UAW Could Throw Cold Water on Automakers’ Hot Output

With the deadline for contract negotiations looming and inventories of key vehicles built by General Motors, Ford and FCA US in short supply, even a brief or partial strike by the UAW has the potential to inflict serious pain on the automakers.

Union President Dennis Williams says he remains hopeful of reaching a settlement before the union’s contracts with the Detroit Three expire at 11:59 p.m. Monday. He said earlier this summer he would consider it a failure by both sides if there was a strike.

But following a Labor Day parade in Detroit, Williams emphasized “somebody was going to have a real problem” if there was no settlement by the time the deadline expires.

“I think all parties want to avoid a strike, but a strike may be unavoidable,” says Kristin Dziczek, an analyst with the Center for Automotive Research in Ann Arbor, MI. “There’s little information coming out from the bargaining, so it’s difficult to judge if there are any roadblocks that could lead the parties to a strike.”

The union has not yet named a strike target. In traditional pattern bargaining the contract reached between the UAW and one automaker is adopted by the other two,

UAW members at all three automakers have authorized strikes.

The union’s Ford Dept. reports nearly 80% of members turned out for a strike-authorization vote and 98.3% cast ballots in favor of a walkout if necessary to enforce the UAW’s contract demands.

Yet the chances of an all-out strike against one of the automakers are small, according to Harley Shaiken, a professor of labor relations at the University of California-Berkeley. The union instead could conduct a targeted strike that deliberately disrupts production of key vehicles or components.

“A long strike is highly unlikely, but I think some kind of short strike is possible,” says Shaiken, a longtime UAW observer. “This ultimately has to be sold to the membership. (Williams) wants to see a competitive industry but he also wants the needs of the members recognized.”

With new-vehicle sales this year heading for better than 17 million units for the first time in a decade, Shaiken says the union has considerable leverage over Detroit’s automakers: “The industry is running at full capacity utilization, meaning it’s difficult to make up what you lose when you have even a short strike of one or two days.

“The danger, of course, is it always can always spill over into something more.”

GM’s Arlington, TX, plant, which builds popular and highly profitable vehicles such as the Cadillac Escalade and Chevrolet Suburban, are running at maximum output. That means any units lost to a work stoppage can’t be added later to the production schedule, resulting in a financial loss for the company.

Another potential target is the GM truck plant in Wentzville, MO, where 41 workers were fired March 20 over new work rules that combine job classifications and require workers to rotate to other jobs. The workers were reinstated with back pay March 31, union members said.

“We are at 65 days’ supply” at Wentzville, which produces the popular Chevrolet Colorado and GMC Canyon midsize pickups, GM spokesman James Cain says in an e-mail. “The plant worked over the summer shutdown to help us get caught up to demand,” but supplies remain tight, he adds.

FCA also has plants running all-out building popular Jeep vehicles and the financial damage from even a partial strike would quickly add up.  The Jeep brand accounts for roughly two-thirds of parent Fiat Chrysler Automobiles’ profits and the company would have little chance of replacing lost production of vehicles such as the Wrangler during a strike.

Even a short walkout would cost the company millions, noted one worker from the Jeep complex in Toledo, OH, who attended a recent meeting of UAW activists demanding elimination of the 2-tier wage system the union accepted in 2007 during the run-up to the bankruptcies of GM and then-Chrysler.

Williams emphasizes the union wants to “close the gap” between first- and second-tier workers, with the latter earning nearly 50% less than long-serving UAW members paid under the union’s traditional wage scale.

Fordhas been ramping up production of its F-150 fullsize pickup – also  the best-selling light vehicle in the U.S. – for the better part of the year. It also would be vulnerable to a short strike at its Dearborn or Kansas City, MO, assembly plants.

“We ended (August) with a 55-day supply of F-150s, which is a relatively low number, but just shows you how quickly the vehicle is turning,” says Mark LaNeve, vice president-sales, service and marketing at Ford. “So we are delighted with customer acceptance and turn rates.”

The UAW has the support of the International Brotherhood of Teamsters, which could make it difficult for automakers to move finished vehicles out of assembly plants surrounded by union pickets.

“If the UAW goes on strike, I make a pledge on behalf of the 1.4 million Teamster members, we will honor your picket lines,” Teamsters President James P. Hoffa said during the Labor Day rally in Detroit. “We will walk with you every day. The Teamsters and the UAW are together. They aren’t going to haul those cars if we’re there.”