Instead of national strike, UAW could target key plants for ripple effect

DETROIT — Can the UAW get deals with the Detroit 3 — and persuade its restless membership to approve them — without a strike?

That's among the top questions looming over this year's contract talks, as outrage over layoffs and increased use of foreign labor courses through the union at a time when the automakers are highly profitable but girding for potentially leaner times ahead.

The stage is set for the most difficult labor battle in Detroit since at least 2007, when the UAW last called a national strike against automakers. But if there is an impasse, experts say, the union might employ a more strategic approach to smoke out a better deal without ordering its full membership at a given company to sacrifice the bulk of their paychecks and march on picket lines.

Bottleneck strikes, in which workers gain leverage by halting production at key plants to create a ripple effect, have become a more favored weapon in the UAW's arsenal than national strikes as its membership has dwindled and fractured. Such a tactic limits the union's cost for strike pay and shifts some of the cost of associated layoffs to the automaker. The most notable example is a 1998 strike of two General Motors plants in Flint, Mich., that took nearly 200,000 workers at about 30 other GM assembly plants and 100 North American parts plants off the job for almost two months, costing GM some $2 billion.

"The UAW's strategy has been more to do strikes at selected locations, and locations are selected for their ability to cause pain at the corporation," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research. "They're plants that supply multiple assembly plants or that produce highly profitable vehicles."

National strikes by the UAW have been scarce in recent decades, aside from brief walkouts at Chrysler and GM in 2007. The last prolonged national strikes occurred against GM and Ford Motor Co. in the 1970s. GM workers went on strike for 67 days in 1970, while Ford workers were off the job for 28 days in 1978.

Today, more surgical strikes can be just as effective and easier for the union to pull off. Just-in-time production means shortages of key parts can quickly force an automaker to halt or slow production at many of its plants. But workers at those other plants can still collect most of their regular pay, rather than having to subsist on meager strike pay, when it's the company's decision to cancel their shift.

And a number of cost-cutting actions by the automakers in recent years, including using more temporary employees and paying workers at lower wages in the first years of their employment, have made it tougher for the union to build the solidarity that's critical to any successful large-scale strike.

Art Wheaton, a labor expert at Cornell University, said a brief, strategic strike at a smaller plant would be less likely to frustrate tens of thousands of workers.

"You don't have quite as much unanimity in the labor movement anymore either as General Motors and especially Fiat Chrysler have gone to a lot more temporaries," he told Automotive News. "With a whole bunch more temporaries who don't have the same levels of benefits, it's harder to say you'll be able to get them 100 percent on board with manning the picket lines and doing the other things for a big, wide national strike."

He added: "Some of the plants, they have maybe 50 or 60 percent temps in some of them, and you can't say for sure that they're going to follow what the union wants to do."

Wheaton pointed to the 2016 presidential election as a key example. Wheaton said union workers used to be sure votes for the Democratic Party, but some were drawn to Donald Trump's promises of protectionism.

"There were an awful lot of UAW members who voted for Trump," he said. "Solidarity is hard to keep."

Some experts believe the union has weakened to the point that it's unlikely to call any kind of strike during this year's talks, no matter how difficult it is to reach a deal it considers palatable.

Mike Smith, principal archivist for the University of Michigan's Bentley Historical Library, said the UAW will hold its strike card close as it has in every round of negotiations. He agreed that the UAW has the ability to shut down one of the automakers nationally by striking only one strategic plant, but he doesn't think the union would want to do that. Losing about half of its members over the past 20 years has made the union less eager to wage such a costly public fight, he said.

"The UAW today, maybe 40 percent of their members are no longer in the automobile industry," Smith said. "I think the key thing now for the UAW is … reinvesting in the plants and providing job security."

The UAW could rotate strikes at different plants to keep the automakers from attempting to source parts from other facilities, while assisting in lowering the strike burden on any certain work force.

A strike is the union's "ultimate weapon in negotiations," said Dziczek, of the Center for Automotive Research.

"They don't wield it lightly, but they've been very clear at the bargaining convention this year that they are willing to use it," she said. A strike emphasizes "how serious they are about their demands," she said, to not only the company but also union members and outside parties, including political leaders and Wall Street.

UAW leaders last month announced a 25 percent boost in the strike payments members would get, to $250 a week, effective immediately. The amount rises to $275 in January, which would be months after the Sept. 14 contract deadline. UAW members would receive health care coverage during a strike.

Workers who are actively on strike get strike benefits, while those idled because of lack of parts during a bottleneck strike would collect unemployment insurance and supplemental unemployment from the company.

Any strike that rippled through an automaker's manufacturing footprint would undoubtedly force suppliers to pare back output as well. Workers at those companies tend to have even less of a safety net in case of an involuntary production stoppage, and many of them earn lower wages to begin with, so they could face more financial hardship as a result of a UAW strike than those actually walking the picket lines.

A work stoppage at a transmission plant likely would be among the most detrimental to the Detroit automakers' supply chains, possibly halting production at key assembly facilities.

At GM, Toledo Transmission would be an obvious linchpin for the union to create a massive and costly bottleneck strike that would quickly hurt the automaker's bottom line.

