DETROIT, Sept 15 (Reuters) – The United Auto Workers union launched simultaneous strikes at three factories owned by General Motors (GM.N), Ford Motor (F.N) and Chrysler parent Stellantis NV (STLAM.MI) on Friday, kicking off the most ambitious U.S. industrial labor action in decades.
The walkouts at the Detroit Three will halt production of the Ford Bronco, Jeep Wrangler and Chevrolet Colorado pickup truck, along with other popular models, though the action was smaller than some expected.
“For the first time in our history we will strike all three of the Big Three,” UAW President Shawn Fain said, adding that the union will hold off more costly company-wide strikes for now, but all options are open if new contracts are not agreed.
The action caps weeks of clashes between Fain and Detroit Three executives over union demands for a bigger share of profits generated by combustion trucks, and stronger job security as automakers shift to electric vehicles.
The automakers’ previous contract expired at 11:59 p.m. EDT on Thursday, and there will be no negotiations on Friday, the UAW said.
Executives say the union’s asks would make the automakers uncompetitive against other nonunion rivals. “We still have a ways to go with the offer they put on the table last night,” said GM CEO Mary Barra on “CBS This Morning” on Friday.
President Joe Biden, who faces re-election next year, has called for a deal. Biden will address the strike later on Friday, the White House said.
The strikes involving a combined 12,700 workers will take place at assembly plants operated by Ford in Wayne, Michigan; GM (GM.N) in Wentzville, Missouri; and Stellantis’ (STLAM.MI) Jeep brand in Toledo, Ohio. Those plants are critical to the production of some of the automakers’ most profitable vehicles.
Friday’s walkout was smaller than some analysts expected.
“This is more of a symbolic strike than an actual damaging one,” said Sam Fiorani, a production forecaster at Auto Forecast Solutions, who added that he had expected more in the strike’s first wave. “If the negotiations don’t go in a direction that Fain thinks is positive, we can fully expect a larger strike coming in a week or two.”
Targeted walkouts could limit the cost of strike pay to the UAW, which has an $825 million strike fund. This pales compared with the billions the automakers have built up thanks to robust profits from the trucks and SUVs UAW members build.
Stellantis has more than 90 days’ worth of Jeeps in stock, and has been building SUVs and trucks on overtime, according to Cox Automotive data. But a week-long shutdown at the Toledo Jeep plant could cut revenue by more than $380 million, based on Stellantis financial reports.
Fiorani estimated the limited action would stop production of about 24,000 vehicles a week.
“UAW on strike” signs lean against a pile of wood on the picket line outside the General Motors Detroit-Hamtramck Assembly in Hamtramck, Michigan, U.S. October 25, 2019. REUTERS/Rebecca Cook/File Photo Acquire Licensing Rights
In Wayne, Michigan, hundreds of people, including auto workers on the night shift and their supporters, gathered at a Ford assembly plant as the strike began.
After earlier losses, Stellantis shares were up 1.8% in Milan. Ford shares were up 0.6% and GM shares were up 1.8% on Friday morning in New York.
COST HIKE FEARS
The UAW has said it wants a 40% raise, while the automakers have offered up to 20%, but without key benefits demanded by the union. None of the Detroit Three has proposed eliminating tiered wage systems that require new hires to stay on the job for eight years to earn the same as veteran workers – a key UAW demand.
Ford said the UAW’s latest proposals would double its U.S. labor costs and make it uncompetitive against Tesla (TSLA.O) and other nonunion rivals. A walkout could mean that UAW profit-sharing checks for this year would be “decimated,” it said.
Stellantis said it had immediately gone into “contingency mode” and would take structural decisions to protect the company and its North American operations, without elaborating.
Fain said earlier this week that Stellantis had proposed shutting as many as 18 U.S. facilities.
GM’s top manufacturing executive, Gerald Johnson, said in a video on Thursday that the UAW wage and benefits proposals would cost the automaker $100 billion. He did not detail how the union proposals would result in that cost, or over what time frame.
Fain has rejected the automakers’ assertions that union demands would cost too much, saying the companies have spent billions on share buybacks and executive salaries.
If the strike is lengthy, demand and cash for suppliers and other sectors that depend on automakers could dry up.
While Biden is pouring billions in federal subsidies into expanding electric vehicle sales, this shift could threaten combustion powertrain jobs and the UAW has not endorsed his re-election.
Biden’s likely opponent, former president Donald Trump, on Friday criticized the shift to EVs as a job-killer for the UAW in an effort to court their votes.
While a deal with one or more of the automakers could come at any time, the disruption is an opportunity for nonunion automakers in the United States, including Tesla, Toyota (7203.T), Honda (7267.T) and Mercedes (MBGn.DE).
Those nonunion factories, plus imports, account for more than half of the vehicles sold in the U.S. market.
Reporting by Joseph White in Detroit, David Shepardson in Washington, Peter Henderson in San Francisco and Mehr Bedi in Bengaluru
Editing by David Gaffen, Alexander Smith and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
