S&P Global Mobility Analysis: UAW Strike

After all three Detroit automakers increased their offers to the UAW but did not fully meet the UAW demands, the union went on strike at key plants at midnight on September 15. The following includes initial analysis from S&P Global Mobility as of the afternoon of September 15.

Fast Facts

• S&P Global Mobility estimates that the combined impact could be about 3,200 units per day, on a straight-time production schedule.
• Prior to the strike action, the S&P Global Mobility light-vehicle production forecast expected combined production at these three plants to decline 17% compared with 2022. In 2022, these plants produced about 770,000 units.
• Days supply: Reports indicate that at the end of August Wrangler had 74 days supply, Gladiator 188 days supply and Canyon 62 days, though Colorado only 35 days, Bronco 40 days, and Ranger only 26 days.
• Toyota is about to launch an all-new Tacoma, while the strike will hamper start of production for Ford Ranger and ramp-up of updated GMC Canyon and Chevrolet Colorado and Jeep's transition to minor updates to Wrangler and Gladiator, potentially handing segment-leading Toyota an inventory advantage
• According to S&P Global Mobility estimates, Ford, GM and Stellantis combined account for about 49% of US light-vehicle production in 2022. Prior to the strike, the forecast was expected to drop to 45% in 2023.

Outlook

The UAW strike against three key mid-size truck and utility plants affects the Chevrolet Colorado/GMC Canyon and Chevrolet Express/Savana; Ford Bronco and Ranger, and Jeep Wrangler and Gladiator. Through July 31, 2023, these products have accounted for a total of 324,507 units registered, according to S&P Global Mobility light-vehicle registration data, which is 14% lower than at the same point of 2022, when 377,914 units were registered. In full-year 2022, these vehicles saw a combined 617,732 units registered. The plants affected include Ford's Michigan Assembly Plant, GM's Wentzville Assembly Plant and Stellantis' Toledo Assembly Complex (including both Toledo North and Toledo Supplier Park). According to S&P Global Mobility light vehicle production forecast data, closures of these plants suggest potential impact of about 3,200 units per day of lost production, assuming a straight-time schedule.

Under revised offers, GM offered a 20% raise to hourly workers, while Stellantis has offered a 17.5% raise and Ford has offered 20%. However, based on the information disclosed publicly by all sides, the automakers and the UAW remain far apart on several issues. It is unclear how long the strike will last, though Automotive News reports that the UAW has said it will not negotiate on Friday, September 15, indicating the strike will run at least through the weekend. The UAW has indicated that other strategic targets will be added if negotiations continue to fail, though what these will be is also not yet specified.

In terms of disrupting upcoming production launches of updated vehicles, the Michigan Assembly Plant is scheduled to see start of production of a new model of Ranger in September while Jeep is adjusting for minor updates to Wrangler and Gladiator for 2024 model. The strike against these mid-size pickup trucks is also happening as the latest-generation segment-leader Toyota Tacoma is set to arrive. Ford is scheduled to start production of the new Ranger in September; the strike could delay that production start and further complicate GM's ramp of Canyon and Colorado, both of which are new for 2023 model year.

The choice to target mid-size trucks instead of full-size trucks reflects the fragility of the strike effort. While there is a need to strike where there will be noticeable impact, the UAW avoided the full-size pick-up truck plants in this initial action. Though ultimately EV versions of the products at these facilities is expected, the transition is forecast to be outside the expected contract period for the Ford projects and late in the contract period for Stellantis. GM is expected to see EV production of its vans in Wentzville about 2026. The UAW is aiming to impact automakers at important points and selecting pick-up trucks clearly is aimed at looking at a high-margin, high-impact product. Sales of these mid-size products are substantially below the much more profitable full-size pick-up trucks.

Initial observations from our team include:

Stephanie Brinley, Associate Director, Automotive Intelligence, S&P Global Mobility:

"The depth of the strike impact will depend on the length and whether it is expanded to other plants, and these are unknowns so far. However, in terms of perception and consumer expectations, the uncertainty created by a well-publicized strategic strike has potential for a more immediate impact. This could play out in consumers looking to close vehicle purchases more quickly over a perceived concern for lack of inventory, while others may pull back and opt to wait it out. And if the strike does continue and does expand, there will be actual and not only perceived inventory issues."

Joe Langley, Associate Director, North American Production Forecasting, S&P Global Mobility:

"While the UAW strike starts with three vehicle assembly plants, this signifies the beginning of a potentially long-lasting and damaging strike. This strategy aims to gradually intensify pressure on the manufacturers in the coming weeks with more plants expected to strike. It starts with daily losses of 3,264 units and could ultimately lead to cumulative losses reaching hundreds of thousands of units.

On a straight-time basis, production losses spanning GM-Wentzville, Ford-Michigan Assembly and Stellantis-Toledo Assembly Complex totals 3,264 units per day or 16,318 per a five-day workweek."

Michael Robinet, Executive Director, Consulting services, S&P Global Mobility:

"A prolonged labor dispute could cause irreparable damage to an already fragile supply base weathering numerous challenges. Suppliers are dealing with higher interest rates, extreme labor inflation, fluctuating vehicle demand and the need to invest in electrified propulsion. Supplier viability is a major concern."

Eric Anderson, Associate director, North American Powertrain Forecasting:

"Although no battery electric vehicle plants have been targeted in the initial strike action, this may change in the coming weeks. Some of the impacted Jeep volume is PHEV production, so that could have repercussions if the situation is not resolved soon. The UAW also recognizes that although there may be some risks in the transition to BEVs, securing BEV investments is likely to secure a long-term future for the respective plants. Currently, internal combustion engine-based vehicles remain the higher volume products, and likely more profitable, and therefore were targeted first."

We are continuing to monitor the situation and will share additional details as we have them available. In the meantime, please reach out to us with questions at mobility@spglobal.com .

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.