UAW members vote on strike in case Ford, GM deal doesn’t happen

James Dornbrook - Kansas City Business Journal
Tue, August 22, 2023

With thousands of jobs and billions of dollars in economic impact at stake, negotiations over a new labor contract for United Auto Workers members are reaching a crucial phase for the Kansas City-area economy.

The UAW is trying to negotiate a new labor contract with Ford Motor Co. and General Motors Co., which have about 9,500 full-time-equivalent employees at their area production plants.

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Ford’s Kansas City Assembly Plant (7,250 employees) in Claycomo produces the Ford F-150 and the Ford Transit. GM’s Fairfax Assembly Plant (2,229 employees) in Kansas City, Kansas, produces the Chevrolet Malibu and the Cadillac XT4.

The UAW labor contract is set to expire Sept. 14, and the parties still haven’t reached an agreement.

Concerned about the pace of the negotiations, the union asked members to authorize a strike if the contract expires. The UAW needs to have strike authorization in hand by Thursday. That doesn’t mean a strike will happen; it simply gives UAW leadership authority to call a strike.

Can the UAW afford to strike all three Detroit automakers?

Jamie L. LaReau, Detroit Free Press
Wed, August 23, 2023

In 1998, about 9,200 union members at two General Motors components' plants in Flint went on strike. Flint Metal Center made sheet metal stampings used on most of GM's vehicles; Flint East made the electronics.

The strike at those two important plants forced production to stop at nearly 30 other GM assembly plants and 100 parts plants across North America. Nearly 193,000 GM hourly workers were then laid off and those nonstriking members collected unemployment benefits. The 9,200 strikers were paid from the union's then-$700 million strike fund.

Striking United Auto Workers union workers demonstrate in front of the General Motors Corp. Metal Fabricating Plant on June 10, 1998, in Flint, Mich., as an auto transport truck passes. Nearly 3,400 hourly UAW employees went on strike Friday, June 5, l998 forcing the various GM plants in North America to shut down due to a lack of parts.

That strategy of using key component plants to take down other plants meant the strike could last long (54 days in this case) and cost the union less compared with taking all 202,200 workers off the line and paying them from the strike fund. The strike and shutdowns cost GM about $2 billion in lost profits, according to an article in MLive.

"It was far less costly to the union, but inflicted considerable pain to General Motors, not as painful as a complete shutdown, but it worked," said Harley Shaiken, professor emeritus at the University of California, Berkeley.

That plan or something similar could be an option this year if the UAW decides to strike one or all of the Detroit automakers next month, experts said. If the tactic is employed, "It can bring down the system and ... this could be a very, very serious situation," said Marick Masters, a business professor and labor expert at Wayne State University.

A United Auto Workers flag flies on a truck outside General Motors' Flint Metal Center in Flint, Mich., on June 17, 1998. A rally was held at the plant where the workers walked out on June 5 in protest of staffing levels, health and safety issues and subcontracting issues.

Labor watchdogs list several tactics the union could take if it strikes. The key for union leaders would be to find the strategy that will inflict the most pain on the company while doing the least damage to the union's $825 million strike fund. For the automakers, it means being prepared to mitigate the damage from a number of scenarios.
Strike authorization vote: Turnout matters

The United Auto Workers declined to comment for this article. In a statement to the Detroit Free Press, President Shawn Fain said, "The UAW does not discuss strike strategy."

Fain also does not discuss the strike fund and how long it could support paying $500 a week to some 150,000 UAW members at GM, Ford Motor Co. and Stellantis, which owns Jeep, Ram, Chrysler, Dodge and Fiat, if it came to that. When asked about the strike fund's ability to fund such a strike at a rally Sunday, he told media that the workforce and the union are prepared to do what needs to be done to get a fair contract.

UAW President Shawn Fain speaks with media during the shift change at the GM Factory ZERO Detroit-Hamtramck Assembly Center in Detroit on July 12, 2023. The UAW will be starting contract talks with management this week.

This week, UAW members at the Detroit Three are being asked to give union leaders the OK to call for a strike. Bargainers continue to negotiate as they come up against the Detroit Three's contract expiration at 11:59 p.m. on Sept. 14.

The strike authorization vote is usually a formality but this year’s heated rhetoric adds more significance to the process. The automakers and the union leaders are watching the vote turnout as an indicator of strike enthusiasm, labor experts said.

"The rallies and the strike vote allow the UAW to collect data as to how willing the workers are to go on strike and that will be calibrated into the union's strike strategy," Masters said. "And, if there is reluctance, that will have an impact on how hard they push these bargaining demands."

The strike authorization results are expected later this week. If voter turnout is high for something that is considered a foregone conclusion, it means the membership is engaged and ready to walk, Shaiken said. That alone could be enough to win a good contract because the companies won't want a strike. For automakers, in today's competitive world, lost sales to imports or competitors like Tesla during a strike are sales they may never get back, he said.

Strike scenario No. 1: Total Conflict

If the automakers won't meet the demands of the UAW, which include wage raises, cost-of-living adjustments, shorter work weeks, pension benefits and more, here are a few strategies the union can deploy in the event of a strike: The first being the "total conflict" approach.

" 'We’re going out on strike across the board and nobody is going to make another automobile at our plants until this is resolved.' That’s maximum pain on both sides of the bargaining table," said Erik Gordon, a business professor at Ross School of Business at University of Michigan. "The idea is, 'We’re going to bring the industry to its knees.' "

Erik Gordon, University of Michigan Ross School of Business professor.

