Detroit will hit a roadblock before its unions do. The United Auto Workers have called for expanded strikes at General Motors and Stellantis, sparing Ford Motor (F.N) thanks to progress in their talks.
In 2019, when a UAW strike closed manufacturing at GM for 40 days, it reduced output by 300,000 vehicles and operating profit by $3.6 billion. I Photo: General Motors
A selective truce might help labor’s rainy-day fund last longer. Shutdowns threaten far more pain for the automakers holding out, as Jonathan Guilford wrote for Reuters Breakingviews.
Talks between the two sides over pay and benefits were deadlocked until UAW boss Shawn Fain said on Friday that they had made "real progress" with Ford.
Meanwhile, GM and Stellantis continue to draw ire. Fain called for work stoppages at 38 parts distribution centers at both companies.
Dividing and conquering makes sense. If the UAW's 146,000 members all downed tools, their $500-a-week strike pay would deplete the organization's $825 million coffers in 11 weeks.
Leaving Ford out would add two extra months to the fund’s life even if impasses at the other two companies spiral into full shutdowns.
The impact of such closures would fall heavily on the refuseniks. In 2019, when a UAW strike closed manufacturing at GM for 40 days, it reduced output by 300,000 vehicles and operating profit by $3.6 billion.
If today’s costs were similar, it would shave around $1.7 billion in operating profit every month, equivalent to 13% of GM’s expected total this year, based on Wells Fargo estimates and LSEG data. Cash flow would be a bigger issue.
The strike four years ago ate away $5.4 billion at GM. That would consume three-quarters of the cash the company’s automotive operations are supposed to generate this year. Plus, it has nearly $30 billion in short-term bills to start paying off soon.