UAW Takes on Automakers: Strike Details and Potential Impact

Oct 24, 2023

At midnight on September 15th, members of the United Auto Workers (UAW) — a labor union representing auto workers in the U.S. and parts of Canada — initiated a strike against a trio of automotive manufacturing facilities belonging to each of the major U.S. automakers.

The extended strike is in direct response to the expiration of the UAW’s former contract with automakers, marking the union’s first attempt to simultaneously out-maneuver the “Big Three” (Ford, General Motors and Stellantis) in the union’s 88-year history.

As of this writing, the strike has grown to include 44 facilities across the U.S., with an estimated 40,000 UAW members joining the picket lines in search for expanded benefits and job protections in the coming years. Here’s what UAW has done so far with their newfound leverage over the Big Three — and why it matters to supply chain professionals.

What Are The UAW’s Demands?

Union workers are seeking significant employee pay and benefit overhauls designed to provide job security through the industry’s pending transition to mass electric vehicle production — though for some, present negotiations also represent a long-overdue reckoning for what the union considers one-sided worker concessions accepted through the 2008 economic crisis.

Though the figures have budged somewhat during negotiations, the union’s overarching demands have not:

  • A 36% raise in wages (down from the initial demand of a flat 40%) over the next four years to account for the increases in inflation.
  • Annual cost-of-living increases to guard against inflation — a benefit which hasn’t been offered to workers since 2009.
  • Abandoning the current “tiered” employment system placing new workers on a lower wage scale with lesser benefits.
  • Reinstate traditional defined-benefit pensions for workers hired after 2007 and restore benefit pensions to pay health-care costs for retirees.
  • A 32-hour (4-day) work week with pay for 40 hours (though the general sense is this “demand” is more a negotiating tactic).

How Have the Big Three Responded?

UPDATE 10/26: Ford recently became the first to reach a tentative agreement with UAW, as reported by CNBC and quickly confirmed by the union after 41 days on strike. The agreement marks the highest base wage increase for Ford workers received in over two decades, placing additional pressure on both General Motors and Stellantis to match.

The agreement grants 25% in base wage increases through April 2028. The contract effectively raises top earners’ base rates to more than $40 an hour, with starting wages set to climb 68% to over $28 an hour.

UPDATE 10/30: As expected following Ford’s agreement with the UAW, Stellantis has reportedly agreed to similar terms guaranteeing autoworkers a 25% wage increase over the contract’s 4.5-year lifespan. Workers will now reach the top of the Stellantis wage scale in just three years instead of eight, see the return of cost-of-living allowances and will no longer subject to the highly controversial tiered wage system.

Retirement benefits have likewise been upgraded, and upon ratification all temporary workers will be made permanent. The new deal is expected to be quickly approved by vote and ratified, consequently ending the 44-day labor strike.

Details for GM‘s deal are still being verified as of this writing, but as the most vulnerable of the Big Three automakers due to low inventory when the strike began, it’s expected GM has matched the key benchmarks set by Ford and Stellantis, including a 25% base wage increase over the life of the contract.

Supply Chain Effects of UAW’s Strike

The first weeks of UAW’s bold negotiations cost the U.S. economy an estimated $5.5 billion, with losses for the automakers themselves accounting for roughly $2.6 billion. With Ford agreeing in principle to a new deal and public opinion still heavily in favor of the autoworkers, it seems only a matter of time before GM and Stellantis oblige the workers’ demands.

However, even as UAW appears close to achieving its desired outcome, automakers, manufacturers, parts suppliers and the truckers partnered with such companies might be feeling the strike’s sting for some time. With the strike in effect since mid-September, the average length of transit for over-the-road auto shipments from Mexico has nearly doubled, with the number of rescheduled shipments leaping from an industry-normal 5% to over 8%.

But lengthy transit times and canceled shipments aren’t the only factors impacting auto parts shippers. North American vehicle suppliers employ over 900,000 workers — six times more than the 146,000 UAW Detroit Three autoworkers — which means the union’s fight for expanded benefits directly impacts the supplier industry’s job market. MEMA, a group representing more than 4.8 million jobs in the vehicle parts supplier sector, reported the following survey results based on the ongoing strike as of Oct. 20:

  • Nearly 30% of surveyed vehicle suppliers have laid off some direct labor employees as a result of the strike.
  • 80% of suppliers who have yet to begin layoffs indicated they will begin in early November if the strike is not resolved.
  • Parts supplier estimates of the ramp-up time to get facilities back to pre-strike levels have increased to 1.5 weeks based on available labor and materials
  • Of the 84% of suppliers that have received canceled orders from customers, 95% indicate they received short to essentially no notice.
  • The percentage of smaller suppliers that are concerned with their internal financial viability increased dramatically to 42%.

Data courtesy of MEMA survey, 10/20/23

Fortunately, logistics and supply chain managers aren’t strangers to disruptive forces changing the cross-country shipping landscape. While cross-border slowdowns and strike effects are likely to throw shippers additional curveballs in the weeks ahead, the First Call team will be standing by with additional insight on how to navigate these unique obstacles. Be sure to contact one of our logistics experts for more on how to disaster-proof your business’ supply chain.

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