The ongoing United Auto Workers strike, which effectively halted work for The Big 3 — Ford, GM, and Stellantis — will have an impact on fleets. That’s the message from fleet professionals Government Fleet spoke to.
Michigan research firm Anderson Economics Group estimates that as of Oct. 16, the automakers have lost $7.7 billion during the strike, from additional facility costs, production costs, and lost sales.
The Latest From the Picket Lines
- 46% pay increase.
- 4-day work week with overtime pay beyond 32 hours.
- union representation at new electric battery plants.
- an end to employment tiers, which created two classes of employees — one of which the auto workers argue gets better benefits.
On Oct. 6, GM agreed in a written offer to place its electric battery manufacturing under the UAW's National Master Agreement, essentially assuring they will be unionized, according to PBS. This means the four U.S. GM battery plants would now be covered under the union’s master agreement and GM would bargain with the union. The move led the union to halt the planned expansion of its strikes against the Big 3.
Still, as the picket lines grew before that, so did the number of laid off auto workers. On Oct. 11, 8,700 more UAW members walked off the job, shutting down Ford's Kentucky Truck Plant in Louisville. UAW President Shawn Fain said it was a result of Ford refusing to make further movement in bargaining.
On Oct. 23, the union expanded its strike at Stellantis, where 6,800 workers walked out of the company's Ram 1500 truck plant in Sterling Heights, Michigan.
Then on Oct. 24, 5,000 more workers walked out of GM's Arlington Assesmbly Plant in Texas. That walkout came hours after GM released its third quarter earnings report.
On Oct. 20, Fain announced that in the past 24 hours, GM and Stellantis had presented new offers, but said there was "still room to improve."
The most recent proposals the Big 3 have offered, as of Oct. 20 are the same across the board: a pay offer of a 23% increase over 4.5 years.
Thousands of employees have been laid off across the Big 3 as a result of the walkouts, according to CNN.
UAW is paying $500 a week in strike benefits to its employed members on strike. Those who were laid off will also receive the weekly pay, since they will not be eligible for unemployment benefits in most cases due to the layoffs.
Fleet Professionals Respond
The strike is likely to have a trickle-down effect for both retail and fleet customers. This is especially true for public sector fleets, since they generally purchase American-made cars from The Big 3.
For public safety vehicles, which often need to be a specific make and model, the impact could be tremendous. The same applies to other specialty vehicles. This is something Coconino County, Arizona, Fleet Services Supervisor Jen Brown noted.
“We rely on specific types of vehicles for various purposes, including law enforcement, public transportation, and maintenance services. My concern for this strike can potentially lead to delays in receiving new vehicles or replacement parts, which may impact the operations and maintenance of our fleet,” Brown explained. “Our fleet requires regular maintenance and repairs to ensure the safety and reliability of our vehicles. The UAW-represented workers went on strike, this will potentially affect the availability of necessary replacement parts, potentially leading to longer downtimes for our fleet vehicles which puts a burden on our fleet availability.”
Also concerned about the repercussions is Charlotte Ashcraft, director, Fleet Management, Franklin County Commissioners, Columbus, Ohio.
"We are already struggling to get the vehicles we ordered and get our replacement plans back in rhythm (thank you, Covid) and now when they strike no vehicles will be coming out. This is just another negative for the automotive industry," she stated. "No vehicles being made. No parts available to repair existing vehicles. Limited vehicle orders being taken. Prices on used vehicles through the roof. New car prices going up and up. How much more can the auto industry endure?"
Bob Stanton, a retired government fleet director and current industry consultant noted that the UAW is being very strategic adding that their strategy is unlike any action they've executed previously.
"Their strategy used to be negotiating with one of the Big 3 and applying the new contract to all three after settling with the one," he explained. "Their current strategy of hitting all three at various, but not all, plants and including those that produce parts is very smart."
He adds that the impact on the public sector will be as follows:
- Delays already in place from previous orders will be further delayed causing public sector fleets to retain planned vehicle retirements driving up costs but not dramatically as the cost/vehicle in this sector is low.
- Vehicle production delays beyond vehicles already in the order bank from last year and before will be further extended. The industry is right in the middle of the public sector's ordering cycle calendar. Orders will continue to be placed but satisfaction of those orders placed now will be delayed further both by production plant slowdowns and the slowdown in parts deliveries. The currently planned vehicle retirements for which those orders being placed now are intended, just like those already in the retirement pipeline, will be pushed out further.
- If the concessions being discussed, such as a 32-hour work week at 40 hours of pay, are accepted, this will drive up vehicle purchase prices in the long term and may possibly cause further production delays, even when the strike is over. Normal production rates/day may be lowered with the shorter work week.
- Parts delays, which have not fully recovered from COVID, are likely to get worse as part production activity is impacted by the strike. This is likely to extend out-of-service delays already being experienced in some sectors.
"It is fortunate that only the Big 3 automakers are impacted and not the entire UAW population which includes some truck and heavy equipment plants," Stanton added. "Hopefully, the current striking workers won't garner support from the truck and bus makers but the unprecedented nature of this action makes future predictions about such merely speculation."
Stanton does point out that once completed vehicles are transferred from "produced" status to "shipped" status, those completed vehicles will continue to be delivered to customers. The strike is not impacting the shipping process, according to him.
"If the strike goes on for months, which in my view is unlikely, the first impacts will likely be felt in the law enforcement sector as those vehicles are replaced typically at a higher frequency than other vehicles in this segment and so the need for replacements in this sector is higher than for others," he explained.
Over a month ago, with the possibility of a strike, the Dakota County, Minnesota, fleet had already started adding more parts inventory.
Dakota County Fleet Manager Kevin Schlangen, CAFM, CEM, CPFP, explained that knowing the common parts they replace made it easy for them to plan what parts to stock up on, which enabled them to increase those amounts before they had shortages from the strike.
"Just like with all the other supply chain issues, we continue to hold on to vehicles longer. When new units show up, we get them setup and put them into service," Schlangen stated. "But instead of remarketing the old units we continue to keep them. We have the units as backups if other older units go down and we can’t get parts to repair them fast enough then we just put them back into service. We have an extensive preventive maintenance program and know the condition of our equipment."
Schlangen added that they would prefer not to keep the units around but that it is the most cost effective way to continue to provide coverage for user group needs.
"The strike is just one of a long line of challenges the fleet industry continues to have to deal with," he added.
Ways to Mitigate the Impact of the UAW Strike
Element Fleet Management recently released a basic guide for fleets that laid out three ways to mitigate the disruption to their operations. Here is what Element suggested:
- Diversify vehicle fleet suppliers: Identify alternate vehicles from other OEMs to help mitigate the effect of a strike from a single manufacturer. Fleets that are standardized with the vast majority of their vehicles coming from one OEM could see a major impact depending on the length of the strike.
- Have a proactive strategy: When possible, gain advanced approval from stakeholders for alternate vehicles and specs prior to a potential strike. While it’s too late for fleets to do that amid this particular strike, it might be a good idea to have alternate vehicles in mind in case orders are canceled because of the strike, leading to an anticipated flood of vehicle orders when order banks do open down the line.
- Manage your inventory: Maintain an adequate inventory of essential vehicles to buffer against sudden vehicle supply constraints. Consider prioritizing which vehicles need to be kept or replaced.
What are your thoughts on the strike? Any advice for readers on ways to limit the effects of the strike on your fleet operations? Keep the conversation going and comment below.
Editor’s Note: Check back periodically for updates on the ongoing strike. This story was last updated on Oct. 24.