The UAW’s novel targeted strike strategy against U.S. automakers is already starting to have ripple effects on other factories, raising the risks for both sides if an agreement is not reached quickly.
Why it matters: Until Friday, the UAW has never gone on strike simultaneously against GM, Ford and Stellantis (Chrysler’s parent).
But the union, under new President Shawn Fain, has devised a unique plan to ratchet up the pain at all three companies without wrecking the economy — targeting a trio of strategic factories while keeping 90 percent of its members working under expired contracts.
Yes, but: GM and Ford have already said they will have to shutter other factories impacted by the work stoppage at the targeted plants.
GM said it will have to idle a Kansas assembly plant next week.
Ford said the work stoppage in the assembly and paint departments at a Michigan factory means 600 other employees at the plant have been told to stay home, but said “this is not a lockout.”
Automakers’ operations are closely interconnected, meaning the limited strike will bleed to other factories.
The intrigue: While the majority of working conditions remains unchanged for those still on the job, a critical “no strike, no lockout” clause is no longer in effect once the contract expires.
That means the companies could shut down other factories affected by the targeted strikes — as parts supplies dwindle, for example, or to avoid overproducing engines — potentially leaving shut down employees ineligible for either strike pay or unemployment benefits, depending on their state’s laws.
Ford has already indicated it will begin an “orderly shutdown” of its operations if they are affected by the targeted strike actions elsewhere.
Meanwhile, President Biden on Friday urged U.S. automakers to share more of their “record profits” with striking union workers to bring a quick end to the historic labor walkout.
“The companies have made some significant offers. But I believe they should go further to ensure that record corporate profits mean record contracts for the UAW,” the president said.
Biden added that he is dispatching Acting Labor Secretary Julie Su and advisor Gene Sperling to Detroit to help reach a settlement to the walkout that began at midnight Friday.
Where it stands: About 13,000 UAW workers at three factories went on strike at midnight Friday — less than 10 percent of the UAW’s 146,000 Detroit Three workers.
The coordinated walkouts at GM’s small pickup plant in Missouri, Ford’s Bronco factory in Michigan and Stellantis’ Jeep Wrangler factory in Toledo are meant to inflict pain on the companies, but the UAW is saving some of its firepower.
For now, it has spared factories that build the companies’ most profitable products — the source of union members’ fat profit-sharing checks — such as the Ford Super Duty, GM’s heavy-duty Chevrolet Silverado and Stellantis’ Ram pickup trucks.
Between the lines: Economists are watching the developments closely.
Auto inventories remain tight, and should the strike escalate, prices of new and used autos could rise within two months, according to RSM US Chief Economist Joe Brusuelas.
“Because this strike involves all three major auto producers, should the duration of the labor action be much longer than the 2-4 weeks we are assuming, there is a risk that the spillover into the broader ecosystem of supply chain participants may result in a more modest downturn in overall manufacturing and industrial production,” he adds.
What’s next: Fain says he expects union negotiators to return to the bargaining table on Saturday, but the two sides remain far apart.
The companies’ latest offer for a 20 percent wage increase over four years is still about half what the UAW is seeking.
Automakers say the union’s demands are too high and would ruin their ability to compete against non-union carmakers like Tesla and Toyota.
Ford CEO James Farley said if the companies had agreed to the UAW’s initial demand to hike wages by 40%, cut workweeks and add new pension benefits, it would bankrupt the company.