Explainer: UAW expands strike against GM, Ford in Week 3, spares Stellantis
29/09/2023 17:33
(Recasts with latest developments)
Sept 29 (Reuters) - The United Auto Workers (UAW) union
on Friday expanded its coordinated U.S. strike, this time
targeting a plant at General Motors GM.N and Ford Motor F.N
but refraining from an additional walkout from Chrysler parent
Stellantis STLAM.MI .
The ongoing strike is the first-ever simultaneous labor
action against the Detroit Three automakers and is now entering
its third week after the earlier contracts expired on Sept. 15.
The automakers, like their global counterparts, have been
focused on cost reductions, which in some cases include job
cuts, to help accelerate a shift to electric vehicles (EVs) from
gasoline-powered vehicles.
WHO IS THE UNION NEGOTIATING WITH?
The UAW, which represents 46,000 GM workers, 57,000 Ford
employees and 43,000 Stellantis workers, kicked off negotiations
with the companies in July.
The union historically has picked one of the Detroit Three
to negotiate with first as the so-called target that sets the
pattern on which subsequent deals are based. This time, union
President Shawn Fain targeted all three companies
simultaneously.
Contract talks between the UAW and the Detroit automakers in
past years had gone on until the strike deadline and beyond. A
Reuters/Ipsos poll found significant support by Americans for
the striking auto workers.
HOW WIDESPREAD IS THE STRIKE?
The strike has now spread to 25,000 workers, or about
one-sixth of the workers employed by the big three. It initially
targeted three assembly plants in Michigan, Ohio and Missouri
targeted that build the Ford Bronco, Jeep Wrangler and Chevrolet
Colorado, along with other popular models.
The second round of strikes expanded to 38 locations across
20 states in all nine regions of the UAW, focusing on parts
distribution centers.
WHAT ARE THE CURRENT OFFERS AND WHAT DOES THE UAW HAVE TO
SAY?
The three automakers currently have proposed 20% raises over
four-and-a-half years that the union has so far rejected. It has
demanded a 40% wage hike, including a 20% immediate increase,
and improvements in benefits.
Fain has said Stellantis has made progress around
cost-of-living allowance payments to offset inflation, as well
as the right to strike over product commitments and plant
closures.
Talks between Ford and UAW negotiators stalled during the
week after the two appeared to be close to an agreement, sources
familiar with the development said.
WHAT IS AT STAKE?
A full strike would hit earnings at each affected automaker
by about $400 million to $500 million per week assuming all
production was lost, Deutsche Bank previously estimated. Some
losses could be recouped by boosting production schedules later,
but that possibility fades if a strike extends to weeks or
months.
In fiscal 2019, GM's fourth-quarter profit took a $3.6
billion hit from a 40-day UAW strike.
Morgan Stanley analyst Adam Jonas estimated on Sept. 21 that
a full month of lost production would cost the three automakers
$7 billion to $8 billion in lost profits.
WHAT ARE THE UNION'S DEMANDS?
The UAW is pushing automakers to eliminate the two-tier wage
system under which new hires can earn far less than veterans.
Fain has said repeatedly that the union will push to restore
pay improvements tied to the cost of living and retiree benefits
cut during the 2008-2009 economic crisis.
The UAW wants strong salary increases, given the financial
success of the automakers, citing generous executive payouts and
large U.S. federal subsidies for EV sales.
The union also wants defined benefit pensions for all
workers restored, 32-hour work weeks, job security guarantees
and an end to the use of temporary workers.
Fain also is aiming to get agreements that would allow the
UAW to represent hourly workers at joint-venture EV battery
plants opened or planned by the Detroit Three.
WHAT DO AUTOMAKERS WANT?
The Detroit Three want to close the cost gap they have with
foreign automakers with non-unionized U.S. factories.
Ford sources estimate that their U.S. labor costs are $64 an
hour, compared with an estimated $55 for foreign automakers and
$45 to $50 for EV leader Tesla TSLA.O .
The companies also want greater flexibility in how they use
their U.S. workforce to increase efficiency and cut costs as the
industry shifts to EVs.
(Reporting By Nathan Gomes, Abhijith G, Joseph White, Ben
Klayman and David Shepardson; Editing by Sriraj Kalluvila)
((david.gaffen@thomsonreuters.com; +1-646-223-6064; Reuters
Messaging: david.gaffen.reuters.com@reuters.net))