DETROIT – The long-anticipated day has arrived: Contracts between the United Auto Workers union and Detroit’s Big Three were set to expire by the end of Thursday, and new deals had not yet been made to replace the old ones. Unless the parties come to an agreement before the 11:59 p.m. deadline, autoworkers are expected to start striking at a small number of factories.
UAW president Shawn Fain said it is still possible that all 146,000 UAW members could walk out, but the union will begin by striking at a limited number of plants. This would be the first time in the union’s history that it struck at all three companies at the same time. The Big Three are General Motors, Ford Motor Company and Stellantis.
Fain said the union will not extend contracts, so anyone who continues to work will do so with an expired agreement. Fain said an all-out strike is still possible, but the targeted strike strategy is more flexible.
Here’s a look at what we know as the potential strike only hours away.
Why would a strike be called?
Tension had been rising between the UAW and the Big Three even before this year’s negotiations began.
New UAW President Shawn Fain was voted into office in March, and has since held a strong position in favor of better pay, benefits and work-life balance for autoworkers. He has maintained that “record profits” recorded by GM, Ford and Stellantis in recent years have not translated into better pay for employees.
The UAW calculates that the Big Three made a combined total of $21 billion in profit in the first half of 2023, and a combined $250 billion in American profits in the last 10 years. In comparison, Fain says employee wages have increased just 6% over the last four years.
Under Fain’s leadership, the union has taken a more aggressive approach to negotiations with the Big Three than it has in previous years. The union announced an extensive list of demands weeks ago, which includes a more than 40% wage increase, an end to tiered wages, cost of living adjustments, reinstated pensions, and more.
But despite both Fain and the automakers expressing a desire to bargain in good faith and reach a deal before the deadline, Fain claims the companies essentially waited “until the last eight days to start talking.” The UAW received a counter proposal from Ford at the beginning of September, and received offers from GM and Stellantis with less than one week until the contract deadline.
“We’ve told all three of the companies up front, before this started, we weren’t going to do things the way we’ve always done them; that Sept. 14 is a deadline, not a reference point,” Fain said last week on CNBC. “... They chose to follow the same path they have in the past, which is delay, delay, delay.”
Earlier this month, the UAW filed unfair labor practice charges against Stellantis and GM, accusing them of intentionally delaying the bargaining process. Both automakers called the allegations surprising and untrue, but both promised to provide counter proposals after the allegations were made.
The UAW has since received counter offers from all three companies, but has turned each of them down. The proposals from Ford and GM, which offered 9% and 10% wage increases, respectively, were dismissed by Fain, who called them “insulting.” The latest proposal from Stellantis offered a 14.5% wage increase, which Fain called “inadequate.”
Last week, Fain said that he understands he’ll have to lose out on some of the UAW’s aggressive demands in order to reach a deal -- but the offers made by the automakers so far have not been well-received by the union.
The UAW is mostly holding firm on its demands, and autoworkers have voted to authorize a strike if leaders decide to call one. Automakers do not seem likely to immediately give into the union’s demands, citing their significant and expensive investments into their transition to electric vehicles.
As of Wednesday night, Ford offered 20% over 4½ years, while GM was at 18% for four years and Stellantis was at 17.5%. Fain said all three companies’ offers on cost-of-living adjustments were deficient.
What would a strike look like?
Unlike in previous years, UAW President Fain did not identify a target company for the quadrennial talks and a potential strike. Instead, he has threatened to strike at any of the Big Three that hasn’t reached a deal by this year’s contract deadline.
There are 146,000 autoworkers represented by the UAW across Ford, GM and Stellantis. Nearly all of the union’s autoworkers -- 97% -- voted to authorize a strike.
Fain said that it is still possible that all 146,000 UAW members could walk out, but the union will begin with striking at a limited number of plants. He said the final decision on which plants to strike won’t be made until Thursday night and will be announced at 10 p.m. Eastern time.
Here’s how many UAW-represented autoworkers are employed at each company:
- At Ford, there are more than 57,000 UAW workers.
- At GM, there are about 46,000 UAW workers.
