With the passing of Thursday night’s deadline, the United Auto Workers (UAW) union said it will strike across all Big Three automakers on Friday using a new “stand up” strike strategy.
This is the first time the union will strike against the Big Three since its six-week strike against GM back in 2019.
With the "stand up" strategy, the UAW — with a total US workforce of 147,000 employees — will not strike all Big Three plants all at once. Instead, select local UAW chapters will be called on to “stand up” and walk out on strike. The UAW says as time goes on, more locals may be called on to join the strike, giving what the UAW says is “maximum leverage and maximum flexibility” with negotiations with the automakers.
Meanwhile, other chapters that have not been called to strike will keep working. This allows the UAW to keep its $825 million “strike fund” going as long as possible while the union pursues its strategy of striking all three automakers in a select way. "We're going to hit where we need to hit," UAW president Shawn Fain said.
The UAW will pay striking workers $500 a week to cover costs and expenses, while the other UAW members who continue working will collect wages and be able to contribute to the strike fund. The UAW members that continue to work will do so under an expired contract, which will be allowed by the union.
“It's unconventional. It's a risky strategy, and one thing is certain, as there is a law in physics that for every action there is a reaction — corporations, the companies, cannot be expected to just sit there and idly take the union striking at their whim,” labor expert Marick Masters, professor at Wayne State University's school of business, told Yahoo Finance. “[The Big Three will] respond in some sort of way to take the union's advantage away in calling strikes at their leisure.”
For its part, the automakers said they are bargaining in good faith and have extended credible offers. Ford CEO Jim Farley said in a statement that the company has submitted four offers without receiving a genuine counteroffer. Farley even went so far as to say he and chairman Bill Ford came to the negotiating table together to offer a "major" offer, only to find out Fain would not be present at the meeting.
Ford rival GM said through its negotiating update site that it has submitted three offers and is still negotiating, noting that it's "making progress" with the UAW. Stellantis — parent of brands including Chrysler, Dodge, and Jeep — said it has submitted a third offer but won’t comment further out of respect for the negotiating process.
In terms of compensation offers, Fain revealed Ford has offered up a 20% pay hike, GM an 18% hike, and Stellantis a 17.5% bump in pay.
Initially, the UAW asked for "substantial wage increases" amounting to a 46% rise over three years (though that has reportedly come down to 36%); eliminating compensation tiers for new and old workers (which the UPS Teamsters secured); restoring cost-of-living adjustments; providing a new pension plan; and reducing workweeks to 32 hours from the standard 40.
The financial pain, even from a short strike, would be costly for autoworkers, the Big Three, and the US economy overall. Consulting firm Anderson Economic Group estimates that a strike at all Big Three automakers by the UAW could result in a $5.6 billion hit to US GDP after only 10 days, and UAW lost wages could total almost $860 million.
In addition, Goldman Sachs projected that a strike at all three automakers would negatively impact quarterly annualized US GDP growth by 0.05 to 0.10 percentage points for each week the strike lasts.
The length of a strike at all three automakers is unclear, though it could last for longer than the industry expects. “It could last for a long period of time,” Masters said.
“I think the companies might lock out the employees and try and expedite this process, because eventually, what Shawn Fain is saying is, ‘I'm going to escalate the conflict to the point where I strike all three companies company-wide.’ If the UAW is going do that, why not lock them out now, and get to the end point sooner rather than later?” Masters said.
The effects of a strike will not only be felt by the UAW and Big Three, but also consumers at dealer lots. “In general, the strikes overall would put even more pressure on new and used car prices, which have remained near record highs in large part due to the strength of the consumer and ongoing supply issues,” CoPilot CEO Pat Ryan said to Yahoo Finance.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
Read the latest financial and business news from Yahoo Finance