The Ohio facility, according to GM, provides transmissions for 10 assembly plants in the U.S. and Canada. That includes transmissions for GM's light-duty pickups, large SUVs and crossovers, among other products.

"Due to the scale of manufacturing, the transmission plants have more supply ties to assembly plants," Dziczek said. "A strike with a relatively low number of workers at that transmission plant can cripple the whole corporation very quickly."

Other facilities that would have a noticeable ripple effect include Romulus Powertrain in Michigan, which produces V-6 engines and 10-speed transmissions, and Tonawanda Engine in New York, which produces four-cylinder, V-6 and V-8 engines. Both plants feed into products across GM's brands — most importantly, pickups and SUVs.

For FCA, a stoppage at its Kokomo Transmission Plant could paralyze most of the automaker's North American manufacturing. The Indiana plant produces four-, six- and eight-speed transmissions as well as machined components for nine-speed transmission across the automaker's lineup.

The union also could instantly get FCA's attention with any action that affects production of Ram pickups and high-end Jeeps, such as the Grand Cherokee and Wrangler. Such plants include powertrain and stamping operations in southeast Michigan that supply parts to nearby stamping plants and FCA's Trenton Engine Complex, which makes the 3.6-liter Pentastar used in vehicles across the automaker's lineup.

Cornell's Wheaton believes FCA would be vulnerable to a tactical strike, especially if it slowed production for Jeep or Ram. "Nobody wins in a strike except your competition," Wheaton said. If consumers can't buy a Jeep because of strike-related inventory shortages, he said, they might jump to another brand.

"Doing it by a single location or plant is a way that you can exert pressure without causing as much permanent damage to the union or strike fund, or the production capacity at other plants," Wheaton said. "If I struck down every parts plant, now it's going to take a longer time to recover. With fewer parts you're impacting, it's easier to get production right back up to speed."

Ford's transmission operations are more diversified, but any facility that impacts production of its F-series pickups, which accounted for 37 percent of its sales in 2018, would cause the automaker's profits to plummet.

Ford last year got a preview of the potential fallout from even an isolated stoppage affecting a key part, when a fire at a magnesium supplier halted F-series production for roughly two weeks, costing the automaker $591 million. After learning of the fire, Ford scrambled to get production back online, including using a rare Russian cargo plane to move an 87,000-pound die from Michigan to the United Kingdom in 30 hours.

By betting its future on pickups and utility vehicles, Ford has made itself more vulnerable to a potential strike at plants supporting those vehicles.

"It wouldn't take much, from a plant standpoint," Jeff Schuster, president of global forecasting at LMC Automotive, told Automotive News. "You could essentially shut down all of Ford with a couple of engine plants or a couple of transmission plants. It would really hit the volume sweet spot."

Facilities that supply critical components for the F series include Livonia Transmission Plant in Michigan and three Ohio plants: Sharonville Transmission, Lima Engine and Cleveland Engine Plant No. 1.

Livonia makes six- and 10-speed gearboxes for the F-150, while Sharonville supplies the Super Duty. Cleveland makes the F-150's popular 3.5-liter EcoBoost and Lima churns out a 2.7-liter EcoBoost.

The UAW has fewer than 400,000 members today, less than half as many as during the 1998 Flint strike and only about a quarter of the union's peak membership of 1.5 million in 1979. It also has not succeeded in any of its recent efforts to unionize U.S. plants owned by foreign automakers or Tesla's plant in California, another indication of its shrinking influence.

The 54-day Flint strike was "one of the last times where the UAW felt really confident in their strikes, that they had a lot of power," said Smith, the University of Michigan archivist.

Smith called the Flint strike a pivotal event because it came in the burgeoning era of just-in-time delivery for the Detroit 3 and with GM no longer as dominant in the industry as during earlier walkouts. Because GM no longer had large stockpiles of the parts it needed, the UAW was able to take out other plants rather quickly, he said.

"It really does affect GM's business, a strike like this," Smith said. "Not only do they lose a couple billion dollars, but they lose all these sales."

Knowing that contentious negotiations loom, the Detroit 3 are certain to examine where they can build up inventory of parts or finished vehicles as backup if needed.

They also can look at alternatives for parts sourcing, such as plants in other countries, but in many cases, lining up redundant supply chains doesn't make business sense. Such moves would undermine the automakers' work to cut spending and impress investors with leaner operations in preparation for the next recession.

"When things are going smoothly and there's no risk, there would be a substantial cost increase," Schuster said. "It's a matter of trying to find a balance of not sourcing too lean that you'd put your operation at risk, but you have to manage the cost as well and get efficiencies out of those component plants."

The ideal outcome, of course, is for the automakers to avoid a strike in the first place. That's in the hands of the UAW's leadership, which will have to decide how hard to push and how to let its members know that a deal is as good as it thinks they're going to get, no matter how bitter they might be.

"I really believe neither side wants a strike, because you will have sales lost; you'll cost the company money," Smith said.

"It never helps the UAW. They're loath to go on strike. I really believe the leadership believes that."

Melissa Burden contributed to this report.