- At Stellantis, there are about 43,000 UAW workers.
UAW workers could choose not to strike if a strike is called, but they would lose out on weekly pay and health benefits covered by the union. The union has about $825 million in its strike fund, so those on the picket line would get $500 per week during a strike. This weekly pay would be a pay cut for most employees, though it’s a larger amount than what was provided during the 2019 GM strike.
However, experts say those funds could run out quickly depending on how many workers are striking at one time.
When crunching the numbers for a potential strike in 2023, Anderson Economic Group found that if workers strike for 10 days at Ford only, for example, that company would lose $325 million in earnings. About $341 million in direct wages would be lost.
Note: Both GM and Ford are clients of the consultancy firm.
If members strike at all three automakers at once, the firm estimates a combined total loss of $989 million in earnings for the companies in a 10-day period. An estimated $856 million in direct wages would be lost.
Those numbers may sound high, but that’s the point of a strike: for it to be costly for the employers.
In addition to impacting the Big Three, experts argue a strike would have a ripple effect throughout the supply chain and other businesses. Beyond the auto industry, a strike could have a broader impact on the Midwest economy.
Jeff Rightmer, who teaches global supply chain management at Wayne State University, told Local 4 that if the strike lasts six weeks like the 2019 strike did, then the lower levels of the supply chain will likely be affected. While the bigger, stronger tier one suppliers would be able to “hold on longer,” he predicts that tier two and tier three suppliers, some of which are small businesses, would have to close their doors if the strike lasts a while.
Businesses like bars and restaurants that are near striking workplaces could also be affected, Rightmer said. A strike would also impact businesses that are contracted by the Big Three, but whose workers aren’t represented by the UAW.
Auto dealers may also take a hit from a halt in production amid a strike. Already low dealership inventories could drop even lower, meaning dealers could run out of product, and potentially charge even more for vehicles. Experts say dealers were already responsible for jacking up vehicle costs anywhere from 30%-60% during the pandemic.
What is the UAW demanding this year?
The UAW is seeking better pay and benefits, a better work-life balance for autoworkers, and job security amid the automakers’ massive investment in electric vehicles. Workers are particularly concerned about what EV production means for their future, since the vehicles require less people to make them -- though those workers require more thorough training.
Here are the UAW’s demands, from the union’s website:
- Eliminate wage tiers.
- Secure substantial wage increases.
- Restore Cost of Living Adjustments (COLA).
- Defined benefit pension for all workers.
- Re-establish retiree medical benefits.
- Establish the right to strike over plant closures.
- Establish a job bank known as the working family protection program.
- Make all temporary workers permanent employees, and put strict limits on the future of temps.
- More paid time off to be with families.
- Significantly increase retiree pay.
What was the last UAW strike against the Big Three like?
In 2019, about 48,000 workers struck from GM for six weeks. The automaker was selected as a target for negotiations and a potential strike, and the eventual deal struck between GM and the union was used to establish similar deals with Ford and then-Chrysler (which has since merged with the parent company of the Peugeot brand to form Stellantis).
The strike, which became the longest UAW strike since 1970, caused 34 plants to idle across several states.
---> See a timeline of events from the 2019 UAW strike here.
Analysts estimated that GM lost about $2 billion in vehicle production over two fiscal quarters due to the strike, though GM’s estimate was higher. The company reported a net income of $2.3 billion in their third quarter of 2019, which was down 9% from a $2.5 billion net income in the same quarter in 2018.
The final agreement between the UAW and GM included an $11,000 signing bonus for each member, performance bonuses, two 3% annual raises, two 4% lump sum payments, and holding the line on health care costs. GM estimated that wage increases from that deal would cost the company an additional $100 million per year.
The new contract also allowed GM to permanently shut down three plants that were designated for closure, including one in Warren.
The auto industry shifted significantly in the years that followed the 2019 strike, primarily due to unforeseen circumstances brought on by the COVID pandemic. Supply chain issues led to lower supply amid a high demand across the U.S. Automakers have since maintained that lower supply intentionally, through which they’re acquiring bigger profits.
Click here to read more about what came after the 2019 strike.