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%.
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."
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.
Outside the Ford plant in suburban Detroit, worker Britney Johnson, 35, has worked for the company about 3 1/2 years and has yet to reach top union wages. "I like the job. It’s just that we deserve more," she said.
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She’s after higher pay, the return of pensions, cost of living raises and an end to different tiers of wages.
Johnson said this is her first strike, but she’s been preparing for it for months and putting away money. "It’s not fun. There are a lot of people who are not going to get paid," she said. She guesses that the strike will last a couple of weeks.
"We’re the ones for the last 20 years who have been kind of hoping things would change and we would get back some of the stuff that we lost with the bankruptcy," said Tommy Wolikow, who delivers parts to an assembly line at GM’s pickup truck plant in Flint, Michigan, which is still making vehicles. "And every contract, it just seemed like we didn’t get what we deserved."
Wolikow called this year’s talks huge, and said meeting the company in the middle isn’t good enough. "I think it needs to be a little bit closer to the top of what were asking for," he said.
The automakers, however, say they’re facing unprecedented demands on capital 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 that 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."
The limited strikes will help to preserve the union’s $825 million strike fund, which would run dry in about 11 weeks if all 146,000 workers went on strike.
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.
But Fain has said the union would increase the number of plants on strike if it doesn’t get fair offers from the companies.
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. All have been building as many highly profitable pickup trucks and big SUVS as they can.
Still, Schuster predicted the strikes could last longer than previous work stoppages such as a 2019 strike against GM that lasted 40 days.
"This one feels like there’s a lot more at risk here on both sides," he said.