UAW expands strike to profitable GM Arlington Assembly plant in Texas

The United Auto Workers expanded its ongoing strike Tuesday to one of General Motors' most profitable factories in North America: Arlington Assembly Plant in Texas.

The union ordered about 5,000 members at that plant to walk out and join the so-called Stand Up Strike at 10 a.m. GM builds its highly profitable Chevrolet Tahoe and Suburban, Cadillac Escalade and GMC Yukon big SUVs at Arlington.

The move came on the day that GM reported its third-quarter earnings had taken a hit in part due to the strike. GM said the strike so far has had an incremental $600 million hit to its earnings before interest and taxes and moving forward it estimated the impact of the strike to be about $200 million per week based on the facilities on strike as of Sunday.

But GM still had a good quarter, reporting gains in its revenues. That prompted the union to call on the company to make a better offer than the one on the table that would give a 23% increase in wages over the life of the contract, an improved cost-of-living adjustment (COLA) formula, a faster path to the top wage for hourly employees and better pay for temporary employees.

"Another record quarter, another record year. As we've said for months: record profits equal record contracts." said UAW President Shawn Fain in a statement. "It’s time GM workers, and the whole working class, get their fair share."

GM CFO Paul Jacobson said strong earnings do not automatically equate to a richer UAW contract.

"When we look at the landscape out there, particularly around EVs (electric vehicles), we need to make sure that's an agreement that we sign that allows us to compete in the market," Jacobson said. "I can appreciate that earnings are strong right now, but there's a lot of uncertainty out there in the future with EV adoption, with the economy and we can't get ourselves in a situation of signing a deal that we can't afford to pay or that doesn't allow us to compete in the global marketplace."

A signal to the automakers and to the members

The latest strike expansion came after the UAW ordered 6,800 members at Stellantis' Sterling Heights Assembly Plant to join the picket line on Monday. There are now about 45,000 UAW members on strike across 46 facilities in the country belonging to the Detroit Three automakers since Sept. 15 when the strike launched.

But by shutting down Arlington on the heels of Stellantis' plant in Sterling Heights, where the Ram 1500 is built, the UAW has selected another high-profit plant to ratchet up the pressure to get a deal, said Harley Shaiken, labor expert and professor emeritus at the University of California-Berkeley.

"The shutdown has taken place on the day GM reported third-quarter financial results. I suspect the goal is to hasten the end of the strike by maximizing pressure on the bottom line at a critical moment," Shaiken said. "The union is sharply upping the cost of the strike to the corporations in the hopes of speeding a better settlement. The risk is that the companies dig in and a longer costlier strike is felt by UAW members."

The two latest strike moves from the UAW are designed to get all three car companies closer together on the issues of tier wages, temporary employee pay and benefits, years to progression to the top wage, retirement contributions and cost-of-living adjustments (COLA), said Marick Masters, a labor expert and business professor at Wayne State University.

"Also in dispute at two of the companies is the status of the joint-venture battery plants under the national master agreements," Masters said. GM, according to Fain, has agreed to include the battery plants under the national contract. "Time is running short to get this dispute resolved without inflicting permanent, irreversible damage on the companies in this turbulent industry."

Art Wheaton, director of Labor Studies at Cornell University, said striking this week at Sterling Heights Assembly Plant and Arlington indicates the two sides may be getting closer to a deal.

"It also means the next domino that's going to fall is the (Ford's) Rouge" plant, Wheaton said. "Fain is saying, 'We're tired of this. It's getting colder and let's get people back to work. So it's getting close to the last and best final offer.' Ford has said it can't afford more, but it hasn't said it's the last and best offer. GM has said, 'We've given all we can, but here's a little more.' "

Wheaton said Fain acknowledged on Friday that some of his membership was getting nervous, wanting to vote. Fain tried to calm them. But these two latest strike actions are as much for the membership as it is to apply pressure on the automakers.

"I think they're getting closer and it's saying, 'We did what we can do as the UAW. We struck their biggest moneymakers, so if we get a contract you better ratify it,' " Wheaton said. "It's a signal not only to the automakers, but it's a signal to the members."

GM responds to the action

Arlington is a significant hit because GM builds the big SUVs only at this location. So if the union were to take strike action at the U.S. factories that make GM's other profit-generators — full-size pickups — the automaker could still produce those vehicles in Canada and Mexico.

But that doesn't mean pickups are safe from strike action, Wheaton said, noting that during his Facebook Live presentation Friday, Fain alluded to future strike targets the union could pull the trigger on if needed. Arlington was one, as was Flint Assembly, where GM makes it heavy duty full-size pickups.

GM has invested nearly $2 billion in Arlington Assembly since 2015, including $500 million earlier this year to upgrade the plant to build future gasoline-powered SUVs.

In a statement emailed to the Detroit Free Press by GM spokesman David Barnas, GM called this latest strike action "unnecessary and irresponsible."

The statement read: "It is harming our team members who are sacrificing their livelihoods and having negative ripple effects on our dealers, suppliers and the communities that rely on us. Last week, we provided a comprehensive offer to the UAW that increased the already substantial and historic offers we have made by approximately 25% in total value. It is time for us to finish this process."

Early Tuesday morning, CEO Mary Barra addressed analysts in a conference call, saying, "the current offer is the most significant GM has ever proposed” to the UAW. She said it tops offers made at Caterpillar and other manufacturers, adding that it will give union members "record wages … it is an offer that rewards our team members, but does not put our company at risk.”

Barra said that GM will not reach an agreement with the UAW that endangers its EV future and when it does get an agreement with the UAW it will schedule an investor call to update Wall Street on the impact to GM’s business.

GM lags behind Ford

Fain said in a statement that despite "having made $10 billion in profits in the past nine months, breaking revenue records for another consecutive quarter, and beating Wall Street expectations, GM’s latest offer fails to reward UAW members for the profits they’ve generated."

All three automakers have offered a 23% wage increase across the life of the contract. On Monday, the UAW said Stellantis lags GM and Ford Motor Co., included cost-of-living adjustment, progression time to the top wage, profit-sharing and wages for temporary employees, as well as offerings to retirees.

On Tuesday, he said GM's offer lags behind Ford, with GM proposing a two-tier wage progression, the weakest 401(k) contribution offer on the table, a deficient COLA and other shortcomings.

"On the heels of their previous quarter, which set 'a post-bankruptcy record' in terms of revenue, it is clear that GM can afford a record contract and do more to repair the harm done by years of falling real wages and declining standards across the Big Three," Fain said in Tuesday's statement. 

More:6,800 UAW members ordered to join strike at Stellantis' Sterling Heights Assembly Plant

More:Stellantis workers after 5 weeks on UAW strike: 'Enough is enough. Let's get it done.'

Free Press staff writer Eric D. Lawrence contributed to this report.

Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.