UAW Prepares Targeted Strike to Maximize Automakers’ Pain

United Auto Workers President Shawn Fain is preparing to hit all three Detroit carmakers with targeted walkouts at strategic locations in several states in a play to both maximize the union’s strike fund and sow chaos at the companies.

(Bloomberg) — United Auto Workers President Shawn Fain is preparing to hit all three Detroit carmakers with targeted walkouts at strategic locations in several states in a play to both maximize the union’s strike fund and sow chaos at the companies.

As the UAW and Detroit Three automakers —  General Motors Co., Ford Motor Co. and Stellantis NV — approach a Thursday night deadline, the companies began sharing more details on the negotiations. GM Chief Executive Officer Mary Barra sent a letter to employees detailing a proposed 20% pay raise over the contract period, up from a previous offer of 18%. But the union wants 36%. 

If the UAW and carmakers can’t come to an agreement by 11:59 p.m. Thursday in Detroit, the union initially will aim to strike key plants that would most disrupt day-to-day business and profitability. That would keep carmakers scrambling to cope and wondering what facilities might be targeted next. And it would be the first time the union targets plants of all three companies at once. 

Read More: What’s at Stake as US Auto Workers Prepare to Strike: QuickTake

“We are prepared to strike these companies in a way they have never seen before,” Fain said late Wednesday in a Facebook Live broadcast aimed at the union’s 150,000 members. “We are still very far apart on our key priorities.”

GM’s latest offer includes inflation protection, extra money for retirement plans of existing employees, and job security at all existing US plants. But it did not include reinstatement of pensions and retiree healthcare for workers hired after 2007.

In her letter, Barra chafed at what she called “heated rhetoric from UAW leadership.” The GM CEO said she still hopes to avoid a walk-out. 

“We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight,” she wrote. “Remember: We had a strike in 2019 and nobody won.”

Shares of the automakers closed little changed in New York trading. GM was flat at $33.66, Ford fell 0.2% and Stellantis fell 0.6%. 

Careful Aim

The union could potentially decide to pinch production of the highest profit margin models such as full-size SUVs and trucks. By opting not to call an all-out work stoppage — at least initially — it preserves more of its $850 million strike fund, which could run out in less than two months if workers walked out of every plant at all three companies. 

Fain may aim to avoid strikes at factories that would result in closures at non-striking plants. That type of knock-on effect could prevent workers at those facilities not targeted from getting strike pay or unemployment benefits in many states. The UAW isn’t extending its current contract, so workers at plants that aren’t striking will work under expired agreements.

It could also strike parts distribution centers, which would leave dealers short of parts to repair vehicles that are already owned by customers, said Art Wheaton, a labor relations professor at Cornell University. 

Fain said the final decision on which plants are targeted will be made at 10 p.m. local time in Detroit, shortly before the deadline. That leaves automakers with limited time to plan for lost production from walk-outs. 

The automakers have expressed irritation at the UAW’s bargaining tactics. Without an exchange of proposals at the bargaining table, the chances of a strike are very high, according to a Ford source.

Ford Chief Executive Officer Jim Farley told CNBC Thursday that his company hasn’t received a counter-proposal from the union for an offer the automaker made Tuesday that included a 20% raise. 

“I don’t know what Shawn Fain is doing, but he’s not negotiating this contract with us as it expires,” Farley said. “But I know he’s busy planning a strike.”

Farley said “it’s frustrating” not to have received a counter-proposal from the union. “Nothing is going on,” he said. “We’ve never seen anything like this.”

Economic Issues

The UAW and three automakers are still hashing out key economic issues, including pay raises, cost-of-living adjustments — or COLA — pensions for newer workers and job security at select factories. Both the union and the companies have amended their offers as they try to reach a deal, but still aren’t in full agreement.

President Joe Biden’s administration is preparing for the potential fallout from a strike, which could include a hit to the overall US economy, higher auto prices and financial damage to industry suppliers.

White House officials are spending the hours leading up to the late night deadline tracking the negotiations and encouraging the parties to remain at the table, and an announcement of any economic assistance to affected parties is not imminent.

Michigan Governor Gretchen Whitmer also is pushing for a last minute deal between the UAW and the carmaker to stave off labor action that would close plants. 

“Of course, I’m worried,” she told reporters as she toured the floor of the Detroit Auto Show. “I’m hopeful that they’ll stay at the table and get a contract.”

The union has lowered its pay demand from 40%, which comes to 46% once raises are compounded, to 36%. Ford had offered to reinstate COLA for the first time in 14 years, but Fain said the formula offered wasn’t good enough. Still, the volleys show that both sides are budging from their opening offers.

Fain said the union proposed 90-day progression to the top pay rate and to restore pensions and retiree health care for all workers. He said the three companies agreed to cut the path to full pay to four years. All three rejected pension and retiree health proposals for workers hired after 2007. 

On pay, Fain said Ford proposed 20% raises over four years, while GM offered 18% and Stellantis 17.5%.

He said all three companies proposed different COLA programs, but none were satisfactory. He added that all three companies are trying to cut profit-sharing. He said Ford’s would have been a 21% smaller check for last year and GM’s would have cut the payment by 29%.

Read More: Auto Workers’ Thirst for COLA Aims to Eliminate Inflation Woes

The union president also complained that Stellantis wants the right to close and sell 18 different facilities in the US.

“I’m at peace with the decision to strike if we have to because I know we’re on the right side of this battle,” Fain said. “It’s a battle of the working class against the rich.”

–With assistance from Gabrielle Coppola and Jordan Fabian.

(Updates with new comments from Ford’s CEO from 14th paragraph.)

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