LDN - Business

Detroit Three strike deadline nears as sides remain far apart

[September 14, 2023] By David Shepardson

(Reuters) - U.S. automakers and union negotiators offered little hope a deal would be reached on Thursday to avoid a midnight walkoff that would be the United Auto Workers' first-ever simultaneous strike against the Detroit Three carmakers.

The UAW on Wednesday outlined plans for a series of strikes targeting individual, undisclosed U.S. auto plants if agreements are not reached by 11:59 p.m. EDT on Thursday (0359 GMT on Friday), rather than a full walkout.

"To win, we're likely going to have to take action," UAW President Shawn Fain said on Wednesday.

Fain said the Detroit Three had offered 146,000 U.S. auto workers pay raises of as much as 20% over 4-1/2 years, but he blasted the proposal as inadequate even as automakers protested the union had yet to formally respond to their latest more generous offers. The union is asking for 40% raises and major improvements in benefits.

Fain outlined a strategy to "create confusion" with a series of work stoppages targeting individual U.S. plants if no deal is reached.

Stopping work at a key engine or transmission plant, for example, could have a cascading effect by depriving other factories of parts they need to produce vehicles. Another option would be to strike profitable pickup truck or SUV assembly plants.

Coordinated strikes would represent arguably the most ambitious U.S. labor action in decades and could impact U.S. economic growth, depending how long they last.

Fain said it was still possible that at a later date all of the auto workers could strike.

A full strike would hit earnings at each affected automaker by about $400 million to $500 million per week assuming all production was lost, Deutsche Bank has estimated.

Some losses could be recouped by boosting production schedules after a strike, but that possibility fades as a strike extends to weeks or months.

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Hummer EVs are seen on the production line as U.S. President Joe Biden tours the General Motors 'Factory ZERO' electric vehicle assembly plant, in Detroit, Michigan, U.S. November 17, 2021. REUTERS/Jonathan Ernst/File Photo

U.S. President Joe Biden has encouraged the parties to stay at the table "to get a win-win agreement that keeps UAW workers at the heart of our auto future," White House economic adviser Jared Bernstein said Wednesday. A prolonged strike could pose political problems for Biden.

Ford Motor has proposed a 20% hike in pay over the contract term, General Motors 18%, and Chrysler parent Stellantis 17.5%, Fain said. That is less than half the pay hikes the union has sought, but higher than companies initial offers.

GM and Stellantis said they had received responses to their latest offers, while Ford said during bargaining it had "not received any genuine counteroffers from the union." GM said it continues "to bargain directly and in good faith with the UAW."

Ford warned of a grim scenario. "The future of our industry is at stake. Let's do everything we can to avert a disastrous outcome."

The union's demands include restoring defined benefit pensions for all workers, 32-hour work weeks and additional cost-of-living hikes, as well as job security guarantees and an end to the use of temporary workers.

Fain said automakers had rejected the pension, 32-hour work week and other benefit improvements sought. He also criticized proposed changes to profit sharing that would cut payments to workers.

The UAW said it was planning a rally in Detroit on Friday that will include Fain, Senator Bernie Sanders and other members of Congress, coinciding with a first of day of expected walkouts.

(Reporting by David Shepardson; Editing by Peter Henderson and Jamie Freed)

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