, with the aim of developing a Masterplan Industriepolitik (industrial policy master plan). In Baden-Württemberg the union has initiated a Strategiedialog Automobilwirtschaft (automotive industry strategic dialogue) with the state government that includes the Ministerpräsident (state premier), the original equipment manufacturers (OEMs), suppliers, employer associations, universities, research institutions, IG Metall, and works councilors. The Land funds a think tank called E-Mobil Baden-Württemberg that supports industrial policy deliberations with research studies. In Bavaria, similarly, IG Metall has agreed with the government and the main employer association on a process for the government to support environmentally friendly manufacturing (Strötzel and Brunkhorst 2019: 263). Across Germany, 27 federally funded “regional transformation networks” with trade unionists, managers, elected officials, researchers, and others promote regional solutions to the challenges of industry restructuring.

A central part of the union’s strategy has been coalition-building, to spread ideas, develop policies, and steer the transition. This effort often goes beyond traditional “social partners.” For example, environmental activists are deeply involved in some of these coalitional bodies. Some work with IG Metall and works councilors in the context of local struggles. Members of the environmental activist group “Fridays for Future,” for example, have talked with workers threatened with plant closures about developing alternative forms of production (Hoben 2022). Still, the dominant actors in these coalitions are government and business as social dialogue partners within Germany’s tripartite industrial relations system.

At the company level, the union supports works councilors in their everyday work of representing workers. The form this support takes depends on whether it is a greenfield site or an existing employer with collective bargaining and works councils. Greenfield sites are challenging in Germany for the same reason they are challenging in North America—the union has to organize them. This effort includes recruiting members, helping members win seats on works councils, and pressuring employers to engage in collective bargaining. There is no legal requirement that the company bargain with IG Metall. At Tesla’s plant near Berlin, a works council has been elected, but it is unclear whether the company will ever bargain with the union, and politicians have criticized Tesla for poor working conditions, spying on workers, and deviating from the German model of social partnership (Neuerer 2023). Joint ventures present a similar problem: ACC, a battery production joint venture in Kaiserslautern, is situated on the former premises of an Opel/Stellantis component plant but is a formally separate entity, initially with no works council or collective agreement (Sebald 2021).

At established employers, IG Metall sees its task as exerting an influence on location, employment, innovation, and investment; negotiating to prevent plant closures; and identifying future products for all plants. As mentioned earlier, in 2021 IG Metall negotiated a collective agreement that serves as a framework for company-level collective agreements with corporate management (Zukunftstarifverträge). At the larger OEMs and suppliers, such agreements often cover all locations and define the parameters for plant-level agreements between a works council and management (Betriebsvereinbarungen) about future products and investment. The company-level collective agreements are more enforceable and may include concessions over pay and working hours. Strötzel and Brunkhorst (2019) gave three examples:

Although the aim of these agreements is to convert ICE-related plants to BEV-related work and minimize the pain of restructuring, many union members face layoffs and plant closures. The use of existing instruments discussed above can reduce the damaging consequences of restructuring: for example, early retirement, severance payments, short-time work, assistance with job search, internal transfer within the company or corporate group, retraining, and transfer corporations. The union’s role is to support works councils in negotiating over this—a Sozialplan and Interessenausgleich governing restructuring plans and associated protections of the workers. In some cases, workers stay employed on the premises as a new owner comes and repurposes the facility. This happened, for example, at a Michelin tire plant in Bamberg, which was converted from a production facility to an R&D park for green technologies, funded by the state of Bavaria (Josipovic 2022). Another case of green transition is currently attracting attention. Automotive supplier Continental has decided to shut down its plant in Gifhorn, which produces parts for car brakes, by 2027. Two IG Metall union leaders and the Head of HR at Continental created the program “From work into work” (Von Arbeit in Arbeit) to find alternative employment for some of the plant’s approximately 1,000 workers. The heating products manufacturer Stiebel Eltron has formally agreed to employ 300 Continental employees to produce heat pumps at the Continental site, and Siemens will employ 100 workers to produce rail infrastructure at a nearby site (Franz 2023; Reitmeister 2023).

