Yahoo Finance The UAW is 'preparing to strike' at Big 3 automakers as deadline looms
The UAW says it may employ "stand up" strikes at select Big Three factories.
The United Auto Workers (UAW) union says it is planning several coordinated strikes at select Big Three auto plants to exercise maximum bargaining leverage, as the Thursday 11:59 p.m. ET deadline to produce a new deal with Ford (F), GM (GM), and Stellantis (STLA) fast approaches.
In a Facebook Live video address to members, UAW President Shawn Fain said the Big Three automakers have extended improved offers to the union, but haven’t come close enough to where the union wants to be — specifically around issues including the elimination of wage tiers and a defined pension plan, which Fain says the automakers have rejected.
“We do not yet have offers on the table that reflect the sacrifices and contributions our members have made to these companies,” Fain said in the video to members. “To win we're likely going to have to take action. We are preparing to strike these companies in a way they've never seen before.”
In order to get the automakers to meet UAW's demands, Fain outlined a tactic known as a "stand up" strike. Instead of striking at all plants all at once, select local UAW chapters will be called on to “stand up” and walk out on strike. The UAW says as time goes on, more locals may be called on to join the strike, giving what the UAW says is "maximum leverage and maximum flexibility" in negotiations with the automakers.
Meanwhile, other chapters who have not been called to strike will keep working. This allows the UAW to keep its $825 million "strike fund" going as long as possible while the union pursues its strategy of striking at all three automakers in a select way. "We're going to hit where we need to hit," Fain said.
The automakers said they are bargaining in good faith and have extended credible offers. Ford CEO Jim Farley said in a statement that the company has submitted four offers without receiving a genuine counteroffer. Farley even went so far as to say he and chairman Bill Ford came to the negotiating table together to offer a "major" offer, only to find out Fain would not be present at the meeting.
Ford rival GM said through its negotiating update site that it has submitted three offers and is still negotiating, noting that it's "making progress" with the UAW. Stellantis — parent of brands including Chrysler, Dodge, and Jeep — said it has submitted a third offer but won’t comment further out of respect for the negotiating process.
In terms of compensation offers, Fain revealed Ford has offered a 20% pay hike, GM an 18% hike, and Stellantis a 17.5% bump in pay.
Initially, the UAW asked for "substantial wage increases" amounting to a 46% rise over three years (though that has reportedly come down to 36%); eliminating compensation tiers for new and old workers (which the UPS Teamsters secured); restoring cost-of-living adjustments; providing a new pension plan; and reducing workweeks to 32 hours from the standard 40.
The two sides are far apart, according to Fain, who said the automakers rejected defined pension plans and a 32-hour workweek, among other demands — suggesting a strike is more likely to happen. "At this point, a strike seems almost certain," BofA research analyst John Murphy wrote in a research note on Wednesday.
The financial pain, even from a short strike, would be costly for autoworkers, the Big Three, and the economy overall. Consulting firm Anderson Economic Group estimates that a strike at all Big Three automakers by the UAW could result in a $5.6 billion hit to US GDP after only 10 days, and UAW lost wages could total almost $860 million.
In addition, Goldman Sachs projected that a strike at all three automakers would negatively impact quarterly annualized US GDP growth by 0.05 to 0.10 percentage points for each week the strike lasts.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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