We Don't See the UAW's Strike Fund Outlasting Automakers' Liquidity, but Will Firms Use Their Funds?

The United Auto Workers' strike against GM, Ford, and Stellantis is a month old and the union escalated the strike on Oct. 11 by striking at Ford’s Kentucky truck plant. This plant is the first severe wound inflicted because the UAW is now hitting full-size SUV and pickup truck plants, the most profitable vehicles. Per Ford, the Kentucky truck plant generates $25 billion in annual revenue contributing, by our estimate, roughly $5 billion in operating profit, mostly making Super Duty pickups but also the Expedition and Navigator SUVs. We expect GM’s only SUV plant, which is in Arlington, Texas, and Stellantis’ Warren, Michigan plant that makes the Grand Wagoneer to be on strike any day. We’ve read predictions that striking the most lucrative vehicles will cause the strike to end soon, but we don’t think that will happen unless the automakers are willing to give in to further wage increases above the as-much-as 23% already offered and also to capitulate on reopening pensions and retiree healthcare to current workers, something we don’t think the firms can afford. The union is not happy with Ford’s offer, but Ford said at an Oct. 12 press conference that its offer has reached the limit of what it can do without hurting its ability to reinvest in the business. That doesn’t sound like a strike that is about to end.