Steel Products
UAW’s Demands Escalate Potential for Strike
Written by Laura Miller
August 8, 2023
A strike at the Big Three Detroit automakers continues to loom on the horizon, and that potential is increasing as the United Autoworkers (UAW) union is pushing for big changes to labor contracts in the wake of soaring profits from the automakers.
And any work stoppage at the automakers’ facilities could have a major impact on the steel market.
Contract negotiations between the UAW and the Big Three – Ford, General Motors, and Stellantis – began in July. The current contracts are set to expire at 11:59 p.m. on Sept. 14.
The Big Three all recently reported what the UAW called “gaudy” second-quarter earnings.
Ford’s Q2 net income of $1.9 billion was nearly triple that of a year ago, while GM’s adjusted Q2 earnings of $3.2 billion were up 39% over last year. And Stellantis’ profits of $12.1 billion in the first half of the year were up 37% year-over-year, the UAW pointed out.
Together, the Big Three made a combined $21 billion in profits in the first half of the year, and that’s on top of the quarter-trillion dollars in North American profits they’ve made over the last decade, the UAW said.
In light of what UAW president Shawn Fain called “eye-popping,” “mind boggling,” and “obscene” profits from Ford, GM, and Stellantis, respectively, the union is asking for a lot for the new contracts for its members.
The asks in contract negotiations are typically called “presidential demands,” but Fain is now calling them “member demands.” Among the member demands in this year’s negotiations are: the elimination of tiers, double-digit pay raises, a restoration of cost of living adjustments (COLA), defined benefit pensions, the re-establishment of retiree medical benefits, the right to strike over plant closures, working family protection program, more paid time off, and a significant increase in retiree pay.
“Record profits mean record contracts,” Fain stated.
A Stellantis spokesperson declined to comment on the company’s profits but said the company “remains committed to working constructively and collaboratively with the UAW to negotiate a new agreement that balances our employee’s concerns with our vision for the future. … It will be critical to find common ground that doesn’t jeopardize our ability to continue investing in the affordable products, services and technology that our customers want and that would allow us to continue providing good jobs here at home.”
In response to the union’s demands, Stellantis gave the UAW a proposal of its own. The UAW has put out a flier showing the difference in the two sides’ proposals. In a Facebook live communication with members on Tuesday, Aug. 8, Fain filed the proposal where he said it belongs: In the trash.
A GM spokesperson said the company expects higher wages for its UAW represented team members, but that “the breadth and scope of the presidential demands, at face value, would threaten our ability to do what’s right for the long-term benefit of the team.”
Ford did not respond to SMU’s requests for comment.
Also of note, the UAW representing approximately 1,000 workers at Lear Corp.’s plant in Hammond, Ind., voted this week to reject a proposed contract, the Northwest Indiana Times reports. The plant supplies seats to Ford’s Chicago Assembly plant. Ford again did not respond to a request for comment.
Automotive News has reported that the entire automotive supply chain is concerned about the potential for a strike.
A Strike’s Impact on Steel
Research firm Wolfe Research’s auto team said there is “a 90-95% probability of a strike, potentially a prolonged one.”
A recent research note from Wolfe Research’s Timna Tanners said there is a “high probability” that a strike could “hurt sheet [North American] sheet prices broadly, as auto tons may be redirected to the spot market.”
Additionally, “higher labor costs likely hurt the auto industry’s appetite for paying up for steel contracts into 2024E,” the note said.
With the automotive sector typically accounting for 25% of US steel demand, “a strike could steer even more tons to the spot market, as we expect steel mills won’t stop producing on an assumed brief stoppage,” the note continued.
And “while a strike could hurt short-term steel appetite,” Tanners also noted there is a “risk to annual fixed-price contract negotiations that typically run Sept-Nov for the following year.”
In case you missed it, SMU’s managing editor Michael Cowden provided additional commentary surrounding the talks and a strike’s potential impact on steel prices in Sunday’s Final Thoughts.
Laura Miller
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