In this fifth Supply Chain Matters weekly reader update, we highlight the latest developments related to ongoing UAW labor strike involving the big three U.S. auto companies.

More Significant Development

As noted in last week’s update, the UAW labor union has been utilizing a novel work stoppage strategy that targets each of the three individual U.S. automakers production facilities based on the union’s perception of whether weekly progress is being made in individual negotiations. The cadence had been updated announcements from UAW head Shawn Fain on Friday of each week via a Facebook Live forum.

This past week provided a different and unexpected set of events, at least for Ford Motor Company.

On Wednesday, the labor union surprised Ford Motor with the announcement that 8,700 assembly line workers at Ford’s largest assembly plant located in Kentucky, and reportedly producer of the automaker’s most profitable vehicles, would not report for the evening work shift.

The UAW President indicated in a statement: “We have been crystal clear, and we have waited long enough, but Ford has not gotten the message. It’s time for a fair contract at Ford and the rest of the Big Three. If they can’t understand that after four weeks, the 8,700 workers shutting down this extremely profitable plant will help them understand it.”

Ford followed up with a statement indicating: “The UAW leadership’s decision to reject this record contract offer – which the UAW has publicly described as the best offer on the table – and strike Kentucky Truck Plant, carries serious consequences for our workforce, suppliers, dealers and commercial customers.

In this morning’s Friday update, the UAW indicated that there would be no additional work stoppage actions targeted for General Motors or Stellantis facilities. However, the UAW President reaffirmed a new disruption tactic: “We’re entering a new phase of this fight, and it demands a new approach. We are prepared at any time to call on more locals to stand up and walk out.

There have been a number of follow on published reports indicating what led up to this latest escalation and action. By our assessment, it would seem from the reporting that the ongoing negotiations specifically with Ford have focused on enhanced retirement benefits and whether certain new joint-venture EV battery production facilities can be included in a master labor agreement. Ford has elected to partner with South Korean based battery manufacturer SK Innovation, in building and the joint operating of three battery production facilities, two in Kentucky and one in Tennessee. Both of these U.S. states support to right-to-work laws that make it very difficult for labor unions to organize workers. Hence are the likely sensitivities to the Ford negotiations.

Parallel Developments

Other parallel developments have occurred since our last update.

Upwards of 4,000 UAW workers at Volvo’s Mack truck manufacturing facilities in Florida, Maryland and Pennsylvania went on strike after rejecting a tentative five year contract agreement that included a reported 19 percent wage increase. Reportedly, the tentative labor agreement allowed for the contract offer to be put to a vote by union workers. According to reporting by The Wall Street Journal, Mack President Stephen Roy indicated the truck manufacturer’s disappointment for the contract rejection, calling the move unnecessary.

A published report from Bloomberg this week that was titled: Carmakers Say They Can’t Afford UAW Demands, While Paying CEO’s $1 Billion, makes the argument that both sides in these negotiations have merit in their arguments. The UAW continually indicates that corporate greed keeps workers from winning a fair share of the monetary benefits of increased revenues and profits. The report highlights 10 years of data dating back to 2010 indicating that the 10 CEO’s of the three U.S. automakers have collected more than $1 billion in total compensation, while wages of U.S. auto workers, unionized and non-unionized, declined 17 percent in that same time period. There are stated qualifiers in that CEO pay is weighted more toward bonus performance, value of stock awards and separation benefits. The further notion is cited data from the Bureau of Labor Statistics indicating that since 2003, the average hourly wage for U.S. auto workers declined upwards of 30 percent as a result of the rise of non-unionized production across U.S. Southern States and the UAW agreeing to a two-tiered wage system for entry level workers in 2007 in the midst of the bankruptcy fears of two of these automakers.

The stated takeaway from this Bloomberg report is that with fewer overall jobs to go around in the industry’s transformation to EV’s, the union seeks forms of guarantees for worker job security. With that stated, the report concludes: “But reversing the declining fortune of the U.S. auto worker will be a tall order.”


Added Perspective

As we noted in our last Supply Chain Matters update, these negotiations have reached 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.”

Our perspective has apparently played out, and with this week’s declared escalation by the labor union, a tentative agreement does not seem to be near for any of the three automakers, especially the Ford negotiations.  Thus, as this disruption passes its 29th day, the implication to the industry’s extended supply and dealer networks take on more significance and cascading impacts. The combination of industry transformation to EV supply and production networks facilitated by U.S. government incentives,  coupled with geographical differences in labor union perspectives across U.S. regions is indeed a tall order to resolve.

The need for more creative thinking toward mechanisms for shared benefits looms large.


Bob Ferrari

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