Sept 29 (Reuters) – The United Auto Workers (UAW) union on Friday expanded its coordinated U.S. strike, this time targeting a plant at General Motors (GM.N) and Ford Motor (F.N) but refraining from an additional walkout from Chrysler parent Stellantis (STLAM.MI).
The ongoing strike is the first-ever simultaneous labor action against the Detroit Three automakers and is now entering its third week after the earlier contracts expired on Sept. 15.
The automakers, like their global counterparts, have been focused on cost reductions, which in some cases include job cuts, to help accelerate a shift to electric vehicles (EVs) from gasoline-powered vehicles.
WHO IS THE UNION NEGOTIATING WITH?
The UAW, which represents 46,000 GM workers, 57,000 Ford employees and 43,000 Stellantis workers, kicked off negotiations with the companies in July.
The union historically has picked one of the Detroit Three to negotiate with first as the so-called target that sets the pattern on which subsequent deals are based. This time, union President Shawn Fain targeted all three companies simultaneously.
Contract talks between the UAW and the Detroit automakers in past years had gone on until the strike deadline and beyond. A Reuters/Ipsos poll found significant support by Americans for the striking auto workers.
HOW WIDESPREAD IS THE STRIKE?
The strike has now spread to 25,000 workers, or about one-sixth of the workers employed by the big three. It initially targeted three assembly plants in Michigan, Ohio and Missouri targeted that build the Ford Bronco, Jeep Wrangler and Chevrolet Colorado, along with other popular models.
The second round of strikes expanded to 38 locations across 20 states in all nine regions of the UAW, focusing on parts distribution centers.
WHAT ARE THE CURRENT OFFERS AND WHAT DOES THE UAW HAVE TO SAY?
The three automakers currently have proposed 20% raises over four-and-a-half years that the union has so far rejected. It has demanded a 40% wage hike, including a 20% immediate increase, and improvements in benefits.
Fain has said Stellantis has made progress around cost-of-living allowance payments to offset inflation, as well as the right to strike over product commitments and plant closures.
Talks between Ford and UAW negotiators stalled during the week after the two appeared to be close to an agreement, sources familiar with the development said.
WHAT IS AT STAKE?
A full strike would hit earnings at each affected automaker by about $400 million to $500 million per week assuming all production was lost, Deutsche Bank previously estimated. Some losses could be recouped by boosting production schedules later, but that possibility fades if a strike extends to weeks or months.
In fiscal 2019, GM’s fourth-quarter profit took a $3.6 billion hit from a 40-day UAW strike.
Morgan Stanley analyst Adam Jonas estimated on Sept. 21 that a full month of lost production would cost the three automakers $7 billion to $8 billion in lost profits.
WHAT ARE THE UNION’S DEMANDS?
The UAW is pushing automakers to eliminate the two-tier wage system under which new hires can earn far less than veterans.
Fain has said repeatedly that the union will push to restore pay improvements tied to the cost of living and retiree benefits cut during the 2008-2009 economic crisis.
The UAW wants strong salary increases, given the financial success of the automakers, citing generous executive payouts and large U.S. federal subsidies for EV sales.
The union also wants defined benefit pensions for all workers restored, 32-hour work weeks, job security guarantees and an end to the use of temporary workers.
Fain also is aiming to get agreements that would allow the UAW to represent hourly workers at joint-venture EV battery plants opened or planned by the Detroit Three.
WHAT DO AUTOMAKERS WANT?
The Detroit Three want to close the cost gap they have with foreign automakers with non-unionized U.S. factories.
Ford sources estimate that their U.S. labor costs are $64 an hour, compared with an estimated $55 for foreign automakers and $45 to $50 for EV leader Tesla (TSLA.O).
The companies also want greater flexibility in how they use their U.S. workforce to increase efficiency and cut costs as the industry shifts to EVs.
Reporting By Nathan Gomes, Abhijith G, Joseph White, Ben Klayman and David Shepardson; Editing by Sriraj Kalluvila
