After more than 40 days of ever-expanding strike by the United Auto Workers union against the Detroit Three, Ford (F) – Get a free reportGeneral Motors (G.M.) – Get a free report and stellantis (STLA) – Get a free report— pickets have officially been disbanded and new contracts signed.
The new contracts from each of the Big Three automakers prominently include 25% pay increases, down from the 40% increase the union initially demanded. The contracts also give workers cost-of-living adjustments, higher retirement contributions and better benefits, among other protections.
Although the strikes have ended, the contracts are not yet completely official; UAW members must still ratify each contract. Once ratified, workers will receive an 11% pay increase, with the remaining pay increases to be made over the course of the four-and-a-half-year contract.
Related: After $8 Billion Hit, Auto Union Targets Tesla, Other Automakers
A strike schedule
After negotiations failed, the UAW union, led by President Shawn Fain, began its series of rolling strikes against the three automakers on September 15. The initial strike called for 12,700 of the union’s 146,000 members to leave the union.
The union at the time was demanding 40% pay increases and a 32-hour work week.
After a week in which there was some progress at Ford, but no movement at GM or Stellantis, Fain extended the strike against GM and Stellantis on September 22, leaving Ford, for the moment, intact. On September 22, approximately 10% of the union’s total members were on strike.
Fain changed his levers on September 29, initiating an expansion of the strike at GM and Ford and this time leaving Stellantis intact.
In mid-October, the union decided to change its strategy, abandoning its previous method of announcing strikes every Friday morning. Fain wanted to increase the pressure; Surprise attacks and larger targets appeared in his sights.
The first of these surprise strikes put Ford’s highly profitable truck plant in Kentucky on strike on October 12. The move cost Ford $150 million a week. The union continued this massive escalation against GM and Stellantis on October 23, targeting each company’s most profitable factories and bringing the total number of striking members to around 45,000.
After a few days amid this increased pressure, automakers went out of business. Ford went first and reached a tentative agreement with the union on October 25; Stellantis followed on October 28. And the GM deal came on October 30.
Related: Prominent Ford executive has harsh warning and desperate appeal to auto strikers
The winners
The union members, in addition to their president and the union itself, are the clear winners of the strike. Although they didn’t get everything they asked for (a 32-hour work week and 40% wage increases), workers were awarded record contracts that included labor protections, better profit-sharing, and better benefits, in addition to significant wage increases.
The result also represents a vote of confidence for Fain, who was elected to his current leadership position this year by a margin of just 500 votes.
His success with the Detroit Three comes after a series of scandals with the UAW executive leadership that saw two of the union’s three previous presidents sent to prison.
Related: Tesla boss Elon Musk has a warning for Detroit 3 amid ongoing car strikes
The losers
The losers of the strike appear to be much more numerous than the winners. The Detroit Three certainly haven’t emerged victorious; In the wake of the strikes, both Ford and GM withdrew their full-year guidance, citing lingering uncertainty.
Ford said it had lost $1.3 billion because of the strikes. Once the contract is ratified, Ford executives said their vehicles will cost about $900 more each, a price increase that will force the company to explore efficiency improvements across the board.
On October 24, GM said the strikes had cost the company more than $800 million. The company said at the time that the strikes would cost it another $200 million a week as long as they continued.
Both companies reported declines in third-quarter revenue due to the strikes. And both companies have significantly withdrawn their planned investments in electric vehicles.
Stellantis said Tuesday that the strikes cost the company about $3.2 billion in revenue.
And even after the strikes are over, getting the plants back to full operation will take time, meaning it will take even longer for each of Detroit’s three automakers to get back up and running.
An October 23 estimate by the Anderson Economic Group found that, after five weeks of strikes, the industry had lost a total of more than $9.3 billion. The losses, which included those to supplier economies and automakers, included hundreds of millions in lost wages.
Related: Former Ford CEO has a strong warning for the electric vehicle industry
Implications of the strike
Even before the strikes began, analysts, investors and executives were examining the implications of a prolonged strike and the implications of a landmark contract.
Gene Munster of Deepwater Management and Dan Ives of Wedbush said from the beginning that the real winner of the attacks was Tesla. (TSLA) – Get a free report. The reason is twofold.
First, they said, a prolonged strike would significantly slow automakers’ electric vehicle plans, pushing back the date when they could actually compete with Tesla in the sector. And second, the additional labor costs that a new contract would incur, they said, would further damage legacy automakers’ profit margins (in an area that is no longer profitable), further cementing Tesla’s dominance. in the market.
These predictions of slowing electric vehicle plans and higher costs per vehicle have already come true.
The combination of the price war Tesla has been leading and the impact of the strikes, former Ford CEO Mark Fields said, will continue to hurt the profitability of electric vehicles across the industry, pushing back that mass adoption curve. more espacious.
Another implication of the historic contracts, Fields warned, could involve greater exploration of factory automation by automakers in an attempt to offset the higher labor costs they now must shell out.
Related: Former Ford CEO has stark warning for workers following conclusion of historic auto strikes
The UAW and Tesla
Another result of the union’s historic victory could take a few years to come to light: increased unionization at other companies, including Tesla.
Willingly at the beginning of October referred to Tesla, Toyota and Honda workers as the “UAW members of the future.”
And after the victories with the Detroit Three, the union said in a statement: “When we return to the negotiating table in 2028, it will not just be with the Big Three, but with the Big Five or Six.”
A day later, Bloomberg reported that a UAW organizing committee was speaking with Tesla workers at a Tesla plant in Fremont, California. The union was reportedly discussing the value of collective bargaining and offered to fund any efforts by Tesla workers to unionize.
Neither Tesla nor the UAW responded to TheStreet’s requests for comment.
This presents a serious threat to Tesla boss Elon Musk, who has long been vocal about his staunchly anti-union views.
Munster, responding to the report, said he hopes Tesla workers will reject the UAW in exchange for 20% wage increases. But he said the situation will take several months to fully develop.
“We have begun to turn the tide of the war against the American working class,” Fain said in a statement. “And we really are saving the American dream.”
Related: Elon Musk’s Tesla has a new union problem after a historic union victory
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