MG:CC - Deadline drama: UAW union prepares for 'never seen before' auto strike

2023-09-14 06:47:57 ET

The auto sector is on watch as negotiations between the UAW union and Detroit carmakers - Ford ( NYSE: F ), General Motors ( NYSE: GM ) and Stellantis ( NYSE: STLA ) - head down to the wire. Things have gone back and forth over the last several weeks, but they aren't looking good ahead of today's strike deadline at 11:59 p.m. ET. Contributing to the tensions has been the industry's shift toward EVs, which has created new manufacturing dynamics - such as less of a need for engine and transmission plants, as well as new battery factories that are largely not unionized.

Defining moment: "To win, we're likely going to have to take action," UAW President Shawn Fain declared. "Just as we have approached our negotiations differently than we have in the past, we're preparing to strike these companies in a way they've never seen before." While the rhetoric remains charged, a targeted walkout is likely to first hit specific U.S. factories before an all-out strike envelops one or more companies, especially if it helps the UAW avoid distributing strike pay to its 146,000 members.

At issue are the terms surrounding new four-year labor contracts for Big Three auto workers. Demands range from higher wages, more paid time off, reduced workweeks, a return to traditional pensions, the elimination of wage classification tiers and a shift back towards cost-of-living adjustments. However, the two sides have grown increasingly skeptical of each other, trading accusations of "no genuine offers," "negotiations in bad faith" and "not showing up to the bargaining table."

Ripple effects: A 10-day strike could cost the U.S. economy $5.6B in gross domestic product, according to the Anderson Economic Group, and push the Michigan economy into a recession. The firm added that lost worker pay could be equal to $859M and lost automaker earnings could be $989M, while continuing to deplete dealership stock levels and impacting prices. A disruption could also deal a sizable economic blow to the broader auto network, like parts suppliers including Lear Corp. ( NYSE: LEA ) and Magna International ( NYSE: MGA ).

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