IG Metall officials and works councilors face difficulties building solidarity, as plants compete for investments. At a firm with multiple locations and a declining amount of work, plant closures become increasingly likely, as the abovementioned closure of the Ford plant in Saarlouis shows. This case of management whipsawing shows how difficult it is to build solidarity among plants of the same company, even at Ford in Europe, which has a long history of cross-border union solidarity (Fetzer 2010). Building solidarity is also difficult within Germany, especially at suppliers, which have begun closing smaller parts plants that make ICE-related components, with the Bosch fuel pump plant in Munich a noteworthy example (Kniekamp 2022).

Worker-to-worker competition for investment is also taking place between suppliers and OEMs. The major system suppliers are developing BEV-related products, such as components for batteries and electric motors and IT systems, but OEMs are also developing the capacity to produce many of these same components in-house. While works councilors at OEMs, particularly in plants that currently make engines, axles, and transmissions, see insourcing as an opportunity, those at suppliers see it as a threat.

The EV transition has certain similarities to the restructuring of the 1990s and the first decade of the 2000s that put pressure on the established German model of industrial relations. The union had to cope with intensified competition for investment due to the internationalization of the companies and vertical disintegration, against a backdrop of high unemployment, often through concession bargaining (Greer 2008). One difference is that workers are currently in a strong position of structural power. The companies are ramping up EV production while maintaining ICE production in the context of an already tight labor market; the union is currently making gains in bargaining. In the longer run, however, it appears that workers’ collective power will decrease. The end of subsidies to consumers will intensify price-based competition, squeeze corporate profits, and favor low-cost production in low-wage countries. Unlike the 1990s, when the European consumer market was growing and incumbent players internationalizing, the current transition includes new players in a product market that is already saturated. The resulting problem of overcapacity will intensify, in the assembly sector and the independent parts sector, leading to plant closures. The strategic questions facing the union are therefore familiar: how to influence offshoring and outsourcing decisions, cope with production overcapacity, organize new subsidiaries and joint ventures, and build solidarity between workers competing for investment.

IG Metall is in many ways well-equipped to face these problems. Its power resources include the current tight labor market (structural power), its large membership (associational power), its institutionalized channels of influence (institutional power), a clear just transition narrative about Fairer Wandel (ideational power), and strong working relationships with government, employers, academics, environmentalists, and more (coalitional power). A well-resourced union bureaucracy deploys those power resources with a clear message about the nature of the transformation and the need to maintain a strong manufacturing base in Germany. It is unclear how much success the union will have as the EV transition progresses, price-based competition intensifies, and job losses mount. In the face of job losses and plant closures, works councils in companies will be competing against one another for investment, market share, and ultimately jobs.

Make It Easier for Unions to Organize the Unorganized and Build Broad Worker Solidarity

Unlike in Germany, where the auto industry had no major non-union player until the arrival of Tesla, an important challenge in achieving a just transition in North America is competition between the union and the non-union sector. This condition creates significant opportunities for automotive firms to lower wages, undermine job security, and compromise workplace safety in the context of the BEV transition. Organizing the unorganized is needed to level the competitive playing field.

Union density in the US “motor vehicles and motor vehicle equipment” sector has declined from 58.8% to 11.8% between 1983 and 2021 (Hirsch and MacPherson 2003) and is higher at OEMs than at parts suppliers. In Canada, density has fallen from 73% in 2005 to 58% in 2014 in the assembly sector and from 31% in 2005 to 21% in 2014 in the automotive parts sector (Sweeney and Mordue 2017). According to Unifor, union coverage in 2021 was 65% in assembly and 23% in the independent parts sector.

