US Auto industry hit by historic strike action

The walkouts at the "Detroit Three" will halt production of the Ford Bronco, Jeep Wrangler and Chevrolet Colorado pickup truck, along with other popular models. UAW President, Shawn Fain, says the union will hold off for now on more costly company-wide strikes, but said all options are open if new contracts are not agreed.

He laid out plans for the unprecedented, simultaneous walkouts in a Facebook Live address less than two hours before the expiration of the old contract.

The walkouts capped weeks of clashes between Fain and Detroit Three executives over union demands for a bigger share of profits generated by combustion trucks and stronger job security as automakers shift to electric vehicles.

"For the first time in our history, we will strike all three of the Big Three," he says.

The strikes involving a combined 12 700 workers will take place at assembly plants operated by Ford in Wayne, Michigan, GM in Wentzville, Missouri, and Stellantis's Jeep brand in Toledo, Ohio. They are critical to the production of some of the Detroit Three's most profitable vehicles.

Fain says the decision to go with targeted walkouts could limit the cost to the union of strike pay. The UAW has a strike fund of $825 million (about R15 billion), which pales in comparison to the billions in liquidity the automakers have built up thanks to robust profits from the trucks and SUVs UAW members build.

Stellantis has more than 90 days’ worth of Jeeps in stock and has been building SUVs and trucks on overtime, according to Cox Automotive data.

But a week-long shutdown at Stellantis's Jeep plant in Toledo could cut revenue by more than $380 million (about R7.1 billion), based on data from the company's financial reports.

"This is more of a symbolic strike than an actual damaging one," says Sam Fiorani, a production forecaster at Auto Forecast Solutions, who added that he had expected more in the first wave of the strike.

"If the negotiations don't go in a direction that I think is positive, we can fully expect a larger strike coming in a week or two," he says.

Sam estimates the limited action will stop production of about 24 000 vehicles a week. And while it targets some key brands, like the Bronco, buyers will be willing to wait, for now.

The union has said it wants a 40 per cent raise. The companies have offered up to 20 per cent, but without key benefits demanded by the union. None of the Detroit Three has proposed eliminating tiered wage systems that require new hires to stay on the job for eight years to earn the same as veteran workers - a central UAW demand.

Ford said the UAW's latest proposals would double its US labour costs and make it uncompetitive against Tesla and other non-union rivals. A walkout could mean that UAW profit-sharing checks for this year would be "decimated", the company said.

Stellantis responded to the union walkout by saying it had immediately put the company in "contingency mode" and would take all the appropriate structural decisions to protect the company and its North American operations, without elaborating.

Fain said earlier this week that Stellantis had proposed shutting as many as 18 US facilities.

GM said it was disappointed by the walkout and would continue to "bargain in good faith".