UAW update: United Auto Workers strike begins as union, automakers remain far from deal

DETROIT — About 13,000 U.S. auto workers stopped making vehicles and went on strike Friday after their leaders couldn’t bridge a giant gap between union demands in contract talks and what Detroit’s three automakers are willing to pay.

Members of the United Auto Workers union began picketing at a General Motors assembly plant in Wentzville, Missouri, a Ford factory in Wayne, Michigan, near Detroit, and a Stellantis Jeep plant in Toledo, Ohio.

It was the first time in the union’s 88-year history that it walked out on all three companies simultaneously as four-year contracts with the companies expired at 11:59 p.m. Thursday.

The strikes will likely chart the future of the union and of America’s homegrown auto industry at a time when U.S. labor is flexing its might and the companies face a historic transition from building internal combustion automobiles to making electric vehicles.

If they last a long time, dealers could run short of vehicles and prices could rise. The walkout could even be a factor in next year’s presidential election by testing Joe Biden’s proud claim to be the most union-friendly president in American history.

“Workers all over the world are watching this,” said Liz Shuler, president of the AFL-CIO, a federation of 60 unions with 12.5 million members.

The strike is far different from those during previous UAW negotiations. Instead of going after one company, the union, led by its pugnacious new president, Shawn Fain, is striking at all three. But not all of the 146,000 UAW members at company plants are walking picket lines, at least not yet.

Instead, the UAW targeted a handful of factories to prod company negotiators to raise their offers, which were far lower than union demands of 36% wage increases over four years. GM and Ford offered 20% and Stellantis, formerly Fiat Chrysler, offered 17.5%.

Outside the Ford plant in suburban Detroit, worker Britney Johnson, 35, who has worked for the company about 3 1/2 years and has yet to reach top union wages, said she’d like higher pay, the return of pensions, and cost of living increases. “I like the job. It’s just that we deserve more,” she said.

Among about 400 workers on the picket line in Michigan was Adelisa LeBron, 37, who works on the engine line. She’s been there three years and makes $24 per hour as a lower-tier employee, she said.

“The strike has me nervous,” LeBron said. “I’m a single mom of 3 teens. It’s important. With what I’m making, I have to work a part time job to make ends meet.”

The limited strikes will help to preserve the union’s $825 million strike fund, which would run dry in about 11 weeks if all workers walked out. But Fain said more plants could be added if the companies don’t make better offers.

Even Fain has called the union’s demands audacious, but he maintains the automakers are raking in billions and can afford them. He scoffed at company statements that costly settlements would force them to raise vehicle prices, saying labor accounts for only 4% to 5% of vehicle costs.

“They could double our raises and not raise car prices and still make millions of dollars in profits,” Fain said. “We’re not the problem. Corporate greed is the problem.”

The strikes capped a day of both sides griping that the other had not budged enough from their initial positions.

In addition to general wage increases, the union is seeking restoration of cost-of-living pay raises, an end to varying tiers of wages for factory jobs, a 32-hour week with 40 hours of pay, the restoration of traditional defined-benefit pensions for new hires who now receive only 401(k)-style retirement plans, pension increases for retirees and other items.

Starting in 2007, workers gave up cost-of-living raises and defined benefit pensions for new hires. Wage tiers were created as the UAW tried to help the companies avoid financial trouble ahead of and during the Great Recession. Even so, only Ford avoided government-funded bankruptcy protection.

Many say it’s time to get the concessions back because the companies are making huge profits and CEOs are raking in millions. They also want to make sure the union represents workers at joint-venture electric vehicle battery factories that the companies are building so workers have jobs making vehicles of the future.

Top-scale assembly plant workers make about $32 per hour, plus large annual profit-sharing checks. Ford said average annual pay including overtime and bonuses was $78,000 last year.

The Ford plant that’s on strike employs about 3,300 workers, and it makes Bronco SUVs and Ranger midsize pickup trucks. The Toledo Jeep complex has about 5,800 workers and manufactures the Jeep Wrangler SUV and Gladiator pickup. GM’s Wentzville plant has about 3,600 workers and makes the GMC Canyon and Chevrolet Colorado midsize pickups, as well as the GMC Savana and Chevrolet Express full-size vans.

The union didn’t go after the companies’ big cash cows, which are full-size pickup trucks and big SUVs, and went more for plants that make vehicles with lower profit margins, said Marick Masters, a business professor at Wayne State University in Detroit.

“They want to give the companies some space without putting them up against the wall,” Masters said. “They’re not putting them right into the corner. You put an animal in the corner and it’s dangerous.”

Automakers say they’re facing unprecedented demands as they develop and build new electric vehicles while at the same time making gas-powered cars, SUVs and trucks to pay the bills. They’re worried labor costs will rise so much that they’ll have to price their cars above those sold by foreign automakers with U.S. factories.

GM CEO Mary Barra told workers in a letter Thursday that the company is offering historic wage increases and new vehicle commitments at U.S. factories. GM’s offer, she wrote, “addresses what you’ve told us is most important to you, in spite of the heated rhetoric from UAW leadership.”

On CNBC Thursday, Ford CEO Farley said if Ford had agreed to the union’s demands, it would have lost $15 billion during the last decade and gone bankrupt.

Under the UAW strategy, workers who go on strike would live on $500 per week in strike pay from the union, while others would stay on the job at full pay. It’s unlikely the companies would lock the remaining workers out of their factories because they want to keep building vehicles.

It’s tough to say just how long it will take for the strikes to cut inventories at dealers and start hurting the companies’ bottom lines.

Jeff Schuster, head of automotive for the Global Data research firm, said Stellantis has the most inventory and could hold out longer. The company has enough vehicles at or en route to dealers to last for 75 days. Ford has a 62-day supply and GM has 51.

Still, Schuster predicted the strikes could last longer than previous work stoppages such as a 40-day strike against GM in 2019.

“This one feels like there’s a lot more at risk here on both sides,” he said.