UPDATED 4:32 a.m. 9/15
DETROIT (Reuters) – The United Auto Workers union launched simultaneous strikes at three factories owned by General Motors, Ford and Chrysler owner Stellantis 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.
“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.
Fain laid out plans for the walkouts on Facebook Live, less than two hours before the expiration of the old contract.
The walkouts cap 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 standoff has become a political issue, with President Joe Biden, facing re-election next year, calling for a deal.
The strikes involving a combined 12,700 workers will take place at assembly plants operated by Ford in Wayne, Michigan, GM in Wentzville, Missouri and Stellantis’ Jeep brand in Toledo, Ohio. They are critical to the production of some of the automakers’ most profitable vehicles.
Fain’s decision to go with targeted walkouts could limit the cost to the union of strike pay. The UAW has a $825 million strike fund, which pales in comparison to billions in liquidity 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 its Jeep plant in Toledo could cut revenue by more than $380 million, based on data from Stellantis’ financial reports.
“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 first wave of the strike.
“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,” he said.
Fiorani estimated the limited action would stop production of about 24,000 vehicles a week. And while it targets some key brands, buyers would be willing to wait, for now.
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.
Stellantis shares fell more than 1% in early trading, among the worst performers on the euro-zone STOXX50 index. Ford shares were down 2.3% and GM was off 1.7% in early premarket trading in New York in thin volumes.
COMPANIES FEAR COST HIKES
The union has said it wants a 40% raise. The companies 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 and other non-union 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 all appropriate 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 said it was disappointed by the walkout, and would continue to “bargain in good faith.”
Ahead of Fain’s address, GM’s top manufacturing executive Gerald Johnson said in a video that the UAW’s wage and benefits proposals would cost the automaker $100 billion, “more than twice the value of all of General Motors and absolutely impossible to absorb.” 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.
Suppliers and other industries that depend on automakers and their workers could see demand and cash dry up if the UAW shuts down Detroit Three’s U.S. manufacturing operations.
Biden is pouring billions in federal subsidies into expanding sales of electric vehicles. But the shift to EVs could threaten UAW combustion powertrain jobs. The union has not 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,” Wedbush analyst Dan Ives said.
UAW President Fain has taken an unorthodox approach to the negotiations, bargaining with all three Detroit automakers simultaneously. Past UAW leaders chose one company to set a contract pattern for the other two. Fain has played the companies against each other, seeking to drive up their offers.
While a deal with one or more of the automakers could come at any time, the disruption is an opportunity for non-union automakers in the United States, including Tesla, Toyota, Honda and Mercedes.
Those non-union factories, plus imported vehicles, account for more than half of the vehicles sold in the U.S. market.
A full strike would hit earnings by about $400 million to $500 million at each affected automaker per week of lost production, Deutsche Bank estimates. Some of those losses could be recouped by later boosting production schedules, but that possibility fades as a strike extends to 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 and Alexander Smith)
UPDATED 5:08 p.m.
(Reuters) -A first-ever simultaneous strike against the Detroit Three carmakers by the United Auto Workers grew increasingly likely on Thursday with little progress reported in talks hours before a contract deadline expires.
The union – which represents 146,000 U.S. auto workers – is asking for 40% pay raises and major improvements in benefits as part of what it calls “audacious” demands.
In response, Ford Motor CEO Jim Farley told CNN the proposal to hike wages by 40% would “put us out of business.” He said there were no talks going on, and that the automaker has received no counteroffer to its plan to offer 20% pay hikes.
“Nothing is going on,” he told CNBC.
General Motors earlier said it hiked its contract offer to a 20% wage hike for U.S. autoworkers over four and a half years – including 10% in the first year – to avoid a strike that is set to begin at 11:59 p.m. if no deal is reached.
GM CEO Mary Barra told employees the company still hoped to reach a deal: “Remember: we had a strike in 2019 and nobody won.” GM reported a $3.6 billion pre-tax loss in 2019 after the 42-day walkout.