With that approach, Gordon said the automakers could probably last longer than the union because they have more money. But Shaiken added that the broader economic impact could hurt ancillary companies such as smaller suppliers to automakers who could be forced out of business in a prolonged strike against all three car companies.

If all of the nearly 150,000 U.S. union autoworkers at the Detroit Three went on strike, at $500 a week in strike pay, it would cost the union about $75 million a week and six weeks would eat up $450 million — about half the strike fund. That would not include the cost of paying for medical insurance, which is hard to calculate, Masters said, because some workers might be covered by a spouse's insurance. But he estimates medical could add another $100 million in costs over six weeks. The UAW website says the union will cover medical costs and prescription drugs during a strike if the automaker discontinues coverage.

Also, the union would lose a big part of its revenue because all those striking workers would not be paying dues while on strike.

"The cost is higher but they hope, by maximum impact, the strike would be shorter," Masters said of this strategy. "It’s a risk."

The other pain point, Gordon noted, is "although the UAW workers might say they want to strike and they might have saved up for a strike, after you go eight weeks on $500 a week, you realize that — apart from having trouble paying your bills — that new fishing boat you were going to buy, you’re not going to buy now. That vacation you were going to take, you're not going to take it."

Scenario No. 2: The traditional approach

The traditional approach means, about a week before the contract deadline, the UAW selects a target company, usually an automaker they believe will give way on the union's most important issues. If they have a strike, they strike that company only.

This is the tactic the UAW took in 2019 when it went on strike against GM for 40 days. The six-week work stoppage cost GM $3.6 billion and had broad impact across the industry. The UAW paid nearly $81 million in benefits to striking workers.

Strikers walk the line at GM Romulus Powertrain, Monday, Oct. 14, 2019.

Shaiken said even a traditional strike causes economic damage to both sides, but it is less costly than striking multiple companies. For example, if Ford were to be the target, the UAW would be funding 57,000 strikers at about $28.5 million a week (about $171 million over six weeks), not including health care costs. In 2019, GM cut off its health care coverage for strikers, putting those costs in the hands of the union. But the negative public image of doing so prompted GM to reinstate health care coverage about a week later.

Shaiken expects the union would go this route because if they don’t, "Lost sales go to nonunion carmakers and those sales may not be coming back. No. 2, it is far more costly to the UAW to be paying $500 to 150,000 workers, that’s $75 million a week. Third, (in a strike against all three) you're talking 2% of the gross domestic product because you’ve got suppliers who have to start laying off workers, you’ve got level two or level three suppliers that are more vulnerable to bankruptcies and you open the possibility to federal intervention.”

Finally, "Once you get the first company, then the others do fall in line," Shaiken said. "So doing a target is more effective."

A variation of scenario 2

But Gordon said this classic option above isn't consistent with Fain's messaging to date.

“Fain has positioned the contract bargaining as more of a class war than, ‘Just give us these economics,’ “ Gordon said. “It’s ‘Management is the enemy, management is greedy, look how much more management makes than you do.’ So if you pick one company, are you saying that GM’s management is more reviled than Stellantis’ management or Ford’s management is?”

Masters suggests a variation of the traditional approach could be in play, which could be striking one automaker completely and some key parts of the others — enough to hurt the other two, but not be as costly to the union.

"All of these scenarios have implications for solidarity and draining the strike fund so they’re going to take all these things and weight them and come up with an algorithm to devise a strategy that will work best for them," Masters said.
Scenario No. 3: Back to 1998

Labor experts said an "asymmetric" attack is another option. That's the 1998 model: Strike some key component plants across GM, Ford and Stellantis and fund those smaller strikes out of the strike fund as other employees continue to pay into the strike fund, keeping revenue flowing. Then, when other plants must be idled because they can't get key components, those workers get paid by unemployment and possibly sub pay by the company.

Fred Johnson, right, an automatic press operator at the Flint Metal Center, and Richard Stevens, left, a quality control technician, rally passing drivers to honk their horns outside the center in Flint, Mich., on July 13, 1998.

There is just one problem with that, Gordon said.

"Figuring out which key component plants of the automaker — because it can’t be a supplier — they will hit is complicated," Gordon said. “What is the part that is most common across the carmaker's line that you can’t get from a supplier? Engines? Maybe a stamping plant? You have to figure out what appears in an entire platform that would hurt them."

A more doable option would be to strike an automaker's plants that make its biggest sellers.

“Shut down the plants making the pickup trucks and stay on the line in the plants making the cars," Gordon said. "It’s good tactic, but not as good as the shutdown of selective components. But it might be easier to do because you know how to shut down the plants building the F-150, the Silverado or RAMs. That’s doable.”

Masters said Fain is keeping the automakers off balance by not following tradition so far. He forewent the traditional handshake, for example, when negotiations officially started last month.

“One of the things that’s impressed me most about Shawn Fain is he’s keeping all his options open, I don’t think they want the companies to know precisely what they’re going to do whereas in the past the companies kind of knew what they were going to do," Masters said.

UAW president Shawn Fain talks to Ford workers outside of Ford's Michigan Assembly Plant in Wayne on Wednesday, July 12, 2023.

He said striking key component plants or plants where the bestselling vehicles are made, might be the best options in terms of managing union costs and balancing impact, but "the question is how are the companies prepared to deal with that? You can easily imagine a scenario where key strikes at key locals could be very impactful.”

More: GM confirms future wage hike for UAW members, but other demands 'threaten' company health

More: 2 auto unions to bargain with the Detroit 3 at same time, each want a share of profits

Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.

This article originally appeared on Detroit Free Press: How the UAW could strike the Detroit 3 without draining strike funds