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UAW Launches Strikes Against Detroit Automakers
The United Auto Workers labor union has initiated targeted strikes against the three major Detroit automakers early Friday morning. These strikes impact three plants responsible for manufacturing popular models including the Ford Bronco, Chevrolet Colorado, and Jeep Wrangler.
This historical event marks the first time the UAW has simultaneously struck all three Detroit automakers. However, while the strikes began simultaneously, the developments may unfold differently in the coming days. Stellantis, the automaker resulting from the merger between Fiat Chrysler Automobiles and French automaker Peugeot, potentially faces a more challenging path to reach a deal compared to its competitors Ford Motor and General Motors.
Stellantis Faces Unique Challenges
Stellantis encounters a problem that its local rivals do not. As a result of the merger, the company has an excess of production capacity worldwide. Stellantis has outlined plans to close or sell 18 of its U.S. facilities, including factories and parts depots. Currently, the company operates a total of about 35 factories and parts distribution centers in the U.S. This proposed plan is unlikely to be embraced willingly by the union.
Considering this, it is plausible that Stellantis has been preparing for an extended strike. At the beginning of September, the company had more vehicles in its U.S. dealer inventories compared to its crosstown rivals. The length of the strike may be influenced by this preparatory measure.
Industry-Wide Inventory Analysis
The auto industry evaluates inventory using the metric of “days’ supply,” which measures the rate of sales for each model over the previous 30 days. Data from Cox Automotive reveals that all four of Stellantis’ U.S. brands had over 100 days’ worth of vehicles in dealer lots or en route to dealers as of the beginning of September. In comparison, GM’s Cadillac and Chevrolet brands had 46 and 51 days’ worth of vehicles respectively, while the Ford brand had 77 days’ worth. The industry-wide average stood at 58 days’ supply at the beginning of the month. Traditionally, the Detroit automakers tend to maintain larger inventories due to the many configurations of their full-size pickups.
Potential Outcomes for Ford and General Motors
Contrary to Stellantis, it is conceivable that the UAW’s strike against Ford may be relatively brief. Recent comments made by Ford executives indicate that the company is closer to reaching an agreement with the union compared to its counterparts. The UAW recognized this when it chose to strike only a section of Ford’s Michigan Assembly Plant where vehicle painting and final assembly are carried out. In contrast, all UAW-represented workers at GM’s Wentzville, Missouri assembly plant and Stellantis’s Jeep Wrangler factory in Toledo went on strike last night.
General Motors may also avoid a drawn-out strike. Details about GM’s final offer prior to the strike suggested that their proposal closely resembled Ford’s. This included a 20% wage increase over the contract’s four-year term, additional vacation days, and two weeks of parental leave, among other concessions. If Ford reaches an agreement with the UAW soon, GM could use it as a template for their own deal.
Stellantis Prepares for a Prolonged Battle
As of Friday morning, Stellantis appears to be preparing for a protracted battle. Following the strikes, the company expressed extreme disappointment in the UAW leadership’s refusal to engage in a responsible manner to reach a fair agreement. Stellantis immediately activated contingency measures to protect its North American operations and the company itself.
In accordance with past practices, negotiations between the UAW and the automakers will pause on Friday, but meetings are expected to resume over the weekend.