In this fourth Supply Chain Matters reader update, we highlight this week’s developments related to ongoing UAW labor strike involving the big three U.S. auto companies.


The UAW labor union continues to practice a two-fold disruption strategy as a means to rachet up labor contract talks.

For the first time, the ongoing labor disruption includes all three of the U.S. big three automakers with implications to their supply networks vs. prior strategies in targeting just one. Second, rather than a massive strike action, the labor union is instead enacting rolling work stoppages targeted either at individual automakers most popular and profitable car models, or key supply chain links for automakers component supply, various parts, or production networks. The actions serve as tactic to keep individual auto makers unsure as to which facilities might be next for a labor stoppage. The strategy further serves as a method to buffer the dollar impact to the labor union’s worker strike compensation funds, providing the leverage to sustain an elongated strike action.

Three weeks ago, after prior labor contract renewal talks failed to reach an agreement by midnight, the UAW initiated targeted walkouts among select production facilities of Ford Motor, General Motors and Chrysler/Jeep parent Stellantis.

Initially, 12,700 workers walked off their assigned shifts at the Ford Motor vehicle assembly plant that produces the Bronco SUV, a GM Missouri assembly plant producing popular pick-up trucks, and the Stellantis assembly plant producing the branded Jeep Wrangler SUV.

In the second week, upwards of 38 termed parts distribution centers across 20 states were targeted with picket lines. However, Ford Motor facilities were not involved in this added strike action, with UAW President Sean Fein indicating a recognition that this particular automaker was serious about reaching a deal.

In parallel, workers across Ford Motor’s Canadian production facilities avoided a strike action after a tentative three year labor contract agreement was reached after extended hours of negotiation. The Unifor labor union reportedly bargained for higher wages, increased pension benefits and support for workers involved in transition to electric vehicle production needs.

Last Friday the labor union elected to target the Ford Motor assembly plant in Chicago that assembles the Ford Explorer SUV, and a General Motors final assembly plant in Lansing Michigan that assembles the Chevrolet Traverse SUV.  Both facilities included an added 7,000 workers. UAW President Sean Fein cited Stellantis as making significant progress on union demands, and thus at the last minute, was spared for added strike actions.

As expected, with this industry’s just-in-time inventory management practices, the implications of the work stoppages cascading across individual automaker’s tiered supplier networks. Reportedly more than 6,000 workers among various industry suppliers have faced temporary layoff while upwards of 25,000 UAW members walk the picket lines.


Latest Developments

Yesterday, Union leader Shawn Fain pointed to positive progress being made with all three auto makers. He specifically indicated that General Motors agreed to include battery production plants in the UAW national bargaining agreement. However, since certain GM and other automaker’s battery production facilities are set up as joint ventures with Asian based battery suppliers, these suppliers will likely have a voice in the process of workers electing to be represented by the UAW.

From our lens, the disclosure that battery production plants are now part of the negotiations is a positive sign. As the Wall Street Journal reported in its coverage, the termed UAW goal of ‘just transition” is an acknowledgement that worker pay, safety and benefits needs to be addressed in these ongoing multi-year labor contact talks.

As Supply Chain Matters highlighted in a prior posting that Ford Motor announced a temporary suspension in construction of a planned new battery production facility in Michigan pending the outcome of these ongoing labor contract negotiations. However, labor staffing was not the sole determinant of this action but rather a joint partnership with a China based supplier.


Added Perspectives

In last week’s update we stated our view that the duration of these ongoing strike actions would be dependent on a sense of both meaningful progress and more active two-way communication occurring among all sides.

As noted above, this past week provides evidence of progress being made.

That stated, senior executives among the three U.S. based automakers have communicated this week of their belief that the UAW was not showing inclinations of seeking quick resolution of these contract negotiations. GM CEO Mary Barra specifically noted: “It’s clear that there is no real intent to get to an agreement.”

The Wall Street Journal reported on Thursday (Paid subscription) that the labor union’s actions to date have spared the three automakers from noteworthy financial and bottom line impacts. Cited data from Wards Intelligence indicates that the current five production facilities with work stoppages account for about 16 percent of vehicle produced by all three auto makers this year. Once more, the report indicates that the facilities producing the most profitable vehicles, namely full size pick-ups and larger SUV’s, remain open.

There remains the opportunity for both parties to shed past practices and come up with innovative approaches that place workers in the position to be able to share both in the future profits of their employers and plan for the skills impacts and opportunities involved in the transformation to EV and hybrid vehicle production.

All of that stated, our sense is that, entering their fourth week, these negotiations are at a key crossroad. If there are no announcements as to a tentative  agreement being made with any of the three automakers this coming week, then the industry should anticipate further escalation and additional cascading disruption.

A lot is riding on the next several days.

Stay tuned.

Bob Ferrari

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