Stellantis, Ford face lingering labor issues with targeted UAW strikes on the horizon

09/20/2024 03:58
Stellantis, Ford face lingering labor issues with targeted UAW strikes on the horizon

Nearly a year after signing record labor contracts with the United Auto Workers union, two of the Big Three automakers find themselves dealing with the possibility of more strikes.

Nearly a year after signing record labor contracts with the United Auto Workers (UAW), two of the Big Three automakers find themselves dealing with the possibility of more strikes.

The latest move by the UAW comes after the labor union said on Wednesday that members at Ford’s (F) tool and die unit at its Dearborn Rouge complex will go on strike on Sept. 26 if local contract issues are not resolved.

On top of the four-year contract that the UAW signed with Ford, there are local laws and regulations that Ford must comply with in order to complete a deal. Over a year has passed since the past contract expired, the union said, and Ford hasn’t struck a deal on those local issues. Those include job security and wage parity for skilled trade workers, as well as other work rules that need to be hammered out, the union said.

A Ford spokesperson did not immediately respond when reached by Yahoo Finance for comment, but the automaker told Reuters that it has “been at the table problem-solving” as “negotiations continue and we look forward to reaching an agreement with UAW Local 600 at Dearborn Tool & Die.”

The situation between the UAW and Stellantis (STLA), which makes vehicles such as Ram Trucks, is much more contentious.

In a fiery address earlier this week, UAW president Shawn Fain said Stellantis violated its agreements in reopening its closed Belvidere, Ill., site. Projects like an auto parts hub in 2024, a stamping plant next year, and an assembly plant in 2027 are all in limbo as a result.

UAW president Shawn Fain speaking from UAW headquarters on the night of September 17th. (UAW.com)

UAW president Shawn Fain speaking from UAW headquarters on the night of Sept. 17. (UAW.com) (UAW)

Fain also said Stellantis was planning to move Dodge Durango SUV production from Detroit to a plant in Canada.

“We’re preparing to take action at Stellantis to enforce our contract and make this company keep its promises they made to the American people," Fain said.

The UAW is convening its Stellantis Council to decide on next steps and will be holding strike authorization votes at a handful of Stellantis local chapters.

In a statement to Yahoo Finance, Stellantis said it is not surprising that over the course of a four-year, seven-month contract, not all of the agreements have come to fruition yet. However, Stellantis said that Fain’s assertion about the Durango is “simply not true.”

“[Fain] continues to willfully damage the reputation of the company with his public attacks which is helpful to no one including his members,” Stellantis said in the statement. “We would all be better served if these issues were addressed across the table with productive, respectful and forward-looking dialogue. A strike does not benefit anyone — our customers, our dealers, the community and, most importantly, our employees."

In this image from video, United Auto Workers members rally outside Stellantis' Sterling Heights Assembly Plant Friday, Aug. 23, 2024, in Sterling Heights, Mich. (AP Photo/Tom Krisher)

In this image from video, United Auto Workers members rally outside Stellantis' Sterling Heights Assembly Plant Friday, Aug. 23, 2024, in Sterling Heights, Mich. (AP Photo/Tom Krisher) (ASSOCIATED PRESS)

The Big Three — Ford, GM (GM), and Stellantis — find themselves in uncertain times after signing labor contracts. The EV transformation, in which the companies have invested billions, is sputtering. The firms are also threatened by Chinese EV competitors who may come to the US and offer cheaper, and potentially better, products.

This is all accompanied by the backdrop of an uncertain macro future, with the Federal Reserve steeply cutting rates this week — raising concerns among some that the economy is slowing. While lower rates should help the consumer and sales at the retail level, the pay hikes the UAW contracts call for may not come at the best time for the automakers.

Meanwhile, labor woes aren't limited to Detroit. German rival Volkswagen has said it will most likely slash jobs at factories it had promised it would never cut. Germany’s Bild news agency said earlier Thursday that up to 30,000 jobs were at risk.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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