In this third Supply Chain Matters reader update, we highlight the ongoing supply chain and manufacturing implications of the labor strike involving the three U.S. unionized auto companies.


The UAW has elected a two-fold strategy. The existing 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, parts, or production networks.

Two weeks ago, after ongoing labor contract renewal talks failed to reach an agreement by midnight, the United Auto Workers (UAW) labor union 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.

Last Friday, 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.

Now, a reported 18,000 UAW workers out of a total of 146,000 in membership are involved in this ongoing labor strike disruption.

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.


Latest Developments

Throughout this past week, while contract negotiations reportedly continued, the rhetoric of the labor union, and the communicated frustrations among the three auto makers continued to make business headlines. A new and likely troubling element has been reports of sporadic violence and personal injury involving some union and non-union workers at various site picket lines.

President Joe Biden made an unprecedented decision to add his voice by visiting striking workers earlier in the week and briefly participating in a picket line. One the President’s statements was the demands of UAW workers for a 40 percent wage hike over the life of a new multi-year contract was not unreasonable given the profits of U.S, automakers. Former President and now candidate Donald Trump, not to be undone, visited a non-union facility and ranted that if union workers voted for him, there would be no need for EV vehicles. Thus is the continued political backdrop of these talks.

According to reporting from business broadcasting network CNBC, “Tensions are rising and accusations are flying between the Detroit automakers and United Auto Workers as the union threatens to expand U.S. plant strikes.”

Noted in this report is that GM and Stellantis have grown increasingly frustrated by a lack of participation from the UAW President along with perceptions delays on the labor union in responding with counterproposals from added offers being made.

As we pen this posting on mid-afternoon Friday, the UAW’s newest targets are reported to be a 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 involve an added 7,000 workers. UAW President Sean Fein cited Stellantis as making significant progress on union demands, and thus would be spared in this latest union targeting. In its reporting, The Wall Street Journal indicated that the tensions related to Ford was an announced decision to pause construction of a planned new battery plant in Michigan, citing the ability to remain competitive.

As expected, with the existence of this industry’s just-in-time inventory replenishment planning, the implications of the work stoppages are cascading across individual automaker’s supply networks. The Wall Street Journal pointed to disclosures from automakers indicating that roughly an added 6,000 workers are now not working or at risk of layoff because of these cascading effects of work stoppages.


Industry Wide Implications At Stake

As noted in our prior part two update related to this disruption, these talks are significant and groundbreaking for the automotive industry which has embarked on a rather expensive and risk laden transformation in regard to development and production of more electric or hybrid powered vehicles that include batteries and electronic components vs. complex engines and transmissions.

Specifically for the U.S. automotive supply chain footprint is the unique nature of existing auto assembly and supplier production sites where foreign based auto manufacturers have elected to primarily locate production within U.S. southern states where right to work and non-union labor laws are practiced. Industry data points to a $10 to $15 per hour difference on average in total direct labor costs among non-union vs. UAW contracted labor with production in the predominate U.S. Midwest sector. Direct labor costs for Tesla’s U.S. facilities average $45 to $50 per hour on a fully loaded basis.

In our last update, we sought out the perspectives of observer and published author on labor union strategy with Professor David Jacobs from American Univerisity’s Kogod School of Business. In this update we would further draw reader attention to a published report from Bloomberg that provides highlights of interviews with a sampling of UAW workers regarding their perspectives on this strike action. While readers can have their own impressions, upon reading, we garnered the sense that union workers indeed have a sense and viewpoint related to the implications of the industry’s transformation, but also in their needs in providing for their everyday expenses and in the sharing of the benefits of industry profits.

As for the duration of these strike actions, our sense is that without some meaningful progress and more active two-way communication occurring over the coming week, both sides are likely to dig in their heels.

From our lens, while there are some signs of compromise appearing, the need is to step up the negotiations and ratchet down the bluster and the uncertainty as to what facilities are next for targeting.

There is 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.

There will come a point where automakers will take more direct of the uncertainty of disruption for the sake of each company’s extended supplier and just-in-time inventory management networks, not to mention long term competitiveness.

The notions of win-lose vs. win-win in contract negotiations is real for all parties, and for the industry itself.

Stay tuned.

Bob Ferrari

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