Members of the United Auto Workers union last week on strike in 2019.
Reuters
After weeks of negotiations with Ford, GM, and Stellantis, United Auto Workers are on strike.The labor union did not reach an agreement with the Detroit 3 before its deadline.The strike is indefinite until workers feel they have an agreement for better wages and more.
As of Friday at midnight Eastern time, auto workers for the Detroit 3 automakers are mounting targeted strikes at three plants after both sides failed to reach new four-year labor agreements.
The United Auto Workers made the announcement just after midnight on Friday.
The strike came after the union did not reach tentative agreements with Ford, General Motors, and Stellantis (the owner of brands including Chrysler and Jeep) before the current contract expired at 11:59 p.m. on Thursday, September 14. As a result, auto workers are engaging in a historic labor stoppage that could cost the automakers as much as $5 billion within just 10 days — and experts anticipate the movement will go on for much longer than that.
The union will go on strike at three vehicle locations: a GM plant in Wentzville, Missouri, a Stellantis complex in Toledo, Ohio, and a Ford plant in Wayne, Michigan, said UAW President Shawn Fain on Thursday.
“For the first time in our history, we will strike all three of the ‘Big Three’ at once,” said Fain in a live stream about two hours before the midnight deadline.
The UAW represents about 150,000 at the three automakers and the strike is likely to impact 13,000 workers at the three plants, per the Associated Press.
Tensions have grown over the past several weeks as UAW leaders and the Detroit 3 negotiated over union proposals that included significant pay increases, cost of living adjustments, a shorter work week, and the return of pensions.
Led by newcomer president Fain, the union was also looking for increased protections as the industry electrifies, which could potentially threaten job security given electric cars require less labor to assemble than internal combustion engine vehicles.
Many of the union’s demands came on the heels of the handful of highly profitable years automakers had during the height of the pandemic. With new and used inventories low as a result of COVID supply chain disruptions, car companies, including the Detroit 3, cashed in on above-sticker price sales and stopped spending on purchase incentives.
Auto workers argued they deserved a slice of those (albeit, unprecedented) high profits, as they build the products that feed the company’s bottom line.
Looming impact
The strike is sure to impact more than just the union workers and the Detroit 3. Detroit 3 car buyers are likely to see a prolonged period with low vehicle inventory and few deals to be had on car purchases, — though that won’t happen right away.
Eventually, a strike is likely to impact the entire auto supply chain and could be a boon for non-domestic automakers and Tesla as deals on domestic lots dry up.
Experts also suggest the additional costs Ford, GM, and Stellantis could incur as a result of the negotiations could trickle down to consumers, particularly through EV pricing.
Wedbush Securities analyst Dan Ives said in a note on Monday, September 11 that a strike would be “a potential nightmare situation for GM and Ford as both 313 stalwarts are in the early stages of a massive EV transformation path for the next decade that will define future success.”
Historic moment
The last time the UAW and Detroit 3 companies negotiated a contract in 2019, union workers went on strike against GM for 40 days. This is the first time the union has bypassed the “lead company” approach to instead target all three automakers at once for a work stoppage.
Fain has called this a “Stand Up” strike, a play on the sit-down strikes used at the birth of the UAW in the 1930s.
Car companies late Thursday were bracing for impact, though this particular work stoppage is uncharted territory for the industry. Especially in the last decade or so as the automotive industry has globalized its supply chain, each individual factory has become a crucial piece in a delicate web of manufacturing.
Just one factory shutting down can send a domino effect across the industry, as displayed by frequent factory shutdowns during the heat of the Covid-19 pandemic.
The UAW and the three automakers did not immediately respond to requests for comment from Insider sent outside regular business hours.