By Joseph White and David Shepardson
Firsts U.S. auto workers strike
DETROIT (Reuters) – In a historic move, U.S. auto workers launch first simultaneous strike at Detroit Three union initiated simultaneous strikes. At three major Detroit Three automotive factories early on Friday. Marking one of the most ambitious industrial labor actions in the United States in decades.
These walkouts will disrupt the production of several popular vehicles, including the Ford Bronco. Jeep Wrangler, and Chevrolet Colorado pickup truck.
UAW President Shawn Fain has indicated that, at present, they are holding off on a broad, general strike. But have not ruled out such action if new contracts cannot be agreed upon.
Fain unveiled the plans for these unprecedented, synchronized walkouts at the U.S.
Operations of General Motors, Ford. And Stellantis (Chrysler’s parent company) in a live address on Facebook, just two hours. Before the expiration of the previous contract.
For the first time in our history, we will strike all three of the Big Three automakers, Fain declared.
Those strikes, which involve approximately 12,700 workers, are set to take place at assembly plants run by Ford in Wayne, Michigan. GM in Wentzville, Missouri, and Stellantis’ Jeep brand in Toledo, Ohio. These plants play a crucial role in producing some of the most profitable vehicles for these automakers.
Fain’s decision to initiate targeted walkouts may limit the financial impact on the union’s strike fund. The UAW possesses an $825 million strike fund, which pales in comparison to the billions in liquidity that automakers have amassed, thanks in part to the robust profits from the trucks and SUVs that UAW members assemble.
Opting for a limited strike may also mitigate potential economic damage, a concern raised by economists and politicians in the event of a widespread and prolonged shutdown of Detroit Three operations.
While Stellantis has a significant inventory of Jeeps, a one-week shutdown at the Jeep plant in Toledo could still result in a revenue loss exceeding $380 million, based on the company’s financial reports.
Sam Fiorani, a production forecaster at Auto Forecast Solutions, estimated that this limited action would halt the production of around 24,000 vehicles per week. Although this strike affects some prominent brands like the Bronco, customers may be willing to wait for the time being.
COMPANIES CONCERNED ABOUT COST INCREASES
The UAW has advocated for a 40% wage increase, while the companies have offered up to 20% but without including certain benefits demanded by the union. None of the Detroit Three automakers has proposed eliminating tiered wage systems, which require new hires to work for eight years to earn the same wages as veteran workers – a central demand of the UAW.
Ford stated in a release that the UAW’s latest proposals would double its U.S. labor costs, making it less competitive compared to non-union rivals like Tesla. A strike could severely impact UAW profit-sharing checks for this year, according to the company. GM and Stellantis declined to comment before the midnight strike deadline.
Before Fain’s address, GM’s top manufacturing executive,
Gerald Johnson, asserted in a video that the UAW’s wage and benefits proposals would cost the automaker $100 billion
an amount “more than twice the value of all of General Motors and absolutely impossible to absorb.” However, he did not elaborate on how the union’s proposals would result in such a cost or over what time frame.
Jim Farley, Ford’s CEO, stressed before the address that the future of the industry was at stake, saying, “Let’s do everything we can to avert a disastrous outcome.”
Fain has dismissed the automakers’ claims that the union’s demands would be prohibitively expensive, pointing out that the companies have allocated billions to share buybacks and executive salaries.
Suppliers and other industries reliant on automakers and their workforce could experience a sudden drop in demand and revenue if the UAW shuts down the Detroit Three’s U.S. manufacturing operations. This standoff has become a political issue, with President Joe Biden, who faces re-election next year, prominently advocating for a resolution.
Biden is funneling substantial federal subsidies into expanding electric vehicle sales, but the transition to EVs could jeopardize UAW combustion powertrain jobs. The union has not yet endorsed Biden’s re-election.
“I think the Biden administration just continues to watch this slow-moving car crash as its EV strategy collides head-on with unions,” remarked Dan Ives, an analyst at Wedbush.
UAW President Fain has taken an unconventional approach to the negotiations by bargaining simultaneously with all three Detroit automakers. Previous UAW leaders typically selected one company to set a contract pattern for the other two. Fain has sought to leverage competition between the companies to secure better offers.
While a deal with one or more of the automakers could materialize at any time, the ongoing disruption provides an opportunity for non-union automakers in the United States, including Tesla, Toyota, Honda, and Mercedes.
These non-union factories, along with imported vehicles, account for over half of the vehicles sold in the U.S. market. Although, Detroit automakers produce some of the best-selling vehicles in the U.S. market, such as the Ford F-150 and Chevrolet Silverado pickup trucks, as well as Jeep SUVs.
A full strike could lead to earnings losses of approximately $400 million to $500 million per week of halted production at each affected automaker, according to estimates by Deutsche Bank. While some of these losses could potentially be recouped by increasing production schedules after a strike, this possibility diminishes as a strike extends over weeks or months.
(Reporting by Joseph White in Detroit, David Shepardson in Washington, Peter Henderson in San Francisco and Mehr Bedi in Bengaluru; Editing by Jamie Freed)