The United Auto Workers (UAW) and the Detroit Three automakers are still in disagreement as the deadline approaches for a potential expansion of the union’s strikes in the U.S. This standoff has raised concerns about the possibility of prolonged industrial action, which could disrupt production, impact the supply chain, and negatively affect U.S. economic growth.
Last week, the UAW initiated unprecedented simultaneous strikes at one assembly plant each of General Motors (GM.N), Ford (F.N), and Stellantis (STLAM.MI), the parent company of Chrysler. These strikes have resulted in approximately 12,700 workers going on strike out of the union’s 146,000 members who work at the Big Three.
UAW President Shawn Fain has stated that he will announce an expansion of the strikes on Friday if there is no significant progress in the talks. In a video message to UAW members, Fain emphasized the approaching deadline, using scenes from Hollywood movies with characters saying “tick tock.”
A RushHourDaily/Ipsos poll has shown that there is significant support among Americans for the striking auto workers.
Due to the ripple effects of the strikes, including parts shortages and storage constraints, Stellantis has joined GM and Ford in furloughing some employees at other factories.
UAW workers are expected to rally in support of workers striking at other plants at one of Ford’s assembly plants in Louisville, Kentucky. This city is home to a Ford assembly plant and its Kentucky truck plant, which is considered the company’s most profitable plant globally.
If the walkout continues, analysts predict that plants producing high-margin pickup trucks, such as Ford’s F-150, GM’s Chevy Silverado, and Stellantis’ Ram, will be the next targets. Morgan Stanley analyst Adam Jonas estimates that a full month of lost production would cost the three automakers $7 billion to $8 billion in lost profits.
UAW President Fain has criticized Detroit automakers for not sharing their profits with workers while benefiting executives and investors. GM President Mark Reuss has rejected these claims, stating that the record profits have been reinvested in electric vehicles and gasoline-powered cars.
The automakers have proposed 20% raises over 4-1/2 years, but UAW workers also want to eliminate the tiered wage structure that has created a wage gap between newer and older employees.
S&P has warned that the strikes are likely to last several weeks and could reduce third-quarter U.S. gross domestic product by 0.39%, causing disruptions in global automotive supply chains.
The ongoing strikes at midsized truck factories have benefited Toyota Motor, which does not have unions at its U.S. factories and is preparing to launch redesigned Tacoma pickup trucks.
Investors in Tesla have noted that an increase in wages and benefits at Detroit competitors would give the electric vehicle company a labor cost advantage.
Overall, the situation between the UAW and the Detroit Three automakers remains tense, with significant implications for the industry and the economy.
