© Reuters. FILE PHOTO: Ford logo is pictured at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany September 10, 2019. REUTERS/Wolfgang Rattay/File Photo
By David Shepardson and Joseph White
DETROIT (Reuters) -United Auto Workers on Wednesday shut down Ford (NYSE:)’s biggest plant globally, halting production of lucrative pickup trucks with little warning, in a sharp escalation of the union’s four-week targeted strike against the Detroit Three automakers.
The UAW said that 8,700 union members at Ford’s Kentucky truck plant went on strike after the union said the No. 2 U.S. automaker refused to move further in contract bargaining.
Automakers have more than doubled initial wage hike offers, agreed to raise wages along with inflation, and improved pay for temporary workers, but the union wants higher wages still, the abolishment of a two-tier wage system and the expansion of unions to battery plants at all three companies.
UAW President Shawn Fain’s decision to shut down assembly lines that build Ford Super Duty pickup trucks and Lincoln Navigator and Ford Expedition large SUVs is a blow to Ford that could quickly undermine the automaker’s full-year profits.
Ford’s Kentucky truck plant, its most profitable operation, generates $25 billion in annual revenue, about a sixth of the company’s global automotive revenue. The company’s shares fell about 2% in after-hours trading, after closing 0.4% higher on Wednesday.
Fain and other UAW officials called a meeting with Ford at 5:30 pm ET (21:30 GMT) on Wednesday and demanded a new offer, which Ford did not have, a Ford official said.
“You just lost Kentucky Truck,” Fain said, according to the Ford official and a union source, speaking on condition of anonymity because the talks are not public.
“This is all you have for us? Our members’ lives and my handshake are worth more than this,” Fain added, according to the union source.
Ford said the decision was “grossly irresponsible but unsurprising given the union leadership’s stated strategy of keeping the Detroit 3 wounded for months through ‘reputational damage’ and ‘industrial chaos.'”
The Kentucky walkout is also a warning to General Motors (NYSE:) and Chrysler parent Stellantis (NYSE:), whose wage and benefits offers fall short of Ford’s, based on summaries the automakers and the UAW have released.
Fain said on Friday he was ready to strike the GM assembly plant in Arlington, Texas that builds Cadillac Escalade, Chevy Suburban and other large, high-priced SUVs.
High-profit targets at Stellantis include the automaker’s Ram pickup truck factories in Sterling Heights and Warren, Michigan, as well as two Jeep SUV factories in Detroit.
Fain said on Friday that Ford had upped its proposed wage hike to 23% through early 2028. Combined with proposed cost-of-living-adjustments, workers could receive pay increases of close to 30%, people familiar with the proposal said.
The UAW had expected a further improved proposal from Ford, and on Wednesday it brought the same offer, the union source said.
The Ford official said the company and UAW bargainers had been working to resolve differences on retirement security and union representation at the company’s future battery plants earlier in the day.
For the past four weeks, Fain has made decisions about new walkouts on Fridays at the Detroit Three’s plants in video addresses. But Fain has said time and again his aim is to keep the automakers off balance.
“We had to choose to do things differently this way,” Fain said on Wednesday after the announcement. “If the companies aren’t going to come to the table and take care of the membership’s needs, then we will react.”
Even with Wednesday’s walkout, only about 22% of the 150,000 UAW workers at the Detroit Three automakers are on strike. However, thousands more have been furloughed from jobs at operations that are not on strike because automakers said the walkouts made their work unnecessary.
The walkout in Kentucky will put stress on Ford UAW members beyond the sprawling factory near Louisville.
Workers at a dozen other Ford plants that supply engines, transmissions and other components to the plant could be furloughed. Suppliers to the plant’s trucks and SUVs could also be forced to temporarily lay off workers.
The Kentucky plant “is a very profitable plant and because there was no notice at all, it will be particularly disruptive,” said Harley Shaiken, labor professor at the University of California, Berkeley.
“This is a major step hitting the bottom line,” Shaiken said. “This sends a signal that the union could escalate this strike any moment of the day or night. This is uncharted territory for both sides. The union has never used this strategy and Ford has never experienced this strategy.”
The UAW on Friday had held off on additional strikes against Detroit Three auto plants, citing GM’s unexpected willingness to allow workers at joint venture battery plants to be covered by union contracts. GM and the UAW have been discussing the precise terms this week.
The UAW and Stellantis have another major round of bargaining set for Thursday, sources said.
The Detroit automakers will report third-quarter financial results between Oct. 24 and 31, and the UAW could use what are expected to be robust profits to press their case for a richer contract.
Before Wednesday’s Ford announcement, the union had ordered walkouts at five assembly plants, including two Ford assembly plants, at the three companies and 38 parts depots operated by GM and Stellantis.
Separately, BlueOval SK, Ford’s battery joint venture with South Korea’s SK On said on Wednesday it would offer higher wages for some workers at its plants in Tennessee and Kentucky, ranging from $24 to $37.50 per hour based on experience, though it did not give details of the previous wages.