UAW strikes at Big 3 automakers, targets select factories

With the passing of Thursday night’s deadline, the United Auto Workers (UAW) union striked across all Big Three automakers on Friday using a new “stand up” strike strategy.

This is the first time the union will strike against the Big Three since its six-week strike against GM back in 2019.

“Tonight at midnight, GM Wentzville Assembly, Local 2250 in Region 4; Stellantis Toledo Assembly Complex, Local 12 in Region 2B; and Ford Michigan Assembly Plant – Final Assembly and Paint only, Local 900 in Region 1A will STAND UP and walk out on strike," UAW President Shawn Fain said in a Facebook Live address late Thursday night. "The rest of us will keep organizing and support them on the picket line.”

This is part of the UAW's "stand up" strategy, in which only a portion of the 147,000 UAW members strike at select plants, and all at once. In this case, around 13,000 UAW members will strike at GM's Wentzville, Mo., plant (which assembles midsize trucks and full-size vans), Stellantis' Toledo Assembly (Jeep Wrangler and Gladiator), and Ford's Michigan Assembly Plant in Wayne (Ranger midsize pickup and Bronco SUV).

The UAW says as time goes on, more locals may be called on to join the strike, giving what the UAW says is “maximum leverage and maximum flexibility” in negotiations with the automakers.

Meanwhile, other chapters that have not been called to strike will keep working. This allows the UAW to keep its $825 million “strike fund” going as long as possible while the union pursues its strategy of striking all three automakers in a select way. "We're going to hit where we need to hit," UAW president Shawn Fain said.

The UAW will pay striking workers $500 a week to cover costs and expenses, while the other UAW members who continue working will collect wages and be able to contribute to the strike fund. The UAW members who continue to work will do so under an expired contract, which will be allowed by the union.

President Biden weighed in on the strike on Friday, supporting UAW efforts to secure what he sees as fair wages. “The companies have made some significant offers, but I believe they should go further to ensure record corporate profits mean record contracts for the UAW,” Biden said, and reiterated that "we need labor agreements for the future." Biden also dispatched Labor Secretary Julie Su and senior adviser Gene Sperling to Detroit to help guide negotiations between the union and Big Three. 

“It's unconventional. It's a risky strategy, and one thing is certain, as there is a law in physics that for every action there is a reaction — corporations, the companies, cannot be expected to just sit there and idly take the union striking at their whim,” labor expert Marick Masters, professor at Wayne State University's school of business, told Yahoo Finance. “[The Big Three will] respond in some sort of way to take the union's advantage away in calling strikes at their leisure.”

In a statement, Ford said it finally received a substantive counterproposal from the UAW late Thursday night, but the union's offer showed "little movement" from the UAW's initial demands. GM CEO Mary Barra confirmed in a statement last night that the automaker put forth another improved offer, increasing pay 20% among other concessions, but the proposal was not accepted. Stellantis said in a statement it was "extremely disappointed" by UAW leadership’s refusal to engage in a "responsible manner" with contract negotiations.

Initially, the UAW asked for "substantial wage increases" amounting to a 46% rise over three years (though that has reportedly come down to 36%); eliminating compensation tiers for new and old workers (which the UPS Teamsters secured); restoring cost-of-living adjustments; providing a new pension plan; and reducing workweeks to 32 hours from the standard 40.

The financial pain, even from a short strike, would be costly for autoworkers, the Big Three, and the US economy overall. Consulting firm Anderson Economic Group estimates that a strike at all Big Three automakers by the UAW could result in a $5.6 billion hit to US GDP after only 10 days, and UAW lost wages could total almost $860 million.

In addition, Goldman Sachs projected that a strike at all three automakers would negatively impact quarterly annualized US GDP growth by 0.05 to 0.10 percentage points for each week the strike lasts.

The length of a strike at all three automakers is unclear, though it could last for longer than the industry expects. “It could last for a long period of time,” Masters said.

“I think the companies might lock out the employees and try and expedite this process, because eventually, what Shawn Fain is saying is, ‘I'm going to escalate the conflict to the point where I strike all three companies company-wide.’ If the UAW is going do that, why not lock them out now, and get to the endpoint sooner rather than later?” Masters said.

The effects of a strike will not only be felt by the UAW and Big Three but also consumers at dealer lots. “In general, the strikes overall would put even more pressure on new and used car prices, which have remained near record highs in large part due to the strength of the consumer and ongoing supply issues,” CoPilot CEO Pat Ryan said to Yahoo Finance.

The UAW intends to press forward with what it sees as its advantage — strong public support for the autoworkers, at least at this juncture. On Friday afternoon Fain and other UAW members and allies will hold a rally in downtown Detroit, with politicians, including Vermont Senator Bernie Sanders, expected to join and speak on the union's behalf.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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