UAW strike at Ford intensifies competition for Detroit Three.
Strike at Ford’s Largest Factory Raises Pressure on Stellantis and General Motors
By Joseph White, Abhirup Roy and David Shepardson
October 12, 2023 – 3:21 PM UTC
DETROIT, Oct 12 (Reuters) – The United Auto Workers’ (UAW) snap strike on Wednesday at Ford’s largest and most profitable factory is raising pressure on Stellantis NV and General Motors as negotiators resumed contract talks on Thursday.
UAW negotiators are turning their attention on Thursday to talks with Chrysler-parent Stellantis (STLAM.MI), union President Shawn Fain said, confirming a Reuters report.
“Here’s to hoping talks at Stellantis today are more productive than Ford yesterday,” Fain wrote on social media. Stellantis did not immediately comment.
The Kentucky walkout is a warning to Stellantis and General Motors (GM.N), whose wage and benefits offers fall short of Ford’s, based on summaries the automakers and the UAW have released.
Some analysts saw Fain’s decision to shut down Ford’s Kentucky Truck plant, which builds Super Duty pickups and Lincoln Navigator SUVs, as a sign that the endgame could be starting in the nearly month-long round of coordinated walkouts at the Detroit Three.
“Pressure was always needed to force a deal,” Evercore ISI analyst Chris McNally wrote in a note on Thursday.
Ford’s shares fell 2% to $12.01 in late morning trading while GM’s shares were down 1.7% at $30.47.
Last Friday, Fain said if needed, the UAW would strike the GM assembly plant in Arlington, Texas that builds Cadillac Escalade, Chevy Suburban and other large, high-priced SUVs. GM’s Flint heavy-duty truck assembly plant is another potential strike target.
Fain has scheduled a video address for Friday at 10 am ET. In past weeks, Fain has used Friday addresses to order additional walkouts, or announce progress in bargaining.
High-profit targets at Stellantis include the automaker’s Ram pickup truck factories in Sterling Heights and Warren, Michigan, as well as two Jeep SUV factories in Detroit.
“This puts everybody on notice,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “If they haven’t brought anything new to the table since last week, GM and Stellantis should be worried.”
Analysts at Wells Fargo estimated that Ford will lose about $150 million per week in core profit from the Kentucky plant strike.
“We think this escalation is a sign that the UAW could be close to a contract proposal with Ford in the next 1-2 weeks,” Wells Fargo analyst Colin Langan said in the note.
Automakers have more than doubled initial wage hike offers, agreed to raise wages along with inflation and improved pay for temporary workers, but the union wants higher wages still, the abolishment of a two-tier wage system and the expansion of unions to battery plants.
The UAW has room to expand its walkouts and increase the pressure on the Detroit Three to offer bigger wage gains, richer retirement packages and more assurances that new electric vehicle battery plants will be unionized.
Even with 8,700 workers at Ford’s Kentucky Truck plant now on strike, less than a quarter of the 150,000 UAW workers at the Detroit Three automakers are now on strike. However, thousands more have been furloughed from jobs at operations that are not on strike because automakers said the walkouts made their work unnecessary.
Ford said Wednesday it was laying off another 58 workers in Michigan as a result of the strike.
Ford warned workers at a dozen other factories could be sent home because of the truck plant walkout. Officials say new layoffs stemming from the Kentucky strike could begin in the coming days.
Its Kentucky truck plant, the company’s most profitable operation, generates $25 billion in annual sales, about a sixth of Ford’s global automotive revenue.
“There are very expensive products here that are extremely profitable,” Fiorani said. “With the Super Duty in this plant, this is Ford’s largest plant. They’re on target to build 400,000 vehicles this year.”
Fain and other UAW officials called a meeting with Ford at 5:30 pm ET (21:30 GMT) on Wednesday and demanded a new offer, which Ford did not have, a Ford official said.
“You just lost Kentucky Truck,” Fain said, according to the Ford official and a union source, speaking on condition of anonymity because the talks are not public.
“This is all you have for us? Our members’ lives and my handshake are worth more than this,” Fain added, according to the union source.
Ford said the decision was “grossly irresponsible but unsurprising given the union leadership’s stated strategy of keeping the Detroit 3 wounded for months through ‘reputational damage’ and ‘industrial chaos.’”
Fain has said his aim is to keep the automakers off balance by taking targeted action rather than a full strike at all operations.
“We’re not gonna wait around forever,” he said on social media platform X on Wednesday evening. “If Ford can’t get that after four weeks on strike, these 8,700 workers shutting down their biggest plant will help them understand it.”
The Detroit automakers will report third-quarter financial results between Oct. 24 and 31, and the UAW could use what are expected to be robust profits to press their case for a richer contract.
Before Wednesday’s Ford announcement, the union had ordered walkouts at five assembly plants, including two Ford assembly plants, at the three companies and 38 parts depots operated by GM and Stellantis.
Reporting by Joe White in Detroit, Abhirup Roy in San Francisco and David Shepardson in Washington; additional reporting by Priyamvada C in Bengaluru; Editing by Peter Henderson, Nick Zieminski, and Jamie Freed
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What implications does the strike at Ford’s largest factory have for both Stellantis and General Motors in terms of their operations and potential financial losses
Strike at Ford’s Largest Factory Raises Pressure on Stellantis and General Motors
By Joseph White, Abhirup Roy and David Shepardson
October 12, 2023 – 3:21 PM UTC
DETROIT, Oct 12 (Reuters) – The United Auto Workers’ (UAW) sudden strike at Ford’s largest and most profitable factory is putting pressure on Stellantis NV and General Motors as contract talks continue.
UAW negotiators are now focusing on talks with Stellantis (STLAM.MI), the parent company of Chrysler, according to union President Shawn Fain. Fain expressed hope that the talks at Stellantis would be more productive than the ones with Ford. However, Stellantis has not commented on the matter yet.
The strike at the Kentucky factory serves as a warning to both Stellantis and General Motors. Reports suggest that the wage and benefits offers from these automakers fall short of what Ford has proposed, based on the summaries released by the companies and the UAW.
Some analysts see Fain’s decision to shut down Ford’s Kentucky Truck plant as an indication that the coordinated walkouts at the Detroit Three may reach their endgame soon.
“Pressure was always needed to force a deal,” stated analyst Chris McNally from Evercore ISI.
Following the strike, Ford’s shares fell by 2% to $12.01, and GM’s shares experienced a 1.7% decrease, reaching $30.47.
Last Friday, Fain mentioned that if necessary, the UAW would strike the GM assembly plant in Arlington, Texas, which manufactures cars such as Cadillac Escalade and Chevy Suburban. GM’s Flint heavy-duty truck assembly plant is also a potential strike target.
Fain has scheduled a video address for Friday at 10 am ET, during which he may order additional walkouts or announce progress in the bargaining process, as he has done in the past.
Stellantis faces high-profit targets, including the automaker’s Ram pickup truck factories in Sterling Heights and Warren, Michigan, as well as two Jeep SUV factories in Detroit. Analysts warn that if no new proposals are brought to the table by Stellantis and GM since last week, they should be concerned.
According to Wells Fargo analysts, Ford is estimated to lose about $150 million per week in core profits due to the strike at the Kentucky plant.
“We think this escalation is a sign that the UAW could be close to a consensus with Ford,” stated the analysts at Wells Fargo.
Overall, the strike at Ford’s largest factory has significant implications for both Stellantis and General Motors. As negotiations continue, these automakers will need to address the concerns raised by the UAW to avoid further disruptions in their operations and potential financial losses.
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