The American car industry on strike

Due to the lack of a satisfactory agreement with General Motors, Ford, and Stellantis, the powerful UAW union has followed through on its threats to strike..

Since 6:00 a.m. French time, the United Auto Workers (UAW) has initiated an unlimited strike at three plants, one from each group. The three affected sites are assembly plants in Wayne, Michigan for Ford, Wentzville, Missouri for General Motors, and Toledo, Ohio for Stellantis-Chrysler. These three sites employ nearly 13,000 union workers out of the 150,000 members represented by the powerful union, and produce over 20,000 vehicles per week.

Wages: the nerve of the war

The union is demanding wage increases of 35% over 4 years, while the automakers settled for a 20% increase in the last negotiations, which were inevitably unsuccessful. The union is also calling for an end to the dual wage scale system. This measure was implemented in 2009 when General Motors and Chrysler were on the brink of bankruptcy. Thanks to this system, employees with more than 8 years of seniority are assured a minimum pay of $32 an hour. On the flip side, newer employees today earn only half that.

Ford CEO Jim Farley tried to defuse the social bomb at the start of the week, claiming that the automaker had made the UAW its “most generous” offer in the last 80 years. It includes wage increases, inflation protection measures, 17 days of paid leave, and higher contributions for retirement. However, there was nothing on the highly controversial demands for negotiations on a 32-hour week and/or 4-day workweeks.

Towards a historic strike?

In the short term, automakers dismiss any risk of vehicle or parts shortages. The last major strike in 2019 only affected General Motors and lasted 40 days. Although the revenue loss for the group, its brands, and its suppliers exceeded a billion dollars, inventories were sufficient to buffer activity at dealerships. However, the situation is different four years later because automakers have learned, under pressure, to manage their inventories better to reduce storage costs.

Shawn Fain, the new UAW president, knows he is in a strong position one year before the presidential election. His best supporter could be President Joe Biden, whose economic record is criticized from all sides and who is accused of failing to curb inflation in the United States. Biden offered timid support to the unions while assuring automakers that the government would stand by them in the event of a prolonged strike. By trying to please everyone, the government has only reinforced each side’s positions and lit the fuse for the strike.

According to observers, the first consequences of the strike will be visible within less than 10 days. This is exactly the deadline set by the union before escalating the movement. A boon for foreign automakers and… Tesla, which has always succeeded in keeping the UAW out of its factories.