By David Shepardson and Joseph White
(Reuters) – The United Auto Workers (UAW) union on Tuesday struck a General Motors assembly plant in Texas that builds the U.S. automaker’s profitable full-size sport utility vehicles, in another significant expansion of the strike.
By striking GM’s Arlington assembly plant, home to GM’s profitable Chevy Tahoe, Chevy Suburban, GMC Yukon and Cadillac Escalade large SUVs, the UAW has now shut down three of the most profitable auto factories in the world. Workers at Ford’s Kentucky Truck heavy-duty pickup factory and Chrysler-owner Stellantis’ Ram pickup plant in Sterling Heights, Michigan, are already on picket lines.
The union’s strategy of targeted strikes unfolded over 40 days has throttled billions in revenue for the Detroit Three while requiring fewer than half the 150,000 UAW members at the companies to forgo pay and walk picket lines.
GM earlier on Tuesday reported a stronger-than-expected third-quarter profit but withdrew its full-year financial forecast due to the uncertainty of the strike.
“Another record quarter, another record year. As we’ve said for months: record profits equal record contracts,” said UAW President Shawn Fain. “It’s time GM workers, and the whole working class, get their fair share.”
On Friday, Fain indicated that a settlement could be near but that negotiations could get tougher, calling talks before a deal “the hardest part of a strike.”
It is not clear how far apart the union and the automakers are. Fain on Friday said the Detroit Three had converged on a 23% wage hike offer and made progress on other issues.
But he told UAW members “there is more to be won.” GM and Ford had said additional cost-of-living increases already take their total compensation offers to over 30%.
Fain’s decision to push the Detroit Three for even more than the record wage and benefit packages they’ve offered is a gamble. Ford has said it is “at the limit” of what it can afford without undermining its ability to compete with non-union automakers.
GM and Stellantis have so far declined to improve their offers since last week. So far, none of the automakers has declared a formal impasse. But the companies have not ruled it out.
The hit to Detroit Three profits also could mean smaller profit sharing checks for UAW workers at the end of the year.
GM said before the Arlington walkout that it was losing $200 million a week. In fiscal 2019, GM’s fourth-quarter profit took a $3.6 billion hit from a 40-day UAW strike.
“We are disappointed by the escalation of this unnecessary and irresponsible strike,” GM said in a statement Tuesday.
GM Chief Executive Mary Barra told investors on Tuesday the company “will not agree to a contract that isn’t responsible to our employees and our shareholders.”
Company executives have said they are increasingly concerned about small and medium-sized suppliers that could run into financial distress if the UAW walkouts slash their cash flow.
Even larger suppliers, including Corning and Illinois Tool Works are warning that Detroit’s labor clash will hurt their finances.
After five week of strikes, the economic losses for the auto industry had crossed $9.3 billion, Anderson Economic Group LLC estimated on Monday.
The UAW and the automakers are also bargaining over future wages and unionization policies for electric vehicle battery plants planned by joint ventures of the automakers and their South Korean battery partners.
Those talks are complicated, because the ventures are separate companies and the automakers do not have to cover them under their master UAW contracts under U.S. labor law.
Shares in GM, Ford and Stellantis were little changed on Tuesday, reflecting Wall Street’s view that the UAW talks may be entering the end game.
“The union is playing its cards with the goal of a settlement sooner rather than later,” University of California Berkeley labor professor Harley Shaiken said. “Pulling out the profitable plants is meant to hasten the settlement.”
(Reporting by David Shepardson and Joe White; Additional reporting bys Ben Klayman in Detroit; Writing by Sayantani Ghosh; Editing by Chizu Nomiyama, Peter Henderson and Jonathan Oatis)
