UAW Escalation Creates a Fork in the Road
UAW Escalation Creates a Fork in the Road
A C-Suite Quick Take
The UAW’s decision to strike Ford’s Kentucky truck plant takes the UAW strikes to their next stage. The UAW is at a strategic fork in the road.
Ford’s Kentucky plant is its largest and most profitable. The UAW is no longer firing shots across the bow.
Ford did nothing to directly provoke the escalation. Shawn Fain walked out a few minutes into a major bargaining session.
The UAW leadership faces a decision: 1) Focus on Ford, escalating until it is confident that it can persuade Ford workers that the best possible deal has been achieved, or 2) Put maximum pressure on all 3 companies to try to provoke a bidding war.
Focusing on Ford would lead to a better outcome for both UAW members and the Detroit 3.
It remains unlikely that there will be a tentative settlement at any of the Detroit 3 before November.
The constructive relationship between Ford and the UAW appears to have fallen apart.
Shawn Fain continues to use “class warfare” rhetoric in public statements. This may have consequences beyond the Detroit 3.
The UAW’s decision to strike Ford’s Kentucky truck plant represents a dramatic escalation. Until this moment, all of the Detroit 3 were still making money, though less than if there were no strike. But the Kentucky plant is not just Ford’s biggest; it produces Ford’s largest and most profitable pickup trucks and SUVs, and its shutdown will cost Ford about $400 million in lost profits per week. Considering the other two plants that have been shut down, Ford is likely only breaking even now.
Why did the UAW escalate? There is no public evidence of any Ford action to provoke an escalation. According to reports, Ford went into a major bargaining session expecting to discuss the joint-venture battery plants that will open soon, knowing that the UAW wants to cover the yet-to-be-hired workers under the Ford National Agreement. Instead, shortly after starting, Shawn Fain walked out and announced the Kentucky shutdown. The Kentucky plant likely represents the start of the UAW’s push toward a tentative agreement.
Before reaching any agreement with one of the Detroit 3, Shawn Fain must visibly demonstrate both his toughness and that he has extracted the best possible deal. The only way to do that is to escalate the strike against that company, including the full-size trucks and SUVs. To be credible, there has to be further escalation; time must pass and additional Ford truck plants must shut down before an agreement with Ford can be announced.
The UAW faces two alternative approaches toward a tentative deal:
It could make Ford the de facto target of bargaining. This would mean focusing on Ford, with a series of escalations, and trying to drive to an agreement at the end of October. Once an agreement has been reached and ratified, then the UAW would move on to Stellantis and GM, demanding that they follow the Ford pattern.
The UAW could try to keep playing off the Detroit 3 against each other, shutting down truck plants at GM and Stellantis and seeing which company offered the best deal.
Based on what is public, targeting Ford is likely to be best for both UAW members and the Detroit 3. The UAW has already extracted the concession on the battery plant representation from GM that they can leverage with Ford. Ford has already made strategic concessions to the UAW. Ratcheting up the pressure on Ford will likely satisfy the UAW members at all 3 companies of UAW toughness while managing the impact on the UAW strike fund. It will also allow the UAW to finish bargaining with Stellantis and GM with plenty of leverage but without the time pressure that walking out now at full-size truck facilities at those companies would create. Most importantly, pressuring all 3 companies simultaneously at this point would create a much more volatile environment that would jeopardize ratification and a successful end game for Shawn Fain.
Regardless of the path the UAW chooses, it cannot settle too quickly. Most members are still working, the UAW will not have achieved all of its objectives, and the members may think the companies could be pressured to offer more. A failed ratification would be far worse for Shawn Fain than a few more weeks of strikes. If a tentative settlement at one company were reached on Halloween, the strike would have lasted longer than the 40-day GM strike in 2019. Settling any sooner than that would be high risk for the UAW leadership.
The animosity between Ford CEO Jim Farley and Shawn Fain seems real. Fain has deliberately insulted Ford at least twice – once by not showing up for an important negotiating session and then by walking out. The escalation at Ford is causing pain with little that Ford can do about it. The special relationship that Ford thought it had with the UAW and thought provided a competitive advantage over GM has collapsed, at least for this contract round.
Shawn Fain has shown no interest in close relationships with the Detroit 3. Instead, he continues to use harsh “class-warfare” language - more frequently and consistently than past UAW leaders - to talk about auto executives, lumping them with the “billionaire class” and accusing them of looking down on both UAW leaders and rank-and-file members. He is playing to the same class resentments that Donald Trump tapped into, but with a genuine working-class edge. He may be positioning himself as a leader of new revitalized, angry union movement. Any company should start preparing, particularly if they are already unionized.