The challenges in unionizing are not limited to Tesla or the battery plants. Union organizing has failed at incumbent firms in the face of management opposition at Toyota, Nissan, Honda, Hyundai, Mercedes-Benz, and BMW. In Republican-dominated states, where much of the new US BEV investment is sited, politicians and local businesses have also mobilized against union organizing campaigns, most notably at Volkswagen in Tennessee (LeRoy et al. 2022; Silvia 2023), where UAW activists were defeated in two union elections before winning in April 2024. Successes by the UAW at Daimler truck plants in North Carolina and by the Steelworkers at the Bluebird bus plant in Georgia in 2023 (Leon 2023) are exceptions. Much government funding to promote the BEV transition goes to firms that violate worker rights. In Canada, unions are facing similar challenges. While many reconversion investments have been announced in union shops, battery components and assembly plants will be “greenfield” sites and management is expected to oppose the extension of union representation. Like the UAW, Unifor has not been able to organize the Toyota and Honda assembly plants, and most workplaces in the supplier sector are non-union.

Building solidarity to shape this process is made difficult by the real pressures of worker-to-worker competition. Much of it is intentionally orchestrated by management, as in Ford’s decision to close the Saarlouis plant, a classic example of management whipsawing (Greer and Hauptmeier 2016). Competition also occurs between firms, as seen with Tesla, whose expansion is likely to push other brands out of the market and increase overall overcapacities in the industry. A lesser-known example of inter-firm competition occurs along the supply chain, as OEMs decide whether to produce certain parts in-house or purchase them from independent suppliers. As the past history of whipsawing in the auto industry shows, organizing solidarity between competing plants and firms is necessary but not easy. The challenge is therefore not only to ensure that workers can form unions but also to make it possible for them to organize in a way that competition is countered with solidarity.

One way to level the competitive playing field is to restrict employer opposition to union organizing. Improving the enforcement of existing labor laws would greatly facilitate organizing. The recent Cemex decision is notable for altering this dynamic. It requires employers to petition the National Labor Relations Board (NLRB) for a secret-ballot election if a union seeks recognition based solely on a show of union authorization cards. As such, employers who are presented with cards signed by a majority of employees must decide to either immediately recognize the union or submit a petition for an election within a two-week time frame. Beyond this, government should encourage broad coordination of collective bargaining at the sector level. Government incentives should mandate that these plants automatically fall under sectoral agreements or that financial support comes with a neutrality agreement. In Canada, the newly introduced Canadian Sustainable Jobs Act promoting union jobs during the environmental transition is a step forward, but more robust measures supported by government financial schemes will be needed.

Give Trade Unionists More Rights to Participate in Corporate Decision-making Where They Are Organized

A second barrier in North America is inside the unionized sector, where, although management’s decisions are constrained by collective bargaining agreements, management still has very strong rights to make unilateral decisions, unaffected by the worker voice and support required under German law. Participation is often understood as a function of labor–management partnership (Vidal 2022) or bargaining over investment (Dupuis and Greer 2022), and in recent years, the UAW has negotiated to create procedures to govern sourcing and technological change (Rutherford 2023). Despite its evident militancy, the UAW leadership did not abolish joint programs in the 2023 master agreements.

Labor–management partnership and negotiation over investment has taken place against a background of union weakness. Dupuis and Greer’s (2022) study of insourcing found that nearly all the work brought in-house was carried out under worse pay and conditions than that done by the core workforce of the OEMs, both in Canada and the United States. This situation was remedied to some extent with the 2023 collective agreements, at least in the Detroit “Big Three” (General Motors, Ford, and Stellantis) plants. Improving union capacity to influence corporate investment decisions would also alter the politics of unionized corporations in ways that would protect industrial jobs in the United States and Canada.

