President Joe Biden shared his support for the United Auto Workers union Friday after members launched the first-ever partial strike against each of the Big Three car makers.
The union called workers to walk off the job at three auto plants after its demands for significant wage increases and other contract measures weren’t met by 11:59 p.m. ET: a
General Motors
facility in Wentzville, Mo.; a
Stellantis
assembly complex in Toledo, Ohio; and part of a Ford plant in Wayne, Mich.
In a brief press conference Friday, Biden said that auto companies have seen “record profits” over the last few year, and that those profits “have not been shared fairly, in my view, with those workers.”
Despite the strike, car maker stocks were rising Friday after initially declining in premarket trading. Ford was up 0.4%, General Motors gained 1.1%, and Stellantis rose 2.1%.
General Motors Chief Executive Mary Barra said in an interview with CNBC Friday that she believes the strike could be resolved “very quickly.”
Wedbush analyst Dan Ives told Barron’s he believes that expectations for only a short-term strike helped push the stocks higher on Friday. He said he was hopeful the strike lasted no more than two to three weeks.
“The fear, if it’s longer than four weeks, is this could push out some EV initiatives in 2024 by three to six months,” Ives said. “And if this goes six to eight weeks, it would be a body blow ‘Nightmare on Elm Street.’”
Fitch Ratings Senior Director Stephen Brown told Barron’s that the strikes would have a limited financial impact on the three major automakers, with only one of each of their plants impacted for now. However, pressure could be intensified over time if the union shifts to more impactful plants or adds more plants to the strike.
Without a deal in place, union President Shawn Fain warned on a livestream two hours before the deadline Thursday that “for the first time in our history we will strike all three of the Big Three at once.”
It was a possibility Fain had floated throughout the summer on behalf of a workforce he said was fed up with stagnant wages, concessions from years past, and plant closures that wore families down.
Some commenters on a chat on the livestream expressed disappointment at the limited nature of the strikes. “That’s it?” one wrote. While some union members wanted a full strike at all three companies, that could be risky and costly. Fain reminded members that other factories could join the strike as needed, as a way to keep the companies off balance.
General Motors acknowledged the strike at the Missouri factory. “We are disappointed by the UAW leadership’s actions, despite the unprecedented economic package GM put on the table, including historic wage increases and manufacturing commitments,” the company said, adding that it will continue bargaining in good faith.
Stellantis said it was “extremely disappointed by the UAW leadership’s refusal to engage in a responsible manner to reach a fair agreement in the best interest of our employees, their families and our customers.”
Ford Motor
issued a statement after Fain’s remarks, saying the “UAW’s counterproposal tonight showed little movement from the union’s initial demands” and that the union’s proposal would more than double Ford’s UAW labor-related costs.
UAW represents some 150,000 workers at the Big Three car makers—Ford, General Motors, and Chrysler and Jeep parent company Stellantis.
In their quest for higher wages and other benefits, Fain made no secret of treating the contract expiration date as a hard deadline to reach agreements. The union leader was narrowly elected to his post in March after campaigning as an outside candidate who’d fight for members in bargaining.
All three companies this week said they were bargaining with the goal of getting deals done by the deadline. Ford Motor CEO Jim Farley was particularly outspoken Wednesday in defending the company’s latest offer and commitment to bargaining.
On wages, the UAW has pressed for a 40% pay increase, spread out over a four-year contract—to match what it said was a similar rise in CEO pay—and to end a tiered-wage system that has put in place lower starting pay for new hires since 2007.
For those newer employees, it can take eight years to reach top pay of about $32 an hour. UAW wants the path to top pay, known as “progression,” cut to just 90 days.
The union is also demanding cost-of-living-adjustments to help counter inflation, job security measures like the right to strike against plant closures, more paid time off, and enhanced retiree benefits.
Current labor costs, including benefits, run about $65 an hour on average at the Big Three, according to The Wall Street Journal, compared with $45 at electric vehicle maker
Tesla
and $55 at Asian car manufacturers. If the gap becomes too wide, company officials fear they will be at a disadvantage to nonunion rivals such as Tesla, the electric vehicle leader.
General Motors said earlier Thursday it made a “record offer” that included a 20% pay increase over the course of the contract, a shorter, four-year path to top pay, and two weeks of parental leave and up to five weeks of vacation.
“We’re at a pivotal part of our journey, and to ensure our company thrives for the next 100 years we need to bring everyone along, together, and make sure we get it right,” Barra said in a statement addressed to manufacturing workers.
RBC Capital Markets analyst Tom Narayan told Barron’s that the “increased labor costs aren’t as painful as many think,” and the original equipment manufacturers showed from the pandemic and other supply-chain shocks that a work stoppage can keep inventories lower and therefore prices higher.
“A 20% labor cost increase is less than 100bps of margin hit. The better pricing can offset this near term,” Narayan said.
Ford’s chief executive said Wednesday the company had put forward a “historically generous offer,” but hadn’t received a genuine counterproposal from the UAW. “If there is a strike, it’s not because Ford didn’t make a great offer,” Farley said.
For its part, Stellantis on Wednesday said the company’s bargaining team approached “each discussion with the seriousness it deserves and a commitment to reaching a fair agreement that responsibly addresses the concerns of our represented employees.”
The union’s strategy is designed to keep companies guessing which assembly plants or parts distribution centers could be chosen for work stoppages, and to give the union “maximum flexibility” at the bargaining table, Fain told his membership via livestream on Wednesday.
That approach could also help the UAW stretch out its $825 million strike fund, which it will use to pay workers who are striking about $500 a week.
Fain has advised members to maintain a “constant strike readiness” and said any could be called upon to walk out.
The union is employing new tactics this time around. Rather than picking a single company as a strike target, Fain has said since bargaining began in July that strikes could happen against any of the companies, or all three of them. Union locals have detailed picketing plans—with assignments for each union worker—ready to implement if the strike call comes from Detroit headquarters.
Fain made a show of throwing earlier company counterproposals in the trash when he said they failed to value workers. He has emphasized the companies’ profitability and accused them of corporate greed.
“We’ve been working hard trying to reach a deal for economic and social justice for our members,” Fain said Thursday night. “We have been firm. We are committed to winning an agreement with the Big Three that reflects the incredible sacrifice and contributions UAW members have made to these companies.”
Write to Catherine Dunn at [email protected]
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