The current contract disputes between the UAW and Detroit’s three automakers are becoming a dispute over the companies’ financial priorities as the impact of the 12-day-old strike deepens and negotiations continue to sputter.
Meanwhile, Ford is being spared, at least temporarily, from the expanded strike by the UAW, which called for a walkout by more than 5,600 General Motors and Stellantis employees at 38 parts distribution warehouses in 20 states, threatening the ability of each company’s dealers to service customers’ vehicles.
More than 13,000 workers at three assembly plants – one each belonging to GM, Ford and Stellantis – were the first to strike, at 11:59 p.m. Sept. 14. They were joined a week later by the parts-warehouse workers.
Negotiations at Ford, however, appeared to hit a pothole Monday, when it disclosed it was “pausing” construction of a new battery plant near Marshall, MI, while going forward with the development of the Blue Oval EV complex in non-union Tennessee. That drew a caustic comment from UAW President Shawn Fain, who will host President Joe Biden on a UAW picket line this week.
“This is a shameful, barely veiled threat by Ford to cut jobs. After closing 65 plants over the last 20 years wasn’t enough for the Big Three, now they want to threaten us with closing plants that aren’t even open yet,” Fain says.
Ford is declining to explain the reasons for the pause.
Biden’s likely opponent in next year’s presidential election, former President Donald Trump, ramps up his criticism of the Biden Admin.’s promotion of electric vehicles. Trump also plans to visit Detroit auto workers this week.
Meanwhile, the strike’s potential threat to the car-repair segment of the auto industry appears to be growing.
“Franchised new-car dealers produce near-record consumer satisfaction scores that are the envy of any other retail industry,” Mike Stanton, president and CEO of the National Automobile Dealers Assn., said after the expanded strike was announced. “Of course, dealers don’t want to see anything to limit our potential to serve customers, so we certainly hope automakers and the UAW can reach an agreement quickly and amicably.”
By sparing Ford from a wider strike, the UAW indicates it is willing to vary its approach to each company, says Michelle Kaminski, associate professor at Michigan State University’s School of Human Resources and Labor Relations.
“I think that bargaining with each employer is a separate process, and so it is not a surprise that one company is in a different place than another. They each have their own goals,” Kaminski notes in an email to Wards.
“But I also think that the UAW is sending a message that if the company works with them, they are willing to cooperate and limit the damage of the strike. But if the company does not work with them, the union will escalate the pressure,” she says.
The union’s strategy, which is a major departure from the way negotiations have been conducted for years, is putting substantial pressure on all three of Detroit’s automakers, including Ford.
“It is now clear that the UAW leadership has always intended to cause months-long disruption, regardless of the harm it causes to its members and their communities,” GM says in a statement.
“Today’s strike escalation by the UAW’s top leadership is unnecessary. The decision to strike an additional 18 of our facilities, affecting more than 3,000 team members plus their families and communities, adds validity to the blueprint identified in leaked texts …that the UAW leadership is manipulating the bargaining process for their own personal agendas.”
Multiple news outlets have reported on memos texted to union officials by Jonah Furman, the UAW’s communications director. In one memo, Furman, who is not directly involved in the contract negotiations, says, “if we can keep them wounded for months, they don’t know what to do… this is recurring reputations damage and operation chaos.”
In a separate statement Stellantis says: “The leaked information calls into question who is in charge of UAW strategy and shows a callous disregard for the seriousness of what is at stake. UAW leadership needs to put the interests of its members and the country over their own ideological and personal agendas.”
Stellantis calls Furman’s comments “incredibly disturbing and strongly indicate that the UAW’s approach to these talks is not in the best interest of the workforce. We are disappointed that it appears our employees are being used as pawns in an agenda that is not intended to meet their needs.”
Ford spokesman Mark Truby says the union official’s comments about a “months-long struggle” and “inflicting reputational damage” are disappointing.
The union said Monday, “The UAW declines comment on the contents of the memo.”
All three Detroit automakers insist the burden of meeting the UAW’s demands for a record contract would leave them in perpetual financial distress as they also are required to meet the challenges that come with the transition to electric demands, according to officials from the companies and their allies in financial industry.
“The current strike is damaging Michigan companies, communities and reputation,” says Glenn Stevens, executive director of MichAuto, and vice president of the Detroit Regional Chamber of Commerce, who notes during a recent webinar many small firms that supply automotive components are facing serious financial hardship because of the strike.
The union’s proposals for a significant wage increase, the end of the tiered wage structure, a 32-hour work week and the restoration of cost-of-living adjustments and defined-benefit pensions would fundamentally change the way the industry’s profits are distributed by taking them away from investors and putting more in the hands of employees, according to UAW President Shawn Fain.
Fain’s rough and ready language has described the strike and confrontation with Detroit’s automakers as a “war on the billionaire class.” Such incendiary language has not been heard from union leaders in years.
The UAW is striking for better pay and benefits after years of seeing their wages stagnate, according to former union President Bob King, a one-time champion of labor-management cooperation. “I don’t think these are huge demands,” King says during an interview on MSNBC. “This is not just a fight for UAW members, but a fight for all workers in America. This is a fight to raise all workers’ wages.”
While the big sums doled out to top executives have been a UAW target, so have the stock buybacks which have accounted for far larger amounts of cash than executive compensation since the bankruptcies of GM and Chrysler in 2009.
The Financial Times notes Detroit’s automakers spent billions in the past decade on stock buybacks and dividends.
By 2018, GM had spent $10.6 billion buying back its own shares, according to filings with the Securities and Exchange Commission, before announcing plans to shutter the big assembly plant in Lordstown, OH, and eliminate 14,000 jobs across the company.
In August 2022, GM reinstated the quarterly dividend after suspending it early in the pandemic to preserve cash. The company is also resuming what it calls “opportunistic share repurchases,” with plans to purchase another $5 billion worth of its own stock, according to GM press releases.
A different pattern prevails at Stellantis, which is controlled by a Netherlands-based holding company for Italy’s Agnelli family and the owner of 14.4% of the shares in Stellantis, which just this year announced $1.6 billion buyback of shares.
Ford says it has used stock buybacks in cases where stock was used to replace more expensive debt.