UAW expected to strike tonight against Detroit automakers if deal isn’t reached

As the United Auto Workers union is poised to go on a targeted strike against Detroit’s three biggest automakers at midnight Friday morning, Biden administration officials are preparing economic measures to protect suppliers to the auto industry from long-term damage, according to three people aware of internal conversations.

While the administration is not expected to intervene in a strike, Biden aides are worried that a protracted walkout could wipe out the thousands of suppliers that depend on the auto business from the three key automakers, Ford, General Motors and Stellantis, said the people, who spoke on the condition of anonymity to describe private deliberations. Widespread failure of these smaller supplier firms — which number as many as 5,600 — could impede the broader U.S. auto supply chain even after the possible strike ends, according to the people.

What are the UAW strike demands? Here are issues amid negotiations

It is unclear what form the aid would take, but one option would be for the Labor Department to provide grants to assist workers at firms affected by a strike, two of the people said. Another option could be for the Small Business Administration to provide favorable loans to these firms. The discussions about these measures are preliminary, and talks remain fluid.

“The administration wants to be sure to do what it can to protect the Detroit supply chains,” one administration ally said. This person also spoke on the condition of anonymity to describe private conversations. “They have to worry about how some of the less well-capitalized firms could be at risk.”

A White House spokeswoman declined to comment on any internal planning.

If the UAW goes on strike, it would be the first against an auto company since 2019. Talks are tense, even as the auto companies have significantly improved their wage offers to union workers. As of Wednesday night, Ford was proposing a 20 percent raise over 4½ years, up from its initial offer of 9 percent. General Motors was offering an 18 percent raise over 4½ years, up from 10 percent earlier. And Stellantis, the parent company of Jeep and Chrysler, was offering 17.5 percent raises over that same time period, up from 14.5 percent.

UAW president Shawn Fain called the offers inadequate, given that inflation has soared in recent years while automaker profits and chief executive pay have ballooned.

“We are seeing movement from the companies, but they’re still not willing to agree on the kinds of raises that will make up for inflation on top of decades of falling wages,” he said. In recent days, the UAW has been demanding 36 percent raises over four years, down from an initial demand of 40 percent, according to people familiar with the talks.

GM on Thursday said it had made a new offer with the aim of avoiding a strike. “Any disruption would negatively impact our employees and customers, and would have an immediate ripple effect across our communities,” the company said.

Fain on Wednesday said a strike would begin in a “select few” facilities and factories but that workers at other facilities at Ford, General Motors and Stellantis should be ready to strike at a moment’s notice if called upon.

The union will keep the companies guessing about which factories could be hit, he said.

The UAW strike could be a tipping point for the U.S. labor movement

“This is going to create confusion for the companies. It’s going to keep them guessing on what might happen next, and it’s going to turbocharge the power of our negotiators,” Fain said in a Facebook Live address to union members on Wednesday.

Any strike, particularly if it drags on, would destabilize an industry that makes up about 3 percent of the nation’s gross domestic product. The UAW’s 150,000 automotive members produce nearly half of the light vehicles manufactured in the United States, according to analytics firm GlobalData.

A strike that significantly hurts auto production would quickly ripple out to affect suppliers and other businesses in auto-manufacturing communities. As auto factories shut down, those businesses would stop ordering parts. Many auto parts suppliers are still trying to recover from long shutdowns during the covid pandemic and would be clobbered by another disruption, analysts say.

“If there is a strike, the impact will be felt much more quickly than people realize, and I am worried about those consequences,” Rep. Debbie Dingell (D-Mich.) said. “For a lot of the suppliers, their profit margins are not very big. A strike will have real economic consequences very quickly, and we cannot leave the workers behind.”

Dean Baker, a White House ally and economist at the Center for Economic and Policy Research, a left-leaning think tank, said there are limits to what the administration could do in an extended strike. But it makes sense for the administration to consider measures to help protect Detroit’s suppliers where it can, he said.

“Probably the best thing they can do is to try to arrange some bridge loans. I’m sure they’re looking into that as an option,” Baker said. “If it’s six months, it’s hard to see how a lot of them get through it. But if there’s a two- or three- or four-week strike, a loan could maybe go a long way to keeping them in business.”

The automakers have stressed that they are striving to negotiate a fair deal, with bigger wage hikes than they have offered in years. But they have said they can’t meet all of the union’s demands without hobbling their future investment and growth.

Ford chief executive Jim Farley, who has kept his public remarks fairly positive throughout the talks, turned more critical after Fain’s address. He said that the UAW was staging “PR events” and not actually responding to Ford’s latest offer. He added that at the last minute Fain didn’t show up for talks with Farley and Ford executive chair Bill Ford on Tuesday.

“Nevertheless, Bill and I laid out a historically generous offer to the UAW Ford bargaining team because we listened to the UAW demands and we care about our employees,” Farley said in a statement Wednesday night. In addition to a wage increase, the offer includes some cost-of-living adjustments to protect against inflation: up to five weeks of paid vacation, 17 paid holidays and health-care coverage with some of the lowest employee cost-sharing in the country, he said.

“The first we learned president Fain received the offer was on Facebook Live this evening,” Farley said. “The future of our industry is at stake. Let’s do everything we can to avert a disastrous outcome.”

Stellantis on Wednesday said it was “still awaiting the UAW’s response to the offer we presented yesterday.” It added: “Our focus remains on bargaining in good faith to have a tentative agreement on the table before the collective bargaining agreement expires.”

Fain is a fiery leader who won the UAW presidency by convincing members that the union had been too complacent and cozy with industry for too long.

He has made bigger demands in these contract talks than the union has attempted in decades, including a 32-hour workweek and the restoration of defined-benefit pensions and retiree health care for all workers.

The automakers haven’t agreed to those demands but have made other concessions. All three companies are offering to allow workers to progress to the highest wage level at a faster rate than in the past.

They’ve also made concessions on temporary workers, who make far less than full-time workers do and often get stuck in temp status for years. Ford is proposing converting all of its current temporary workers to full-time status after 90 days of work, while GM and Stellantis are offering an immediate 20 percent raise over temps’ starting wage, to $20 an hour.

The automakers have argued that a big hike in their labor costs, or a prolonged shutdown, would undermine their efforts to scale up production of electric vehicles, a major undertaking that is costing the global auto industry tens of billions of dollars.

Fain and the UAW are planning a rally with Sen. Bernie Sanders (I-Vt.), a longtime supporter of the union, Friday evening in Detroit.

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