The third Detroit automaker, Chrysler parent Stellantis, has offered pay hikes of 17.5%, the union has said.
Coordinated strikes would represent arguably the most ambitious U.S. labor action in decades and could impact U.S. economic growth, depending on how long they last.
The UAW’s demands include restoring defined benefit pensions for all workers, 32-hour work weeks and additional cost-of-living hikes, as well as job security guarantees and an end to the use of temporary workers.
Farley said if the UAW proposal had already been in effect the company would have lost about $15 billion from 2019-2022 instead of earning about $30 billion and “gone bankrupt by now.”
“The future of our industry is at stake,” Farley said in a letter to employees urging the UAW to “stay at the table” and reach a deal. “Let’s do everything we can to avert a disastrous outcome.”
‘DISASTROUS OUTCOME’
UAW President Shawn Fain said Wednesday a strike was likely as automakers rejected the pension, 32-hour work week and other benefit improvements sought. He also criticized proposed changes to profit sharing that would cut payments to workers.
The UAW has outlined plans for a series of strikes targeting individual, undisclosed U.S. auto plants if agreements are not reached by late Thursday, rather than a full walkout. The union plans to disclose the initial plants during a 10 p.m. ET event.
UAW organizing director Brian O. Shepherd said in an online event Thursday that the strike strategy is to give “negotiators maximum flexibility” to get autoworkers “the contract they deserve.” He added a full walkout “is still on the table.”
Fain said Wednesday that the pay raises offered by the Detroit Three to auto workers were inadequate even as automakers said the union had yet to formally respond to their latest, more generous offers.
“The clear winner in this Game of Thrones Battle between the UAW vs. GM/Ford is Tesla,” said Wedbush analyst Daniel Ives. The Detroit automakers could face higher costs and complexity in the future that Tesla and other non-union automakers will not face as they expand electric vehicle production, he said.
AID FOR SUPPLIERS
The U.S. auto sector, including parts manufacturers, employs almost 1 million people, according to the U.S. Bureau of Labor Statistics.
Biden administration officials are discussing emergency aid to protect smaller firms that supply U.S. auto manufacturers, according to a source with knowledge of the matter. The White House declined to comment.
Fain outlined a strategy to “create confusion” with a series of work stoppages targeting individual U.S. plants if no deal is reached.
Stopping work at a key engine or transmission plant, for example, could have a cascading effect by depriving other factories of parts they need to produce vehicles. Another option would be to strike at profitable pickup truck or SUV assembly plants.
Fain said it was still possible that at a later date all of the auto workers could strike.
A full strike would hit earnings at each affected automaker by about $400 million to $500 million per week assuming all production was lost, Deutsche Bank has estimated.
Some losses could be recouped by boosting production schedules after a strike, but that possibility fades as a strike extends to weeks or months. A UAW strike would not affect European and Asian carmakers like Toyota, Honda and Mercedes, whose U.S. plant workers are not represented by the union.
U.S. President Joe Biden has encouraged the parties to stay at the table “to get a win-win agreement that keeps UAW workers at the heart of our auto future,” White House economic adviser Jared Bernstein said Wednesday.
“These workers are again at the forefront of their industry, and they’re not getting paid like it,” said Senator Sherrod Brown, a Democrat from Ohio, a state with thousands of auto industry workers, on the Senate floor Thursday.
The UAW said it was planning a rally in Detroit on Friday that will include Fain, Senator Bernie Sanders and other members of Congress, coinciding with a first of day of expected walkouts.
(Reporting by David Shepardson; additional reporting by Nandita Bose in Washington and Ben Klayman in Detroit Editing by Peter Henderson, Jamie Freed, Nick Zieminski and Deepa Babington)
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(Reuters) -U.S. automakers and union negotiators offered little hope a deal would be reached on Thursday to avoid a midnight walk-off that would be the United Auto Workers’ first-ever simultaneous strike against the Detroit Three carmakers.
