UAW Eyes Strategic Strikes Against Stellantis Amid Economic and Political Turmoil
By Nora Eckert
DETROIT (Multibagger) - The United Auto Workers (UAW) union is preparing for multiple strikes against French-Italian automaker Stellantis (NYSE: STLA), just a year after a major national walkout cost the Detroit Big Three billions and left 50,000 workers idle.
UAW's Battle with Stellantis: Broken Promises and Grievances
UAW President Shawn Fain has accused Stellantis of violating contract promises. On Tuesday night, Fain announced that several union local chapters are gearing up for strikes that could potentially halt Stellantis' operations.
The latest strike threats follow last year's six-week walkout, which cost Stellantis around €750 million ($834.08 million) in profit. The 2023 strike also impacted General Motors (NYSE: GM) and Ford (NYSE: F), drawing President Joe Biden to the picket lines to support the workers.
Timing and Political Implications
Stellantis' North American division has faced significant struggles recently, and the strike threat coincides with the heated race for the White House between Democrat Kamala Harris and Republican Donald Trump. The UAW has endorsed Vice President Harris.
Union strikes outside the regular four-year contract negotiations are rare. A significant strike at Stellantis just one year after a new labor agreement, particularly in an election year, would be unprecedented.
"The union has picked the perfect time to target Stellantis, because the North American group is likely at its weakest point," said Sam Fiorani, Vice President at AutoForecast Solutions.
Local Grievances and Potential Strike Locations
Fain revealed that 28 locals, representing tens of thousands of workers, had filed grievances against Stellantis, with 18 nearing the point of calling for strike authorization votes. Some of these votes are expected imminently. The locations include Toledo, Ohio; Kokomo, Indiana; and several plants in Michigan. The UAW claims that about 98% of Stellantis' membership is impacted, making the potential strikes as powerful as a nationwide walkout.
Stellantis has not commented on the latest developments but has criticized Fain for damaging the company's reputation without providing data to support his claims. The automaker insists that addressing these issues through productive dialogue would benefit everyone involved.
Core Issues: Investment and Production Commitments
The UAW's grievances focus on product and investment commitments made during last autumn's contract negotiations. Key sticking points include delays in a planned multibillion-dollar investment in a new battery plant and factory in Belvidere, Illinois, and potential plans to move Dodge Durango SUV production out of the U.S.
While Stellantis has not confirmed plans to relocate the Durango, the contract allows for financial commitment delays if market conditions worsen.
Stellantis' Troubled U.S. Market
Over the past year, Stellantis' U.S. business has struggled, with dealers and shareholders voicing concerns over lagging sales, bloated inventories, and a falling share price. CEO Carlos Tavares has emphasized improving U.S. operations, even expressing willingness to shut down unprofitable brands. Despite these challenges, Stellantis' U.S. vehicle inventories are higher than last year, which might cushion the impact of a strike.
However, analysts suggest that the UAW could target high-demand vehicle plants, like those producing Jeep SUVs, to maximize impact while minimizing strike support costs.
Political and Legal Ramifications
A collective strike could capture the White House's attention as the November 5 U.S. election approaches. Michigan, a key battleground state, has seen multiple visits from both Harris and Trump.
Union support is crucial for Harris, who aims to attract more working-class voters. Trump, however, criticizes Fain for jeopardizing union jobs as the industry shifts production outside the U.S.
The Teamsters' executive board is also deliberating on their endorsement.
Fain stated that last year's deal granted the UAW the right to strike over product and financial commitments, although this could be legally contested, according to Cornell University labor professor Art Wheaton.
Conclusion: What Does This Mean for You?
- For Workers: Potential strikes could result in temporary job losses but may secure better terms in the long run.
- For Investors: Short-term volatility in Stellantis' stock is likely. A prolonged strike could impact profitability.
- For Consumers: Expect potential delays and price increases for Stellantis vehicles, especially high-demand models like Jeep SUVs.
- For the Economy: Large-scale strikes can have ripple effects, influencing everything from local economies to national political dynamics.
Understanding these dynamics helps in making informed decisions about investments, job security, and even purchasing vehicles.