What to make of the UAW's shifting strike tactics after the latest escalation

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Bill Pugliano

Bill Pugliano | Getty Images

DETROIT – A shift in strategy by the United Auto Workers union this week has some analysts wondering if the parties are — perhaps, counterintuitively — getting closer to a deal.

On Wednesday the union initiated a surprise work stoppage at

Ford Motor’s Kentucky Truck Plant. This strike affects 8,700 workers at the most important plant by far, responsible for 25 billion dollars in annual revenue. It’s expected to quickly have a ripple effect on other Ford plants and suppliers.It also ushered in what UAW President Shawn Fain characterized as a “new phase” of strikes and contract negotiations with Ford,

General Motors and Chrysler-parent Stellantis, giving the union the element of surprise to keep the automakers on edge during the ongoing negotiations, Fain told members in a Friday presentation.“We’re entering a new phase of this fight and it demands a new approach,” Fain said Friday. “We don’t want to wait until Fridays before we escalate our strike. We’re ready to do so at any time,” Fain said. Some Wall Street analysts believe that this week’s change in strategy is an indication that UAW leaders are feeling pressure to reach a tentative agreement with Ford. The strike at KY Truck, Ford’s largest plant, is the most severe level of escalation aside from a nationwide strike, wrote Wells Fargo analyst Colin Langan in a note on Friday This escalation is likely to be used to press for final terms. “

But UAW leaders might be thinking one step further, and that is to sell a tentative agreement with Ford to its members. Striking Ford’s most profitable factory could be one way to do that. The strike at Ford’s largest factory could help convince members to ratify a new contract. Rod Lache, Wolfe Research’s Rod Lache, argued that the Kentucky strike would allow UAW ), and that UAW members have secured the last few ounces of wage, benefits, and job protection concessions that they can get,” Lache wrote Thursday to investors.

Factory workers and UAW union members form a picket line outside the Ford Motor Co. Kentucky Truck Plant in the early morning hours on October 12, 2023 in Louisville, Kentucky.

Luke Sharrett | Getty Images

Winning over workers

Only about 34,000 U.S. automakers with the companies, or roughly 23% of UAW members covered by the expired contracts with the Detroit automakers, are currently on strike.[Ford]”Hitting a very high-dollar, high-profitable plant, it certainly gets Ford’s attention very quickly,” said Art Wheaton, a labor professor at the Worker Institute at Cornell University. It also sends an important message to Stellantis, General Motors, and other automakers. Wells Fargo’s Langan believes that while Fain declined to expand strikes against GM and Stellantis Friday, it doesn’t necessarily mean they are spared.

“The lack There are plenty more plants the union could hit for each of the automakers, including the full-size pickup truck plants owned by all three and large SUV plants at GM and Stellantis.

GM avoided a strike at its most profitable SUV plant in Texas last week with a last-minute offer to include battery cell plant workers under the company’s national agreement, however details regarding how that will be done are believed to be still being negotiated.

While Fain declined to expand strikes against GM and Stellantis Friday, Wells Fargo’s Langan thinks that doesn’t necessarily mean they’re spared.

“The lack of GM & STLA strike today, even though both have not matched F’s offer, would be consistent with the UAW holding out the most profitable plants for a final push,” he wrote in a Friday note.

Other outcomes?

All of that tea-leaf reading aside, rapid escalation-turned-resolution is just one potential outcome.

Another includes the automakers holding out for the union to deplete its resources, specifically its strike and defense fund. The UAW may continue to rotate strikes against the companies or file additional unfair labor practices charges. An executive said Thursday that the automaker was “at the limit” of what it could offer UAW in terms of economic concessions. An executive said Thursday the automaker was “at the limit” of what it can offer UAW in terms of economic concessions.

The Detroit automakers have largely given into many of the union’s demands, but not all of them.

The companies haven’t waved the white flag on demands for a 32-hour workweek — which was always a nonstarter for the companies and which has largely fallen out of union talking points — and a 40% wage increase.

Ford was up to a record 23% wage increase in its recent contract proposal, with the others not far behind.

Then there’s the outstanding issues of benefits for retirees as well as a return to traditional pension plans and future battery plant jobs and workers.

Industry experts and sources familiar with the talks believe regardless of the outcome, the contracts will have ripple effects on the companies potentially in the way of reorganizations, cost cuts and future investments and jobs.

A former high-ranking bargainer for one of the automakers told CNBC that it’s nearly guaranteed that the companies will cut union jobs through product allocation, plant closures or other means to offset increased labor costs once the contracts are set.

“They’re going to have to pay up. A former high-ranking bargainer for one of the automakers told CNBC that it’s almost guaranteed that the companies will cut union jobs through product allocation, plant closures or other means to offset increased labor This will result in fewer jobs. This is how automakers reduce costs. “