The United Auto Workers (UAW) union launched simultaneous strikes at three factories owned by General Motors, Ford, and Chrysler owner Stellantis on Friday, kicking off the largest 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.
Union President Shawn Fain said that this is the first time in the UAW’s history that it has struck all three of the Big Three automakers. He added 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 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 calling for a deal.
The strikes involve a combined 12,700 workers and are taking place at assembly plants operated by Ford, GM, and Stellantis. These plants 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 is small compared to the billions in liquidity that the automakers have built up.
Stellantis has more than 90 days worth of Jeeps in stock and has been building SUVs and trucks on overtime. However, a week-long shutdown at its Jeep plant in Toledo could cut revenue by more than $380 million.
Production analysts estimate that the limited action will stop production of about 24,000 vehicles a week. While it targets some key brands, buyers would be willing to wait, for now.
Companies Fear Cost Hikes
The union has said that 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.
Ford said that the UAW’s latest proposals would double its U.S. labor costs and make it uncompetitive against Tesla and other non-union rivals. Stellantis said that it would take all appropriate structural decisions to protect the company and its North American operations. GM said that it was disappointed by the walkout and would continue to “bargain in good faith.”
Impact of the Strike
The strike could have a significant impact on the auto industry and its suppliers. It could also hurt workers and businesses that depend on the auto industry.
President Biden has poured billions in federal subsidies into expanding sales of electric vehicles. The shift to EVs could threaten UAW combustion powertrain jobs.
The UAW’s decision to strike all three Detroit automakers simultaneously is a bold move. It is unclear how long the strike will last or what the outcome will be. However, the strike is a sign of the growing tensions between the union and the automakers.