Auto Workers Strike: UAW halts work at 3 plants in contractual conflict with automakers

The union’s four-year contracts with three automakers — General Motors, Ford Motor Co. and Stellantis, which owns Chrysler, Jeep and Ram — expired on Thursday, and the companies and the union have stayed away from making new deals.

UAW President Sean Fine used sweeping language Thursday to describe why his members would strike against the three automakers at the same time — something the union has never done in its nearly 90-year history.

“This is the defining moment of our generation,” Mr. Fine, the union’s first leader directly elected by members, said in an online video. “The money is there, the cause is just, the world is watching, and the UAW is ready to stand up.”

The union and companies did not negotiate Friday, but the UAW said it plans to resume negotiations Saturday. President Biden sent two senior administration officials to Detroit on Friday to encourage the companies and the union to reach agreements.

At the Ford plant in Wayne, Michigan, west of Detroit, strikers waved signs — one reading: “Record Profits; “Contract Record” – and gave a thumbs up to the honking vehicles. A metal sign on a mesh fence reads, “No foreign cars allowed at all.” Protesters were assigned to a six-hour shift on the picket line. If the strike continues, they will be called back for one shift a week.

Although this conflict is first and foremost a battle between auto workers and automakers, it could have far-reaching consequences. A prolonged strike would reduce the number of new cars available for sale, which could fuel inflation and force the Fed to keep interest rates high.

The strike also presents a quandary for Mr. Biden, who has called for higher incomes but must also be mindful of the economic impact of the strike and his goal of promoting electric vehicles as a solution to climate change.

Speaking at the White House on Friday, the president strongly supported the union. “Over the past decade, auto companies have seen record profits, including in the last few years, because of the extraordinary skills and sacrifices made by UAW workers,” he said. “But these record profits have not been shared fairly.”

The UAW says its pay demands roughly match compensation increases for top executives at Ford, General Motors and Stellantis. The raises are also intended to help compensate workers for ground lost to inflation and big concessions the union made to automakers after the 2007-2008 financial crisis, when GM and Chrysler were forced to restructure themselves in bankruptcy court.

But auto industry executives say they already pay production workers much higher wages than competitors, such as Tesla and Toyota, whose workers in the United States are not unionized. The companies also assert that such large increases would undermine their efforts to develop electric vehicles and remain relevant as the industry makes a difficult and expensive transition from gasoline cars and trucks to electric vehicles.

If unions get everything they asked for, “we’re going to have to undo our investments in electric vehicles,” Ford CEO Jim Farley said in an interview Friday. Instead, Ford will need to focus on the large SUVs and pickup trucks that generate the most profits, he said.

Ford, which employs most union members, reported profits of $1.9 billion in the second quarter, equivalent to 4 percent of its sales. Tesla generated $2.7 billion in the same period, or about 11% of its sales.

Mr. Farley appeared pessimistic about the chances of agreeing on the contract soon. He added: “They are not negotiating in good faith if they are proposing deals that they know will destroy our investments.”

Mr. Fine’s decision to close just three plants is a departure for the union, which in previous strikes has withdrawn from all plants belonging to one automaker. By halting production of some of the most profitable vehicles, while allowing most factories to continue operating, the union hopes to harm automakers while allowing most of its members to continue collecting salaries.

But it may be difficult for the union to work to limit the damage to the incomes of its members. Ford asked workers at a facility in Michigan, who were not on strike, to stay home Friday due to parts shortages caused by the strike. General Motors said it will likely lay off 2,000 workers at a Kansas plant next week due to a shortage of parts produced at the plant near St. Louis that is on strike.

Less than 10 percent of the UAW’s roughly 150,000 members at the three companies are on strike. Limited strikes could allow the union to maintain pressure longer by maintaining its $825 million strike fund. The union will pay striking workers $500 weekly and cover their health insurance premiums.

In addition to the Ford plant in Michigan, which makes the Bronco and Ranger pickup trucks, and the General Motors plant in Wentzville, Missouri, which makes the GMC Canyon and Chevrolet Colorado, workers have shut down the Stellantis complex in Toledo, Ohio. Which makes the Jeep Gladiator and Jeep Wrangler. If an agreement is not reached, the union is expected to target additional factories in the coming weeks.

The union is also seeking cost-of-living adjustments that would protect workers if inflation flares up again. It wants to restore pensions that the union agreed to eliminate for new workers after the financial crisis, better benefits for retirees and shorter working hours. The union also wants to eliminate a wage system that starts new hires at wages well below the UAW’s top wage of $32 an hour.

As of Friday last week, companies had offered to raise wages of about 14.5% to 20% over four years. Their offers include lump sum payments to help offset the effects of inflation, and policy changes that would raise wages for new hires and temporary workers, who typically earn about a third less than veteran union members.

In a last-minute effort to keep assembly lines running, GM offered its employees a 20 percent raise late Thursday and said it was willing to pay cost-of-living adjustments to veteran workers. The 20% raise would be far more than employees have received in decades. But the union rejected the offer, which it says barely offsets inflation.

Automaker leaders have criticized the UAW’s tactics, with a focus on Mr. Fine, who became president last March and announced the end of what he described as overly friendly relations between union leaders and auto company managers. He took office after a federal corruption investigation led to prison sentences for two former UAW presidents.

Carlos Tavares, Stellantis’ chief executive, described Mr. Fine’s strategy as “posturing.” Ford’s Mr. Farley said the two sides should negotiate rather than “plan strikes and public relations events.” “Every negotiation takes on the personality of its leader,” said Mary T. Barra, CEO of General Motors.

If auto workers succeed, they could inspire workers in other industries. Union activity is on the rise: Hollywood screenwriters and actors have been on strike for months, and in August, United Parcel Service employees won the largest raises ever in a contract negotiated by the International Brotherhood of Truck Drivers.

“Workers have been under pressure for too long, and now they realize they can do something about it,” said Meijin Cha, an assistant professor at the University of California, Santa Cruz, who studies the relationship between workers’ interests and the fight against climate change. “People see that there is a path to greater economic security and that workers have power together.”

Late Friday, at an outdoor rally in downtown Detroit attended by several hundred UAW members, Mr. Fine introduced Sen. Bernie Sanders, an independent from Vermont, who told the crowd: “The fight you are fighting here is not just about… With decent wages and work. Conditions and pensions in the automobile industry. “It is a battle against corporate greed.”

The strikes come as auto production is still recovering from the effects of the pandemic, which has caused shortages of semiconductors and other components. Car prices and wait times are down, but dealer inventories remain low and a prolonged strike could make it harder to find popular American-made models.

“We’re not back up to speed on inventory,” said Wes Lutz, owner of Extreme Dodge, a car dealership in Jackson, Michigan.

Scarcity isn’t always bad for automakers. It has allowed them to earn higher profit margins during the pandemic. It would benefit any automaker that was having trouble transporting some models. Pat Ryan, CEO of car shopping app Co-Pilot, said Stellantis has at least 100 days of inventory for brands like Dodge and Chrysler, and that a strike could help it liquidate a lot of dealers.

However, if prices for popular models rise, it will be another bump in the Fed’s path to lowering inflation, and a political liability for Mr. Biden. The president, who has no formal role in the negotiations, said Friday that he had been in contact with union leaders and auto industry executives, in addition to sending administrative officials to Detroit.

He contributed to the preparation of the reports Neil E. Beaudette, J. Edward Moreno, Santul Nerkar And Jenna Smialek.