Negotiations are still ongoing and moved to the UAW’s office in downtown Detroit with less than 12 hours before the strike deadline. General Motors said Thursday it “put another economic offer on the table this morning with the goal of avoiding a work disruption by 11:59 PM tonight.”
Coordinated strikes would represent arguably the most ambitious U.S. labor action in decades and could impact U.S. economic growth, depending how long they last.
The UAW has outlined plans for a series of strikes targeting individual, undisclosed U.S. auto plants if agreements are not reached by late Thursday, rather than a full walkout.
UAW organizing director Brian O. Shepherd said in an online event Thursday the strike strategy is to give “negotiators maximum flexibility” to get autoworkers “the contract they deserve.” He added a full walkout “is still on the table.”
UAW President Shawn Fain said the Detroit Three had offered 146,000 U.S. auto workers pay raises of as much as 20% over 4-1/2 years, but he blasted the proposal as inadequate even as automakers protested the union had yet to formally respond to their latest, more generous offers. The union is asking for 40% raises and major improvements in benefits.
The Washington Post reported Thursday Biden administration officials are preparing economic measures to protect auto suppliers that could be impacted, including through government loans. The White House declined to comment on the report.
A source told Reuters aid for suppliers has been discussed “since the minute it became clear there could be a strike” but those talks are “premature and fluid.”
Ford CEO Jim Farley said in a letter to employees seen by Reuters, “bargaining is a two-way street and we continue to implore the UAW to stay at the table, work together to reach an agreement, and avert a strike.”
Ford hourly employees on strike “would take home nearly 60% less on average with UAW strike pay than they would from working. And without vehicles in production, the profit-sharing checks that UAW workers could expect to receive early next year will also be decimated by a significant strike.”
Fain outlined a strategy to “create confusion” with a series of work stoppages targeting individual U.S. plants if no deal is reached.
Stopping work at a key engine or transmission plant, for example, could have a cascading effect by depriving other factories of parts they need to produce vehicles. Another option would be to strike profitable pickup truck or SUV assembly plants.
Fain said it was still possible that at a later date all of the auto workers could strike.
A full strike would hit earnings at each affected automaker by about $400 million to $500 million per week assuming all production was lost, Deutsche Bank has estimated.
Some losses could be recouped by boosting production schedules after a strike, but that possibility fades as a strike extends to weeks or months. A UAW strike would not affect so-called transplant carmakers like Toyota, Honda and Mercedes, whose U.S. plant workers are not represented by the union.
U.S. President Joe Biden has encouraged the parties to stay at the table “to get a win-win agreement that keeps UAW workers at the heart of our auto future,” White House economic adviser Jared Bernstein said Wednesday. A prolonged strike could pose political problems for Biden.
Senator John Fetterman, a Democrat, rejected the idea automakers could not pay more, saying the Detroit Three CEOs made a combined $74 million last year.
Ford Motor has proposed a 20% hike in pay over the contract term, General Motors 18%, and Chrysler parent Stellantis 17.5%, Fain said. That is less than half the pay hikes the union has sought, but higher than companies’ initial offers. It is not clear what is in the new GM offer.
Ford said Thursday it was still waiting for a UAW counteroffer.
Ford warned of a grim scenario. “The future of our industry is at stake. Let’s do everything we can to avert a disastrous outcome.”
The union’s demands include restoring defined benefit pensions for all workers, 32-hour work weeks and additional cost-of-living hikes, as well as job security guarantees and an end to the use of temporary workers.
Fain said automakers had rejected the pension, 32-hour work week and other benefit improvements sought. He also criticized proposed changes to profit sharing that would cut payments to workers.
The UAW said it was planning a rally in Detroit on Friday that will include Fain, Senator Bernie Sanders and other members of Congress, coinciding with a first of day of expected walkouts.
(Reporting by David Shepardson; additional reporting by Nandita Bose in Washington and Ben Klayman in Detroit Editing by Peter Henderson, Jamie Freed and Nick Zieminski)
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