UAW, automakers to resume talks as strike starts to create parts shortage

By Kevin Krolicki, David Shepardson and Steve Holland

DETROIT (Reuters) -The United Auto Workers said it plans to resume bargaining on Saturday after the union launched simultaneous strikes at three factories owned by General Motors (NYSE:), Ford Motor (NYSE:) and Chrysler parent Stellantis (NYSE:) on Friday.

The walkouts at the Detroit Three by 12,700 workers, kicking off the most ambitious U.S. industrial labor action in decades, are halting production of the Ford Bronco, Jeep Wrangler and Chevrolet Colorado, along with other popular models, though the action was smaller than some expected.

The ripple effects of the strike began to spread on Friday, as Ford told 600 workers who are not striking that they should not come to work on Friday and GM told some 2,000 workers at a Kansas car plant that their factory likely would be shut down next week for lack of parts, stemming from a nearby plant being struck.

“We’re not going to wreck the economy. The truth is we are going to wreck the billionaire economy,” UAW President Shawn Fain said.

The action caps weeks of clashes between the union and Detroit Three executives over union demands for a bigger share of profits generated by combustion trucks, shorter work weeks, restoration of defined benefit pensions and stronger job security as automakers shift to electric vehicles.

The automakers’ previous contract expired at 11:59 p.m. EDT on Thursday. Fain said the union will hold off more costly company-wide strikes for now, but all options are open.

President Joe Biden, who faces re-election next year, called for the auto companies to reward workers just as executives’ salaries have risen. “No one wants a strike, but I respect workers’ right to use their options,” Biden said, echoing statements from union leaders. “The companies have made some significant offers but I believe they should go further to ensure record corporate profits mean record contracts.”

Dozens of workers picketed the main entrance at Ford’s Michigan assembly plant in Wayne on Friday as many passing drivers blew their horns in solidarity.

Workers said they have been hurt by a series of changes to their contract and work rules over the past 15 years which have shifted risks to “tier two” workers. Those employees can make only half the hourly wages of senior UAW workers and face a longer climb to reach the highest pay under the expired contract.

None of the Detroit Three has proposed eliminating those tiered wage systems – a key UAW demand – but they have offered to cut the time needed to reach top pay from eight to four years.

“There are times when I look in my pantry, I look in my fridge and I don’t know how I’m going to feed my family,” said Gerry Gunn, 38, a Ford worker who was on the picket line on Friday in Wayne.

Executives say the union’s asks would make the automakers uncompetitive against other nonunion rivals. “We still have a ways to go with the offer they put on the table last night,” said GM CEO Mary Barra on “CBS This Morning” on Friday, while Ford CEO Jim Farley said the UAW’s 40% wage hike demand would “put us out of business.”

In addition to Ford’s Wayne plant, the strikes are taking place at assembly plants operated by GM in Wentzville, Missouri, and by Stellantis’ Jeep brand in Toledo, Ohio. Those plants produce some of the automakers’ most profitable vehicles.

Friday’s walkout was smaller than some analysts expected, but workers in Michigan supported the plan. “Keep the other plants open,” said Sofus Nielsen, a 29-year Ford veteran, outside the Wayne plant. “This way we can be out here longer and hurt them more.”

Targeted walkouts could limit the cost of strike pay to the UAW, which has an $825 million strike fund. The automakers have built up billions thanks to robust profits from the trucks and SUVs UAW members build.

Biden on Friday said acting Labor Secretary Julie Su and adviser Gene Sperling will travel to Detroit to offer support for talks but the White House said they would not intervene or mediate. The White House declined to say if Biden supported the UAW’s 40% wage hike proposal.

Ford shares ended barely changed on Friday, GM stock rose about 1% and Stellantis shares earlier closed up 1.9% in Milan.

The UAW has said it wants a 40% raise, while the automakers have offered up to 20%, but without key benefits demanded by the union. The automakers have said the union’s demands would create an unsustainable financial situation and leave them exposed to losses in coming years.

Fain has rejected the automakers’ assertions, saying the companies have spent billions on share buybacks and executive salaries.

Ford said the UAW’s latest proposals would double its U.S. labor costs and make it uncompetitive against Tesla (NASDAQ:) and other nonunion rivals.

Stellantis said it had immediately gone into “contingency mode” and would take structural decisions to protect the company and its North American operations, without elaborating.

GM said on Thursday that the UAW wage and benefits proposals would cost the automaker $100 billion, but did not elaborate.

While Biden is pouring billions in federal subsidies into expanding electric-vehicle sales, this shift could threaten combustion powertrain jobs. The UAW has not endorsed his re-election.

Biden’s likely opponent, former president Donald Trump, on Friday criticized the shift to EVs as a job-killer for the UAW.