The solution is to require corporations to bargain with unions over investment, to require workplace-level information and consultation, and to include worker representatives in corporate governance. One way to strengthen worker participation is to enshrine it in collective bargaining, a proposal OEMs will oppose at the bargaining table; unions will have to weigh these demands against others that could be more important for their members in the short run. Another path is that state investments in new capacities should require such mechanisms that promote information and consultation. A third path is to strengthen worker voice through labor law reforms to create North American equivalents to the instruments described above.

Involve Unions in Industrial Policies to Encourage BEV Expansion

Not only do North American workers lack the participation rights that German workers rely on in co-determined firms, their unions lack the corporatist forums that give IG Metall a strong voice. Trade unionists can be involved in the national policies that govern this transition, including trade rules, subsidies, emissions standards, BEV mandates, energy policy, public procurement, and other areas of industrial policy. The German example shows that much can be done at the regional level as well. Even compared to other kinds of climate jobs in the United States, manufacturing unions hold limited sway. For instance, in the energy transition, building trade unions can continue their past practice of negotiating project labor agreements with apprenticeship targets that favor the unionized sector; manufacturing unions lack these forms of leverage.

Despite the discourse of political leaders, unions are not involved in government efforts to promote BEVs, and they therefore have less information and influence than their counterparts in Germany. The weakness of workers’ rights in the workplace makes it all the more important to include unions in policymaking processes. Without the involvement of organized labor in this process, the language of “just transition” and “good union jobs” may ring hollow to many workers.

To create good jobs through industrial policy, states, provinces, and federal governments need the kinds of forums that exist in Germany in which labor, management, and government discuss industrial policy, from formulation to implementation. The newly proposed Canadian Sustainable Jobs Act envisions the creation of regional tables and jobs partnership councils including union representatives, and in Québec labor–management sectoral committees supported by the provincial government could provide a vehicle to promote policy discussions and solutions to workers affected by climate transitions. Past experience, however, shows that funding is sometimes inadequate for unions to fulfill the potential of these forums.

Expand the Use of Existing Tools for Managing Restructuring

Strengthening worker rights is also necessary outside the workplace, when making transitions in the labor market. Although the regulatory landscapes of North America are less stringent than Germany’s regarding plant closures and mass layoffs, with no worker consultation rights or “social plans,” North American trade unionists have access to comparable tools, just in weakened form.

Approximately half of the US states have short-time compensation programs, with names such as Workshare or Shared Work, and Canada has a national Work Sharing Program. Similar to Kurzarbeit, these programs provide support from the unemployment insurance system for employers that reduce working time, rather than resorting to layoffs. However, these programs are underutilized. Whereas Kurzarbeit aided 6 million German workers at their peak in April 2020 (Mueller 2021), state short-time compensation programs in the United States supported only 450,000 workers at their peak, which came three months later, in July 2020 (U.S. Department of Labor 2020). Similarly, the services of Germany’s Transfergesellschaften and Beschäftigungsgesellschaften are similar to those funded by the US government’s Trade Adjustment Assistance (TAA) program, which offered workers various services to facilitate re-employment, including targeted retraining, income support, and job-search assistance. TAA, however, expired in 2022 and has yet to be reauthorized by US Congress (Congressional Research Service 2023). US job banks had a similar function, albeit one set in collective bargaining and confined to the unionized sector. At Detroit’s Big Three they were eliminated as a condition of the auto industry bailout of 2009 (Rattner 2011).

Most Canadian provinces require measures to soften the impact of collective layoffs through retraining or transferring workers to new workplaces or new occupations, often governed by a “reallocation committee” with labor representatives. These tools should be strengthened and include climate transition language that would apply in situations like the EV transition. Union participation should also be mandatory when such episodes of restructuring occur.

The programs that exist to support workers fighting against layoffs and making transitions in the labor market should be expanded and modernized. Retraining programs need more funding, short-time compensation should exist in every US state, and TAA should be reauthorized by Congress. Improvements to unemployment insurance, including the involvement of unions in its administration, would support workers looking for good jobs and attempting to avoid bad ones.