The Detroit 3 Are Not Alike
A C-Suite Quick Take
The UAW decision to expand the strikes at GM and Stellantis but not at Ford is only one sign that negotiations are fundamentally different across the Detroit 3.
Ford’s deal in Canada shows that it is willing to make numerous strategic concessions, in addition to granting major wage hikes.
Despite the progress at Ford, a contract settlement is highly unlikely in the near future due to union politics and demands.
Weekly expansion of the strikes means that costs will grow substantially over time and will be painful for GM and Stellantis even after Ford ultimately settles.
Suppliers should prepare for a long strike and pay close attention to which products the strike will affect.
The UAW on Friday continued its unprecedented tactics by striking the parts distribution centers at GM and Stellantis while sparing those at Ford. Shawn Fain also revealed what he said were a number of major concessions that Ford had offered the UAW, continuing his public bargaining.
The different treatment of Ford highlights an underreported feature of this year’s negotiations – negotiations with each of the Detroit 3 have important differences that will add further complexity to the already difficult path to a final agreement. Ford has the most UAW members (despite a much smaller market share than GM) and has long viewed its better relationship with the UAW as a competitive advantage over GM. The lead UAW negotiator facing Ford is the most experienced bargainer – Chuck Browning – who was a supporter of the candidate who lost to Shawn Fain in the election, unlike his UAW counterparts bargaining with GM and Stellantis. It is not surprising that Ford is closer to a deal than GM or Stellantis. Ford reached an agreement with the Canadian union (ratified Sunday) that included both significant wage increases and major concessions on strategic issues like COLA, wage grow-ins, plant closings, pay during plant transitions, and defined-benefit pensions. In any other year, a Ford deal with the UAW would already have been reached, but the union’s politics and demands make that impossible. For example, Fain must worry about Browning running against him next time.
Stellantis is well behind GM and Ford on EVs and wants to restructure its US operations including shrinking or closing its Belvedere plant. It makes greater use of temporary workers and has a younger workforce. It is also primarily a European company that does not have a good relationship with the UAW, particularly Shawn Fain. It might demand visible changes in any “pattern” set by Ford, leading to escalated conflict.
The actions that Shawn Fain has taken so far have maximized the visibility of the strikes while minimizing their impact on UAW members, the UAW strike fund, suppliers, dealers, and the Detroit 3. For example, GM was able to operate its distribution centers to get parts needed by customers during the 2019 strike with salaried workers and will undoubtedly do so again. The “shots across the bow” Fain has fired help build political support - as shown by President Biden’s appearance on the picket line - while allowing room for weekly escalations to come. Fain likely needs the strike even at Ford to go on longer than the 40-day 2019 strike to demonstrate both his toughness and that every possible concession has been extracted.
Moreover, unlike past negotiations, getting from a Ford pattern to a final agreement will be painful for GM, Stellantis, and their workers and suppliers. The UAW will be on strike against GM and Stellantis during the Ford ratification process and any subsequent bargaining and ratification. Despite the progress at Ford and the slow escalation, it still looks like a very long autumn for the industry in short- and long-term financial costs and in reputational damage. A leaked message from an aide to Fain talks about “keeping [the Detroit 3] wounded for months”!
Suppliers, particularly to Stellantis, should take strong actions to manage cash and watch closely which products are affected. It will get much worse before the strikes end.