UAW Shifts Strategy to Call for Strikes ‘With Little Notice’

The United Auto Workers spared General Motors Co., Ford Motor Co. and Stellantis NV from additional strike locations Friday as contract talks progressed, and said that it will now call for strikes “with little notice.”

(Bloomberg) — The United Auto Workers spared General Motors Co., Ford Motor Co. and Stellantis NV from additional strike locations Friday as contract talks progressed, and said that it will now call for strikes “with little notice.” 

UAW President Shawn Fain said the UAW will abandon its practice of announcing new targets on Fridays and instead escalate the strike at random. The shift is a response to the companies’ behavior, Fain said, because they were gaming the timetable and slow-walking talks before making any substantial offers.

“Going forward, we will be calling out plants when we need to, where we need to, with little notice,” Fain said in a livestream briefing Friday. “So stay ready.”

“I predict they’re going to be a lot more strikes on the horizon,” he added.

The change in strategy was previewed earlier in the week as the union called for a surprise walkout at Ford’s Kentucky Truck Plant Oct. 11, its largest plant. This was a major escalation since that site makes higher-priced Super Duty versions of F-Series pickups and Lincoln Navigator and Ford Expedition large sport-utility vehicles.

Ford had proposed a 23% raise, and the UAW had requested a new economic offer from the automaker, according to Ford officials. When the company failed to go higher than that, Fain called for the Kentucky strike. 

Kumar Galhotra, head of Ford’s internal combustion business, told reporters Thursday that the company couldn’t afford to go any higher without hurting the business. “We have been very clear that we are at the limit,” he said. 

On Friday, Fain said that Ford was threatening to close plants if the union demanded more. “The problem here is clear and the money is there,” he said.

Colin Langan, a Wells Fargo analyst, said that the UAW strike at Ford’s Kentucky Truck Plant suggests that the talks could be nearing an end.

“KY Truck is likely Ford’s most profitable plant, and therefore the strike is the highest level of escalation, aside from a national strike,” he wrote in a note to clients. “This escalation would likely be done to push for final terms.” 

Negotiations between Stellantis and the union continued Friday. In a statement, the company said the talks were “focused on narrowing the gaps on issues that will bring immediate financial gains and job security for our employees while providing a bridge for the sustainability of the Company.”

Stellantis also said that as a result of the strikes, it was temporarily laying off 700 employees from two plants in Kokomo, Indiana, bringing the total number of furloughed workers to 1,340.

Ford shares were down 1.5% at 3:29 p.m. in New York. GM’s dropped 2.1% and Stellantis’ US shares fell 0.5%. 

There are currently about 34,000 workers already striking six assembly plants and 38 parts-distribution facilities. 

The one-month-old strike marked the first time in the UAW’s 88-year history that it struck all three carmakers at once, instead of targeting one company to achieve a contract that the others would be expected to follow. While each company is now negotiating separately, they are closely watching each other’s moves. And the UAW is using their offers to pressure the others. 

The union ultimately wants at least a 30% pay raise, down from the 40% increase it initially sought. It is also seeking the return of benefits it conceded in the years before and after the 2009 recession. And the UAW wants to ensure good wages and benefits for people making batteries for electric vehicles. 

The UAW is also looking to unionize battery plant workers, complicated by the fact these are joint ventures still under construction that haven’t hired any employees. On Oct. 6, GM agreed to let battery workers be covered by the union’s master agreement, a last-minute deal that helped convince the union to spare the automakers from further strikes. Ford and Stellantis have yet to publicly say that they will do the same. 

Chris McNally, an analyst at Evercore ISI, estimates that in the first four weeks of the strike, the Detroit automakers have lost production of about 155,000 vehicles, which could have been as high as 750,000 in that period if the UAW had struck every facility. 

He also estimates that the $500 a week that the UAW is paying each striking worker is costing it $17 million to $18 million a week. The union began the strike with about $825 million in its strike fund. 

The UAW’s hard line against the Detroit Three has spurred strikes against other manufacturers. On Monday, around 4,000 union workers walked out of Mack Trucks facilities in Pennsylvania, Maryland and Florida. The work stoppage came after 73% of UAW workers rejected a last-minute tentative agreement with Mack Trucks, owned by Sweden’s Volvo AB. The union said many issued remained to be resolved, including wage increases, job security and pensions. 

The economic fallout is spreading beyond the automotive industry. Delta Air Lines Inc. President Glen Hauenstein said Thursday that the work stoppages have “curtailed a significant amount of business in Detroit,” one of the carrier’s hubs. And in minutes released Oct. 11 from its September policy meeting, Federal Reserve officials said the strike “posed both an upside risk to inflation and a downside risk to activity” in the economy. 

(Updates with analyst comment, Stellantis negotiations from ninth paragraph)

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