U.A.W. Strike Hits 3 Plants as It Seeks Big Raises and Other Gains

U.A.W. Strike Hits 3 Plants as It Seeks Big Raises and Other Gains

Autoworkers walked off the job on Friday at three factories that produce of some of the Detroit carmakers’ most popular vehicles, the opening salvos in what could become a protracted strike that hurts the U.S. economy and has an impact on the 2024 presidential election.

Nearly 13,000 members of the United Auto Workers at plants in Ohio, Michigan and Missouri joined early Friday in what the union described as a targeted strike that could expand to more plants if its demands for pay raises of up to 40 percent and other gains were not met.

The union’s four-year contracts with three automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — expired Thursday, and the companies and the union remained far from striking new deals.

The U.A.W.’s president, Shawn Fain, used sweeping language on Thursday to describe why his members were going on strike against all three automakers at the same time — something the union had never done in its nearly 90-year history.

“This is our generation’s defining moment,” Mr. Fain, the union’s first leader elected directly by members, said in an online video. “The money is there, the cause is righteous, the world is watching, and the U.A.W. is ready to stand up.”

The union and the companies did not negotiate on Friday, and the U.A.W. said it planned bargaining to resume on Saturday. President Biden dispatched two senior administration officials to Detroit on Friday to encourage the companies and union to reach agreements.

At a Ford plant in Wayne, Mich., west of Detroit, strikers waved placards — one read, “Record Profits; Record Contracts” — and gave thumbs-up to honking vehicles. A metal sign on a chain-link fence read, “Absolutely NO foreign cars allowed.” The protesters were assigned to a six-hour shift on the picket line. If the strike continues, they will be called to one shift per week.

While first and foremost a battle between autoworkers and automakers, the conflict could have far-reaching consequences. A lengthy strike would reduce the number of new cars available for sale, which could fuel inflation and force the Federal Reserve to keep interest rates high.

A strike also presents a quandary for Mr. Biden, who has called for rising incomes but must also be mindful of the strike’s economic impact and his goal to promote electric vehicles as a solution to climate change.

Speaking at the White House on Friday, the president strongly supported the union. “Over the past decade, auto companies have seen record profits, including in the last few years, because of the extraordinary skill and sacrifices of U.A.W. workers,” he said. “But those record profits have not been shared fairly.”

The U.A.W. says its pay demands roughly correspond to the increases in the compensation of the top executives at Ford, G.M. and Stellantis. The raises are also meant to help compensate workers for the ground they have lost to inflation and big concessions the union made to the automakers after the 2007-8 financial crisis, when G.M. and Chrysler were forced to restructure themselves in bankruptcy court.

But auto executives say they already pay production workers substantially more than rivals, like Tesla and Toyota, whose U.S. workers are not unionized. The companies also contend that such big raises would undermine their efforts to develop electric vehicles and remain relevant as the industry makes a difficult and costly shift from gasoline cars and trucks to electric vehicles.

Ford, which employs the most union members, reported a profit of $1.9 billion in the second quarter, equal to 4 percent of its sales. Tesla made $2.7 billion in the same period, about 11 percent of its sales.

Mary T. Barra, the chief executive of G.M., said the strikes would hurt the industry. “I’m extremely frustrated and disappointed,” she told CNBC on Friday. “We don’t need to be on strike right now.” She said the company had “put a historic offer on the table” that included better job security and “world-class health care.”

Mr. Fain’s decision to shut down just three factories is also a departure for the union, which in previous strikes typically walked out of all the factories of a single automaker. By interrupting production of some of the most profitable vehicles, while allowing most plants to keep operating, the union hopes to inflict pain on the carmakers while allowing most of its members to continue collecting paychecks.

Fewer than 10 percent of the nearly 150,000 U.A.W. members at the three companies are on strike. Limited strikes could allow the union to maintain the pressure longer by preserving its strike fund of $825 million. The union will pay striking workers $500 a week and cover their health insurance premiums.

