UAW Doubles Down On Strikes, With Growing National Consequences
United Auto Workers (UAW) union members picket outside Ford's Kentucky truck plant after going on strike in Louisville, Kentucky, U.S. October 12, 2023. Photo: REUTERS/Luke Sharrett
United Auto Workers President Shawn Fain started the week by lauding productive talks with Ford, but as the week progressed, strikes by the UAW began to expand to other companies, as well as into some of Ford’s core facilities.
On Monday, an overwhelming 73% of workers at Volvo’s Mack Trucks voted to reject a contract that was reached between the union bargaining team and the company, which included a 19% raise over 5 years, with a 10% raise in the first year, and a bonus of $3,500 for ratifying the contract. Mack Trucks President Stephen Roy expressed disappointment in the UAW’s decision, noting that UAW negotiators called the agreement “a record contract for the heavy truck industry.”
As of last week, the strike at Mack’s Pennsylvania, Maryland, and Florida factories have added 4,000 workers to the 25,000 striking workers from Ford, GM, and Stellantis, representing a significant expansion of the strike.
The effect of these strikes have rippled through markets as inflation remains a central worry for investors, with upward wage pressures serving as a hawkish signal for the Federal Reserve System. As Treasury yields remain at their highest levels in more than 15 years, and as federal fund rates at their highest in more than 20, there is widespread worry that further Fed aggression will add additional pressures to an already slowing economy. On Thursday, an unideal inflation report caused a stock market contraction that reached as low as 1% intraday. Combined with the strikes, these may further fuel fears of the Fed tightening.
The stakes in this dispute ratcheted up to a new level on Wednesday, when UAW workers walked off the job at the Kentucky Truck Plant at Louisville, Kentucky — the largest Ford plant in the world. The Louisville plant is responsible for the production of some of Ford’s most prized and lucrative products, making the strike especially notable.
The strike came amidst an apparent breakdown in talks between the UAW and Ford that afternoon. Ford argued that it had made a “record offer [that] would make a meaningful positive difference in the quality of life” of the 57,000 UAW workers at Ford, and described the decision to expand the strike to the Kentucky Plant as “grossly irresponsible.”
Ford has previously agreed to many important demands of the UAW, including allowing workers to rise to the top UAW wage in four years instead of eight, a deal which includes workers at Ford’s new battery factories.
With financial markets on edge in the wake of the inflation report, the further prolonging and expansion of the strike will have far-reaching consequences not just for Ford, but for the American economy in general — as the nation’s businesses face looming debt maturities, and consumers deal with stubborn inflation and dwindling pandemic savings.
Ford's Louisville assembly plant on Fern Valley Road. Photo: WDRB
Ford’s position in the EV industry could be harmed as the strikes threaten to widen an already large gap in labor costs between Tesla and Ford. Already, Ford pays its workers around $20 more per hour in wages and benefits compared to Tesla. As the gap widens, Tesla’s advantage in labor cost savings would give it an additional leg up in the EV revolution, especially combined with the many advantages it already has, including the adoption of Tesla’s charging standards across North America.
The continued upward pressure on wages will put pressure on the inflation rate, making it even more unlikely that the Fed will budge from its policy on higher rates — creating headaches for financial markets as companies with large amounts of high-yield debt continue to struggle.