United Auto Staff members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
DETROIT – A shift in strategy by the United Auto Staff union this week has some analysts wondering if the parties are — perhaps, counterintuitively — getting closer to a deal.
On Wednesday the union initiated a surprise work stoppage at Ford Motor’s Kentucky Truck Plant. The strike involves 8,700 employees and affects the most important plant, by far – chargeable for $25 billion in revenue annually – that the union has walked out on since the strikes began Sept. 15. It’s expected to quickly have a ripple effect on other Ford plants and suppliers.
It also ushered in what UAW President Shawn Fain characterised as a “recent phase” of strikes and contract negotiations with Ford, General Motors and Chrysler-parent Stellantis, giving the union the element of surprise to keep the automakers on edge during the ongoing negotiations, Fain told members in a Friday presentation.
“We’re entering a recent phase of this fight and it demands a recent approach,” Fain said Friday. “We’re done waiting until Fridays to escalate our strike.
“We’re prepared at any time to call on more locals to get up and walk out,” he said.
Until this week, Fain had announced all of the union’s recent strikes on Fridays, during what has turn into a weekly livestreamed update for union members.
Some Wall Street analysts and industry experts think this week’s shift in strategy could possibly be an indication that UAW leaders feel a cope with Ford is close, and that they are increasing pressure as a tactic to get the deal over the finish line — and to help sell a possible tentative deal to their members.
“We proceed to imagine the escalation at [Ford] this week is an indication the talks could also be coming to an end. KY Truck is probably going Ford’s most profitable plant, and subsequently the strike is the highest level of escalation, except for a national strike,” Wells Fargo analyst Colin Langan wrote in a Friday note. “This escalation would likely be done to push for final terms.”
But the UAW’s leaders could also be looking yet another step ahead, to the process of selling a tentative cope with Ford to their members. The considering is that to persuade members to ratify a possible recent contract, UAW President Shawn Fain and the union’s leadership will need to persuade autoworkers that the union has fought as hard as possible to have their demands met. Striking Ford’s most profitable factory could be a method to try this.
Wolfe Research’s Rod Lache argued the Kentucky strike may allow UAW leadership to claim that they did all that could possibly be done, especially if it leads to one or two more concessions from Ford.
“In one other week or two, Fain should have the option to credibly announce that he has forced Ford into one last capitulation (battery plants?), and that UAW members have secured the previous few ounces of wage, advantages, and job protection concessions that they will get,” Lache wrote Thursday to investors.
Factory employees and UAW union members form a picket line outside the Ford Motor Co. Kentucky Truck Plant in the early morning hours on October 12, 2023 in Louisville, Kentucky.
Luke Sharrett | Getty Images
Winning over employees
Only about 34,000 U.S. automakers with the firms, or roughly 23% of UAW members covered by the expired contracts with the Detroit automakers, are currently on strike.
“Hitting a really high-dollar, high-profitable plant, it actually gets Ford’s attention in a short time,” said Art Wheaton, a labor professor at the Employee Institute at Cornell University. “It also sends an enormous message to Stellantis and General Motors.”
Wheaton argues the escalation in Kentucky may be the starting. There are plenty more plants the union could hit for every of the automakers, including the full-size pickup truck plants owned by all three and enormous SUV plants at GM and Stellantis.
GM avoided a strike at its most profitable SUV plant in Texas last week with a last-minute offer to include battery cell plant employees under the company’s national agreement, nevertheless details regarding how that will likely be done are believed to be still being negotiated.
While Fain declined to expand strikes against GM and Stellantis Friday, Wells Fargo’s Langan thinks that does not necessarily mean they’re spared.
“The shortage of GM & STLA strike today, although each haven’t matched F’s offer, could be consistent with the UAW holding out the most profitable plants for a final push,” he wrote in a Friday note.
Other outcomes?
All of that tea-leaf reading aside, rapid escalation-turned-resolution is only one potential final result.
One other includes the automakers holding out for the union to deplete its resources, specifically its strike and defense fund. Or, the UAW could proceed rotating strikes or filing additional unfair labor practice charges against the firms. Yet one more final result could see the sides in search of mediation or legal resources.
“I believe they have to be getting close to some sort of an agreement, or you only have to conclude an affordable deal isn’t in the making — and that this is basically more a matter of a test of will than the rest,” said Marick Masters, a business professor at Wayne State University in Detroit who focuses on labor issues.
An automaker also could submit what’s often called a “last, best and final offer,” which, because it states, is often a final proposal when bargainers have reached an impasse.
Ford could also be close to that time. An executive said Thursday the automaker was “at the limit” of what it may possibly offer UAW in terms of economic concessions.
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The Detroit automakers have largely given into many of the union’s demands, but not all of them.
The businesses have not waved the white flag on demands for a 32-hour workweek — which was at all times a nonstarter for the firms and which has largely fallen out of union talking points — and a 40% wage increase.
Ford was up to a record 23% wage increase in its recent contract proposal, with the others not far behind.
Then there’s the outstanding issues of advantages for retirees in addition to a return to traditional pension plans and future battery plant jobs and employees.
Industry experts and sources aware of the talks imagine regardless of the final result, the contracts may have ripple effects on the firms potentially in the way of reorganizations, cost cuts and future investments and jobs.
A former high-ranking bargainer for one of the automakers told CNBC that it’s nearly guaranteed that the firms will cut union jobs through product allocation, plant closures or other means to offset increased labor costs once the contracts are set.
“They are going to have to pay up. The query is how much,” said the longtime bargainer, who agreed to speak on the condition of anonymity. “This finally ends up with fewer jobs. That is how the automakers cut costs.”