The Impact of UAW Strikes on Detroit Automakers

The Impact of UAW Strikes on Detroit Automakers

The United Auto Workers (UAW) labor union recently launched targeted strikes against the three major Detroit automakers, marking the first time in history that all three companies have been struck simultaneously. These stoppages specifically impact three plants where popular models like the Ford Bronco, Chevrolet Colorado, and Jeep Wrangler are manufactured. However, while the strikes commenced simultaneously, the potential outcomes for each automaker may vary significantly in the days to come. Stellantis, the result of a merger between Fiat Chrysler Automobiles and French automaker Peugeot, faces a distinct challenge compared to its crosstown rivals, Ford Motor and General Motors.

Stellantis finds itself in a precarious position due to its surplus production capacity worldwide. Having formed in early 2021, the company plans to close or sell 18 of its US facilities, including factories and parts depots. This intention has set Stellantis apart from its competitors and may result in a more challenging road to reaching a deal with the UAW. The union is unlikely to accept the closure or sale of these facilities willingly, leading to potential conflicts and a longer strike. Interestingly, Stellantis appears to have anticipated a prolonged strike, as it had a higher inventory of vehicles in its US dealer lots compared to Ford and General Motors at the beginning of September.

The auto industry typically measures inventory in terms of “days’ supply,” which calculates the number of days a particular model’s inventory can sustain current sales rates. Cox Automotive data reveals that all four of Stellantis’ US brands possessed more than 100 days’ supply of vehicles in dealer lots or in transit at the start of September. In contrast, GM’s Cadillac and Chevrolet brands had significantly lower numbers, with 46 and 51 days’ worth of vehicles respectively, while Ford had 77 days’ worth. The industry average stood at 58 days’ supply. The larger inventory held by the Detroit automakers is historically attributed to the availability of different configurations for their full-size pickups.

In comparison to the situation with Stellantis, the UAW strike against Ford Motor appears more likely to be brief. Statements from UAW President Shawn Fain and Ford executives suggest that the company is closest to reaching a deal with the union. Notably, the union chose to strike only specific areas of Ford’s Michigan Assembly Plant, namely those involved in vehicle painting and final assembly. On the other hand, the UAW-represented workers at GM’s assembly plant in Wentzville, Missouri, and Stellantis’ Jeep Wrangler factory in Toledo, Ohio, participated in the strike. However, General Motors may not face an extended strike, as its final offer before the strike closely resembled Ford’s offer, featuring a 20% wage increase over four years, additional vacation days, and two weeks of parental leave.

As of Friday morning, Stellantis seemed the least likely to swiftly resolve the strike. The company expressed its disappointment in the UAW’s refusal to engage in a responsible manner to reach a fair agreement. Stellantis promptly initiated contingency measures to protect its North American operations and the company as a whole. Considering past practices following a strike, both the UAW and the automakers will take a break from negotiations on Friday, with meetings expected to resume over the weekend. The unique circumstances surrounding Stellantis’ surplus production capacity pose a significant hurdle in this striking period.

The UAW strikes against the three major Detroit automakers have already made history. While Ford and General Motors may have a higher chance of reaching resolutions, Stellantis faces a more challenging road due to its global production capacity surplus. The strike outcomes for each automaker will likely differ, and only time will reveal the eventual agreements and impacts on the industry.

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