United Auto Workers Strike Looms

By Cee Lippens September 13, 2023
The UAW has rejected all initial offers from Ford, Stellantis and G.M and is currently negotiating through multiple counterproposals as Thursday's deadline closes in. The UAW has rejected all initial offers from Ford, Stellantis and G.M and is currently negotiating through multiple counterproposals as Thursday's deadline closes in.

Detroit, Mi. -United Auto Workers workers are preparing for the largest auto strike in generations as the deadline for new contract agreements with Detroit’s Big Three automakers comes to a close.  UAW President Shawn Fain has called for strikes at Ford, GM and Stellantis if no deal is reached when the current four-year contracts covering 146,000 U.S. workers expire on Thursday at 11:59 p.m. ET.  UAW leaders are considering targeted strikes on all three automakers according to Reuters, but haven’t said whether strikes would target vehicle assembly plants or component factories.

The UAW seeks an “audacious and ambitious” list of demands, according to the UAW and the Big Three, that include a 46% wage increase over four years, an end to two-tier wage systems, a return of a defined pension instead of a 401k, reinstatement of cost of living adjustment raises, a 32-hour work week, job security protections and protections for workers affected by plant closures.

On Friday, Sept. 8, the union rejected wage and benefit offers from all three Detroit automakers. Union President Shawn Fain told workers in a Facebook Live talk that he filed proposals from Ford, General Motors and Stellantis in a wastebasket. “The automakers have yet to offer our members a fair contract,” he said. The Big Three counter offers have included much more modest wage hikes. Stellantis has offered a 14.5% pay bump over four years. Ford and GM have offered roughly 10% raises for its employees over four years.  The union called proposals from Ford and GM “shameful and insulting,” while it labeled Stellantis' pay offer “deeply inadequate.” A survey of 99 investors by Morgan Stanley found that 82% were expecting a strike, while 58% believed that a stoppage was "extremely likely."

As of Tuesday, Sept 12,  a wide gap on wages and the working conditions at plants remain between the union and the Big three. “While the continued exchange of counter proposals between the union and the automakers shows progress, it does not eliminate the risk of a strike," Benjamin Salisbury, an analyst at Height Securities said Tuesday in an investors' note.  "Our members are being left behind not just with the transition to EV, but also with product placement, and retirement security. There's a lot of issues feeding into this." Fain said.

A strike could bring production to a halt, costing billions of dollars in losses for automakers as well as their suppliers. According to J.P. Morgan, 40% of U.S. new light-vehicle sales by units are made by the three automakers. Ten-day strikes at all three automakers could cost manufacturers, workers, suppliers and dealers more than $5 billion, according to economic consulting firm Anderson Economic Group.

Dealership Inventory could be affected by a prolonged strike. 

A month-long strike at the three automakers could cut output by as many as 500,000 vehicles, potentially creating skyrocketing vehicle prices for consumers. If a strike is short and limited to only certain factories, it isn’t likely to raise prices for most vehicles, analysts say.

A prolonged strike could have deep impacts on auto dealerships and repair shops, which are just seeing inventory bounce back to pre-pandemic levels. The UAW strike fund has about five weeks of solvency, five weeks could wipe out much car inventory on dealer lots. Any strike length will ripple out to affect suppliers and other businesses like repair shops. If shops can’t access OEM parts, cars can’t get fixed. The GM strike in 2019 saw lasting effects on car repair times. In 2019, the UAW went on a 42-day strike against GM before reaching a new contract, costing GM $5 billion. It was the longest walkout since a 28-day strike at Ford in 1976. UAW workers struck for two days at GM and for one day at Chrysler in 2007. Prior to 1976, strikes were frequently used as a bargaining tool in contract talks with the longest UAW strike against GM lasting 113 days in 1945 involving 320,000 hourly workers. 

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Last modified on Tuesday, 26 September 2023 12:12