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UAW expands strike against Stellantis, hitting pickup truck plant

Published 10/23/2023, 10:32 AM
Updated 10/23/2023, 03:16 PM
© Reuters. FILE PHOTO: The logo of Stellantis is seen on a company's building in Velizy-Villacoublay near Paris, France, February 23, 2022. REUTERS/Gonzalo Fuentes/File Photo

By David Shepardson and Joseph White

WASHINGTON/DETROIT -The United Auto Workers (UAW) union went on strike at Chrysler-parent Stellantis (NYSE:STLA)'s largest assembly plant on Monday, hitting the automaker's profitable RAM 1500 pickup truck production in a major expansion of the more than month-old strike.

The UAW, which is striking the three big Detroit automakers, blamed the latest walkout by 6,800 workers at the Michigan plant on Stellantis having the "worst proposal" on the table on wage increases, temporary worker pay and conversion to full time status as well as cost-of-living adjustments.

More than 40,000 union members working at Ford (NYSE:F), General Motors (NYSE:GM) and Stellantis are now on strike since the walkouts began on Sept. 15 - about 27% of the Detroit Three automakers' total workforce - as part of an unusual campaign of simultaneous strikes.

Stellantis said it is "outraged" over the expanded strike after presenting a more generous offer on Thursday.

"We left the bargaining table expecting a counter-proposal, but have been waiting for one ever since," the company said. "The UAW’s continued disturbing strategy of 'wounding' all the Detroit Three will have long-lasting consequences. With every decision to strike, the UAW sacrifices domestic market share to non-union competition."

The UAW is expected to make new proposals to General Motors and Stellantis soon, a source familiar with the bargaining negotiations said Monday.

The union initially demanded a 40% wage hike over four-and-a-half years, including a 20% immediate increase, improvements in benefits, as well as covering EV battery plant workers under union agreements. Stellantis said it has raised its offer to include a 23% wage hike over the course of the contract.

The UAW's move against Sterling Heights is similar to its recent walkout from Ford's Kentucky Truck assembly plant, its most profitable single operation globally.

"Expanding it to the pickup trucks is really at the heart of what these companies produce," said Tim Ghriskey, a senior investment strategist at Ingalls & Snyder, which has owned auto stocks in the past.

Wells Fargo analyst Colin Langan estimated that production losses at the truck plant will cost Stellantis $110 million in operating earnings per week, doubling the automaker's overall hit from the strikes to about $200 million a week.

The plant accounted for about 16% of North American production for Stellantis and is proportional to the strike against Ford's Kentucky plant in terms of production, said Marick Masters, professor of business at Wayne State University.

'GOOD NEWS'

The UAW and the automakers are also bargaining over future wages and unionization policies for electric vehicle battery plants planned by joint ventures of the automakers and their South Korean battery partners.

Those talks are complicated, because the ventures are separate companies and the automakers do not have to cover them under their master UAW contracts under U.S. labor law.

United Auto Workers President Shawn Fain met workers at the Michigan plant on Monday as they left, shaking hands and handing out picket signs, according to a union post on X, the social media site formerly known as Twitter.

Fain on Friday warned of more walkouts unless the automakers improved their compensation offers, insisting they can afford more than the record packages on the table. He has acknowledged some union members want to vote on the offers in hand, but has urged them not to give in to what he called "fear, uncertainty, doubt and division" sowed by the companies.

Arthur Wheaton, director of labor studies at Cornell University, said that among the three automakers, Stellantis was the toughest one for the union to strike a deal with.

"It's good news they did not say, 'We're not even close. We're going to strike GM and Ford,'" Wheaton said.

© Reuters. FILE PHOTO: United Auto Workers president Shawn Fain meets with striking UAW members from the General Motors Lansing Delta Plant, as they picket in Delta Township, Michigan U.S.  September 29, 2023.    REUTERS/Rebecca Cook/File Photo

Bill Ford, company chair and great-grandson of founder Henry Ford, has warned the strike was taking a toll on the automaker and the U.S. economy. After five week of strikes, the economic losses for the auto industry had crossed $9.3 billion, Anderson Economic Group LLC estimated on Monday.

Stellantis shares closed up 2.2% in Milan trading. Ford and GM were flat in New York.

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