In addition to the Ford plant in Michigan, which makes the Bronco and the Ranger pickup truck, workers shut down production at a G.M. plant in Wentzville, Mo., near St. Louis, that makes the GMC Canyon and the Chevrolet Colorado and a Stellantis complex in Toledo, Ohio, that makes the Jeep Gladiator and Jeep Wrangler. If no agreement is reached, the union is expected to target additional factories in weeks to come.

The union is also seeking cost-of-living adjustments that would protect workers if inflation flares up again. And it wants to reinstate pensions that the union agreed to do away with for newer workers after the financial crisis, improved retiree benefits and shorter work hours. The union also wants to eliminate a wage system that starts new hires at much lower wages than the top U.A.W. pay of $32 an hour.

As of Friday last week, the companies had offered to raise pay by around 14.5 percent to 20 percent over four years. Their offers include lump-sum payments to help offset the effects of inflation, and policy changes that would lift the pay of recent hires and temporary workers, who typically earn about a third less than veteran union members.

In a last-minute attempt to keep assembly lines running, G.M. offered its employees a 20 percent raise late Thursday and said it was willing to pay cost-of-living adjustments to veteran workers. The 20 percent increase would be far more than employees had received in decades. But the union rejected the offer, which it says would barely compensate for inflation.

Leaders of the automakers have criticized the U.A.W.’s tactics, focusing on Mr. Fain, who became president in March and declared an end to what he said were overly friendly relations between union leaders and auto executives. He took office after a federal corruption investigation resulted in prison terms for two former U.A.W. presidents.

Carlos Tavares, the chief executive of Stellantis, has called Mr. Fain’s strategy “posturing.” Ford’s chief executive, Jim Farley, said the two sides should be negotiating instead of “planning strikes and P.R. events.” And Ms. Barra of G.M. said that “every negotiation takes on the personality of its leader.”

If the autoworkers are successful, they could inspire workers in other industries. Union activism is on the rise: Hollywood screenwriters and actors have been on strike for months. In August, United Parcel Service employees won their biggest raises ever in a contract negotiated by the International Brotherhood of Teamsters.

“Workers have been squeezed for too long and now are realizing they can do something about it,” said Mijin Cha, an assistant professor at the University of California, Santa Cruz, who studies the relationship between labor’s interests and the fight against climate change. “People see there is a pathway to more economic security and workers do have power together.”

The strikes come as auto production is still recovering from the effects of the pandemic, which caused shortages of semiconductors and other components. Car prices and wait times have come down, but dealer inventories remain low and a lengthy strike could eventually make it hard to find popular U.S.-made models.

“We’re not back to speed inventory-wise,” said Wes Lutz, the owner of Extreme Dodge, a car dealership in Jackson, Mich.

Scarcity is not always bad for carmakers. It allowed them to earn higher profit margins during the pandemic. And it would benefit any carmakers that were having trouble moving some models. Pat Ryan, chief executive of the car-shopping app Co-Pilot, said that Stellantis had at least 100 days of inventory for brands like Dodge and Chrysler, and that a strike could help it clear many dealers’ lots.

Still, if prices for popular models rise, that will be yet another speed bump in the Federal Reserve’s road to lowering inflation, and a political liability for Mr. Biden. The president, who has no formal role in the negotiations, said Friday that he had been in touch with union leaders and auto executives, in addition to dispatching the two administration officials to Detroit.

It is unclear how much of an effect the administration’s intervention will have on automakers or the union.

Despite Mr. Biden’s pro-union statements, Mr. Fain has withheld the U.A.W.’s endorsement for president despite generally backing Democrats, and he criticized federal incentives and loans to automakers for electric vehicle and battery production that do not require new factories to be unionized.

Former President Donald J. Trump, the front-runner in the Republican primary race, has been courting U.A.W. workers and attacked Mr. Biden’s electric vehicle policies as bad for workers and consumers.

Reporting was contributed by Neal E. Boudette, J. Edward Moreno, Santul Nerkar and Jeanna Smialek.

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