In a surprising move, the United Auto Workers (UAW) has shut down Ford’s largest global plant, disrupting the production of high-profit pickup trucks. This marks a significant escalation in the union’s four-week targeted strike against the Detroit Three automakers.
The UAW stated that 8,700 of its union members at Ford’s Kentucky truck plant initiated the strike after the automaker refused to make further progress in contract negotiations. While automakers have already increased their initial wage hike offers, agreed to raise wages in tandem with inflation, and enhanced pay for temporary workers, the union seeks even higher wages, the elimination of a two-tier wage system, and the expansion of unions to battery plants at all three companies.
Ford’s Kentucky truck plant is its most profitable operation, generating about $25 billion in annual revenue, accounting for roughly a sixth of the company’s global automotive revenue. The sudden strike has raised concerns about the automaker’s full-year profits, resulting in a 2% decline in Ford’s shares in after-hours trading.
UAW President Shawn Fain and other UAW officials met with Ford and demanded a new offer, which the automaker did not provide. This led to the decision to shut down the Kentucky Truck plant. Ford responded by calling the decision “grossly irresponsible” but not surprising, given the UAW’s strategy of causing reputational damage and industrial chaos to keep the Detroit Three automakers vulnerable for months.
This strike also serves as a warning to General Motors (GM) and Chrysler’s parent company, Stellantis, as their wage and benefits offers fall short of Ford’s. Fain previously indicated his readiness to strike the GM assembly plant in Arlington, Texas, which builds high-priced SUVs.
The UAW’s strategy has so far impacted about 22% of the 150,000 UAW workers at the Detroit Three automakers, with thousands more furloughed from non-striking operations due to the walkouts making their work unnecessary.
This uncharted territory for both sides has the potential to significantly impact the bottom line. The UAW has never employed this strategy before, and Ford has never faced such tactics.
The strike in Kentucky could lead to further furloughs at a dozen other Ford plants that supply components to the Kentucky plant, impacting suppliers as well.
As the Detroit automakers prepare to report their third-quarter financial results, the UAW could leverage their expected robust profits to advocate for a more favorable contract. The UAW and Stellantis have another round of major negotiations scheduled for Thursday.
Separately, Ford’s battery joint venture with SK On, BlueOval SK, announced higher wages for some of its workers at plants in Tennessee and Kentucky, offering hourly rates ranging from $24 to $37.50 based on experience, although previous wage details were not disclosed.