In a significant development that reverberated across the automotive industry, Stellantis reported staggering financial losses in the wake of a 44-day strike involving 46,000 U.S. auto workers (UAW). The toll on the company amounted to a remarkable $3.2 billion in lost revenue representing a 5% decrease in Stellantis’ total revenue for the July-to-September period and a profit dip of approximately $800 million representing a 20% decrease in Stellantis’ total profits for the July-to-September period. The impact of the strike on Stellantis’ financial performance is expected to continue into the fourth quarter of 2023 and beyond.
Union Power and Company Responses
This historic six-week strike, which affected automotive giants- General Motors, Ford, and Stellantis – came to a conclusion following a tentative agreement reached between General Motors and the United Auto Workers union, joining Ford and Stellantis in the aftermath. Ford and GM reported profit losses of $1.3 billion and $800 million, respectively, underscoring the magnitude of the strike’s impact.
Stellantis Chief Financial Officer Natalie Knight emphasized that their experience as a major global entity sets them apart, highlighting the differences in how the strike’s fallout affected them compared to their competitors. Despite this substantial setback, the company still managed to report a notable increase in sales and revenue for the July-to-September period, marking a 7% rise compared to the same quarter in 2022, amounting to a substantial $48 billion.
Stellantis affirmed its determination to achieve its annual profit goals, demonstrating resilience in the face of the strike’s challenges. The United Auto Workers (UAW) revealed that the tentative contract with Stellantis includes a 25% increase in base wages by 2028, along with cost-of-living adjustments that cumulatively raise the top wage by 33%, surpassing $42 an hour.
Worker’s Impact
While the strike was in full swing, Stellantis had to place over 1,000 employees on layoff at various facilities, including the Toledo Machining Plant in Ohio and the Kokomo Transmission and Kokomo Casting facilities in Indiana. Notably, nearly 7,000 workers staged a walkout at Stellantis’ most profitable plant, which further intensified the UAW strike. This walkout, occurring shortly after UAW President Shawn Fain disclosed a new offer from Stellantis involving a 23% wage increase, emphasized the urgency of addressing worker demands.
The UAW’s strategic approach of escalating targeted strikes exacted a substantial financial toll on not only the Detroit Three but also suppliers, collectively costing billions of dollars over the 44-day duration of the strike. General Motors, for instance, disclosed that the strike resulted in an estimated $200 million loss in profits per week.
U.S. President Joe Biden celebrated the tentative agreement, affirming his pro-union stance. This development was particularly significant, as the UAW strike against General Motors, Ford, and Stellantis commenced on September 15, 2023, marking the first coordinated strike against these major automakers since 2007.
Union Demands and Agreements
The UAW’s demands encompassed a substantial 40% wage raise, the elimination of the two-tier wage system, improved benefits, job security, and a call for automakers to invest in new U.S. plants, products, and job creation.
The strike reached its conclusion on October 28, 2023, following tentative agreements between the UAW and the three automakers. These agreements not only entail the significant 25% wage raise by 2028 but also include cost-of-living adjustments, the elimination of the two-tier wage system, improved benefits, and a commitment to invest in new domestic plants and products. This four year tentative agreement is mirrored by all three companies. Moreover, Ford has made a noteworthy commitment of $50 billion towards electric vehicles and autonomous driving over the next five years.
