Tensions rise over US carmaker strike as Ford lays off 600 workers

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Tensions have escalated over a strike at Detroit carmakers despite US president Joe Biden’s call for a return to the bargaining table, with Ford laying off hundreds of employees hours after the work stoppage began.

Nearly 13,000 UAW members went on strike at three plants early Friday when their contract expired at midnight without a deal. The factories in Michigan, Missouri and Ohio belong to Ford, GM and Stellantis, respectively, marking the first time in history the union has gone on strike against all three carmakers at once.

Ford late on Friday said it laid off 600 workers who had not walked out at the Michigan plant, blaming “knock-on effects” from others in the painting and final assembly departments who had. The UAW had directed only certain departments to go on strike.

Production is “highly interconnected”, the company said, adding that the striking workers had “directly impacted the operations in other parts of the facility”. The laid-off employees worked in the plant’s body construction department and a sub-assembly area for metal stamping.

“This is not a lockout,” Ford said. “This lay-off is a consequence of the strike.”

Ford’s announcement came after Biden directed two top White House officials to mediate talks as he urged both sides to find a deal to end a work stoppage with potentially damaging economic consequences.

Speaking from the White House on Friday, the president urged the UAW and the carmakers to return to the negotiating table to find a “win-win” deal and suggested it was up to the companies to come up with a better offer.

Car companies’ “record profits” should be paired with “record contracts” for the UAW, Biden said.

He also said he was dispatching Julie Su, the acting US labour secretary, and Gene Sperling, a White House economic adviser, to help mediate the talks.

Earlier on Friday, the chief executive of the US’s largest auto manufacturer lambasted the UAW.

“I’m extremely frustrated and disappointed,” GM’s Mary Barra told CNBC. “We don’t need to be on strike right now. We put a historic offer on the table.”

Barra added that “every negotiation takes on the personality of the leader”, a reference to Shawn Fain, who won the UAW presidency promising a more aggressive stance against the carmakers.

The UAW is asking for a wage increase to 36 per cent over four years, while the carmakers are offering no more than 20 per cent. The union also wants to end a two-tier wage system, where newer workers take four years to reach the same pay as longtime employees.

The strike could expand to more factories and distribution centres, depending on progress at the bargaining table. The UAW has named it the “Stand Up Strike”, referring to the 1930s Sit Down Strike that helped build the nascent union, and the larger US labour movement.

“If we need to go all out, we will,” Fain said on Thursday. “Everything is on the table.”

The strike represents a political problem for Biden, who has cast himself as the most pro-union US president in recent memory and is now caught between his desire to support the demands of the workers and fears of the economic impact of the action in the politically pivotal industrial Midwest.

Several congressional Democrats have backed the UAW in the stand-off with the US carmakers. Elissa Slotkin, a moderate Democratic member of Congress from Michigan who is running for an open Senate seat next year, said she would join the picket line this weekend. The UAW held a rally on Friday evening in Detroit with Bernie Sanders, a leftwing senator from Vermont.

“When you have auto workers who can’t afford the cars they make, that is bad for the economy,” Sanders said.

Some Republicans also expressed support for the striking workers. “Rooting for the auto workers across our country demanding higher wages and an end to political leadership’s green war on their industry,” JD Vance, the Ohio Republican senator close to former president Donald Trump, wrote on social media.

Barra also appeared on CNN on Friday, where she defended her pay, which she said was tied to company performance. In response, the UAW said on social media that “during the eight and a half minutes [Barra] appeared on CNN this morning, she ‘earned’ more money than any autoworker makes in a full work day. And that’s how the Big Three wants to keep it.”

Economists worry that prolonged strikes could push up new and used car prices and curb policymakers’ progress at taming inflation.

“Such an outcome will present another wrinkle for the ongoing disinflation as it would halt the recent streak of soft readings in the [consumer price index] component for motor vehicles,” said economists at JPMorgan. “If the final contractual agreement involves a significant wage increase, it will also present an upside risk for inflation in the sector.”