Detroit Three under pressure as UAW warns of wider strike

The United Auto Workers (UAW) and the US’s three biggest carmakers — known as the Detroit Three — have a final full day to make significant progress on a new contract that would otherwise see the union announce an expansion of its strikes in the US.

The standoff is fuelling concerns about prolonged industrial action that could disrupt production and ripple through the supply chain and dent US economic growth.

The UAW last week launched unprecedented, simultaneous strikes at one assembly plant each of General Motors, Ford and Chrysler parent Stellantis.

Stellantis on Wednesday joined GM and Ford in temporarily laying off some workers at other factories because of the ripple effects of the strikes, including parts shortages, storage constraints and other issues.

UAW President Shawn Fain said in a video released late on Monday that he would announce an expansion of the strikes at midday on Friday, barring “serious progress” in talks.

“We’re not waiting around. And we’re not messing around,” he said.

UAW workers are expected to rally at one of Ford’s two plants in Louisville, Kentucky, on Thursday evening in support of workers on strike at other facilities.

The city is home to Ford’s Louisville assembly plant and its Kentucky truck plant. Ford CEO Jim Farley has previously said the truck plant, which assembles F-Series trucks, is the company’s most profitable globally.

Analysts expect plants that build high-margin pickup trucks such as Ford’s F-150, GM’s Chevy Silverado and Stellantis’ Ram to be the next targets if the walkout continues.

Fain has said Detroit carmakers haven’t shared their huge profits with workers while enriching executives and investors.

GM president Mark Reuss on Wednesday rejected claims by the union that the record profits go towards fuelling “corporate greed,” saying they have been reinvested in electric vehicles as well as petrol-powered cars.

In the opinion piece published in the Detroit Free Press, Reuss also called UAW’s demands for a 40% pay hike “untenable”, signalling the two sides remain far apart over the issue.

The three automakers have proposed 20% raises over 4½ years. UAW workers also want to end a tiered wage structure that they say has created a large gap between newer and older employees, forcing some to work two jobs to make ends meet.

S&P said the strikes were likely to last several weeks, potentially cutting third-quarter US GDP by 0.39% and causing “upheaval” across global automotive supply chains.

The walkout at mid-sized truck factories benefits rival Toyota, which doesn’t have unions at its US factories and is about to launch redesigned Tacoma pickup trucks, S&P added.

Tesla investors have said a potential hike in wages and benefits at Detroit competitors would widen the EV giant’s labour cost advantages.

Reuters