US workers represented by the United Auto Workers (UAW) trade union have begun a strike at plants owned by three legacy Detroit car-maker, setting up a potentially costly and protracted showdown over wages and job security.
As the midnight deadline for a new contract passed, workers on Friday began walking out of a Ford plant that makes the Bronco SUV; a General Motors factory in Missouri that makes its Chevy Colorado mid-sized pickup; and a Stellantis plant in Toledo, Ohio, that makes the Jeep Wrangler. The union and automakers are still far apart after weeks of talks.
The strategy is designed to methodically cut production of profitable vehicles while minimising the impact on the UAW’s strike fund. The union said it will add strike locations depending on how bargaining progresses.
“Tonight, for the first time in our history, we will strike all three of the Big Three at once,” UAW President Shawn Fain said late Thursday. “This strategy will keep the companies guessing. It will give our national negotiators maximum leverage and flexibility in bargaining. And if we need to go all out, we will. Everything is on the table.”
The UAW’s unusually broad attack comes amid a resurgence of labour activism in the US. Emboldened by tight labour markets and agitated by inflation and new risks shouldered during the pandemic, unionised workers have notched a series of victories in the last year at some of the most prominent US companies, including major railroads and United Parcel Service Inc.
The automakers were quick to condemn the strike.
“We are extremely disappointed by the UAW leadership’s refusal to engage in a responsible manner to reach a fair agreement in the best interest of our employees, their families and our customers,” Stellantis said in an emailed statement after the strike began. “We immediately put the company in contingency mode and will take all the appropriate structural decisions to protect our North American operations.”
GM said it was “disappointed by the UAW leadership’s actions, despite the unprecedented economic package GM put on the table, including historic wage increases and manufacturing commitments. We will continue to bargain in good faith with the union to reach an agreement as quickly as possible.”
Ford said in a statement late Thursday the union’s latest counterproposal “showed little movement” from its initial demands. It said those would give an extra boost to the cost-competitiveness of non-union rivals such as Tesla Inc. and Toyota Motor Corp.
The first walkout will shut down plants that make popular and profitable models, but spares factories that make cash cows like the Ford F-150, Chevy Silverado and Ram pickups. That leaves the union with bigger, more damaging moves if a strike drags on.
The union said 12,700 workers at three plants will be part of the initial action. They will get $500 a week from the union in strike pay.
The effects of the strike could ripple across the economy, with parts suppliers expected to be hit as production comes to a halt at the three plants – and potentially others.
“Small and medium-sized manufacturers across the country will feel the brunt of this work stoppage, whether they are a union shop or not,”’ the National Association of Manufacturers said in a statement after the strike began. “American families are already feeling economic pressures from near-record high inflation and this will only inflict more pain.”
A 40-day strike against GM in 2019, the longest since the 1970s, cost the company about $3.6 billion in earnings before interest and taxes, according to RBC Capital Markets. The strike dented revenue up and down the automotive supply chain.
The UAW said Thursday that it has about $825 million in its strike fund. The union offers strike pay of $500 per week per member. – Bloomberg
