Surprise UAW strike at Ford raises stakes for Detroit Three

The United Auto Workers (UAW) snap strike on Wednesday at Ford’s largest and most profitable factory is raising pressure on Stellantis NV and General Motors as negotiators are expected to resume contract talks on Thursday.

UAW negotiators are expected to turn their attention on Thursday to talks with Chrysler-parent Stellantis (STLAM.MI), sources said.

The Kentucky walkout is a warning to Stellantis and General Motors (GM.N), whose wage and benefits offers fall short of Ford’s, based on summaries the automakers and the UAW have released.

Some analysts saw UAW President Shawn Fain’s decision to shut down Ford’s Kentucky Truck plant, which builds Super Duty pickips and Linoln Navigator SUVs, as a sign that the endgame could be starting in the nearly month-long round of coordinated walkouts at the Detroit Three.

“Pressure was always needed to force a deal,” Evercore ISI analyst Chris McNally wrote in a note on Thursday.

Ford’s shares fell 2.2% to $11.98 in premarket trade while GM’s shares were marginally lower at $30.95.

Last Friday, Fain said if needed, the UAW would strike the GM assembly plant in Arlington, Texas that builds Cadillac Escalade, Chevy Suburban and other large, high-priced SUVs. GM’s Flint heavy duty truck assembly plant is another potential strike target.

High-profit targets at Stellantis include the automaker’s Ram pickup truck factories in Sterling Heights and Warren, Michigan, as well as two Jeep SUV factories in Detroit.

“This puts everybody on notice,” said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. “If they haven’t brought anything new to the table since last week, GM and Stellantis should be worried.”

Analysts at Wells Fargo estimated that Ford will lose about $150 million per week in core profit from the Kentucky plant strike.

“We think this escalation is a sign that the UAW could be close to a contract proposal with Ford in the next 1-2 weeks,” Wells Fargo analyst Colin Langan said in the note.

Automakers have more than doubled initial wage hike offers, agreed to raise wages along with inflation and improved pay for temporary workers, but the union wants higher wages still, the abolishment of a two-tier wage system and the expansion of unions to battery plants.

The UAW has room to expand its walkouts and increase the pressure on the Detroit Three to offer bigger wage gains, richer retirement packages and more assurances that new electric vehicle battery plants will be unionized.

Even with 8,700 workers at Ford’s Kentucky Truck plant now on strike, less than a quarter of the 150,000 UAW workers at the Detroit Three automakers are now on strike. However, thousands more have been furloughed from jobs at operations that are not on strike because automakers said the walkouts made their work unnecessary.

Ford warned on Wednesday that workers at a dozen other factories could be sent home because of the truck plant walkout.

Its Kentucky truck plant, the company’s most profitable operation, generates $25 billion in annual sales, about a sixth of Ford’s global automotive revenue.

“There are very expensive products here that are extremely profitable,” Fiorani said. “With the Super Duty in this plant, this is Ford’s largest plant. They’re on target to build 400,000 vehicles this year.”

Fain and other UAW officials called a meeting with Ford at 5:30 pm ET (21:30 GMT) on Wednesday and demanded a new offer, which Ford did not have, a Ford official said.

“You just lost Kentucky Truck,” Fain said, according to the Ford official and a union source, speaking on condition of anonymity because the talks are not public.

“This is all you have for us? Our members’ lives and my handshake are worth more than this,” Fain added, according to the union source.

Ford said the decision was “grossly irresponsible but unsurprising given the union leadership’s stated strategy of keeping the Detroit 3 wounded for months through ‘reputational damage’ and ‘industrial chaos.’”

Fain has said his aim is to keep the automakers off balance by taking targeted action rather than a full strike at all operations.

“We’re not gonna wait around forever,” he said on social media platform X on Wednesday evening. “If Ford can’t get that after four weeks on strike, these 8,700 workers shutting down their biggest plant will help them understand it.”

The Detroit automakers will report third-quarter financial results between Oct. 24 and 31, and the UAW could use what are expected to be robust profits to press their case for a richer contract.

Before Wednesday’s Ford announcement, the union had ordered walkouts at five assembly plants, including two Ford assembly plants, at the three companies and 38 parts depots operated by GM and Stellantis.