The UAW strike and its implications for U.S. industry

U.S. Steel already has announced plans to idle one blast furnace with the likelihood of the recently announced United Auto Workers strike continuing for some time. Other steelmakers are likely to follow suit. Sdlgzps/iStock/Getty Images Plus

Firms up and down the supply chain have braced for impact after the United Auto Workers (UAW) union went on strike on Sept. 15.

The work stoppage leaves the Big Three automakers and their union-represented workers—and, by extension, everything along the chain that touches automotive, especially steel—in uncharted territory.

The UAW has resumed talks with Ford, General Motors, and Stellantis, the European company that owns well-known U.S. brands such as Dodge, Jeep, and Ram. But a deal does not seem imminent.

“We have a long way to go,” UAW President Shawn Fain said in an interview with NPR. “And if the company does not respect the demands of our workers, then we will escalate action.” Those demands include significantly higher wages, protection against inflation, and better benefits for both active and retired members.

The UAW initially struck three plants: a Ford plant in Wayne, Mich.; a GM plant in Wentzville, Mo.; and a Jeep factory in Toledo, Ohio. The union has said it will expand the strike if it does not get what it wants at the bargaining table.

Where do things go from here? The answer to that question might be found in the past.

Standing Up in 2023

Let’s look at Fain’s rhetoric. Here’s one example from a rally in Detroit: “We’re not going to wreck the economy. We’re going to wreck their economy. Because it only works for the billionaire class.”

But beyond the fire and brimstone, there’s the name itself: The Stand Up Strike. Fain said explicitly that this hearkens back to the Sit Down Strikes of the Great Depression.

In 1936, GM workers started to occupy plants. Doing this “protected (the workers) from both violence and weather as well as from the threat of being replaced with other workers unwilling to go along with the strike,” according to an article in the Library of Congress. After 44 days of striking, GM announced a deal. Workers at other companies soon took notice of the success. In the space of two weeks, 87 sit-down strikes occurred in Detroit alone. UAW membership swelled.

This time, the UAW is targeting specific plants across all three automakers instead of all plants at one automaker, which has been standard practice in past negotiations.

Plants can be struck at any time, and the UAW could still call for a broad-based walkout. Fain has changed the rules of the game. For anyone along the supply chain making contingency plans, this strike flexibility complicates matters.

Two more differences stand out: market share and electric vehicles (EVs). GM, Ford, and Chrysler had a combined market share of more than 85% through the 1960s, according to an American Enterprise Institute article from 2019. It didn’t go below 50% until 2008, the article added. With competition from Nissan, Honda, and Toyota, which all happen to run nonunion plants in North America, the Big Three are no longer the only game in town.

In some respects, it’s the very notion of Motor City that’s at stake. What happens to UAW workers when the gasoline engines that powered Detroit’s rise are no longer necessary?

The internal combustion engine itself has stiff competition coming down the pike from EVs. Managing the EV transition successfully for workers is one of the UAW’s concerns. For that transition to occur, though, a lot depends on the infrastructure to sustain it, and that means government.

The White House Responds

Automobiles depend on roads, and EVs depend on electricity. Constructing charging stations, fortifying the current electrical grid, and providing enough power to match the uptick in EVs require all levels of government to be involved. The federal government and many state governments already have subsidies in place for EVs, but that fundamental infrastructure transformation has not yet taken place. As the automakers move forward, it’s clear the government will be involved in some fashion. Will that mean guiding a path or more direct action, akin to the auto bailout of 2008?

Regarding the strike, so far President Biden has voiced his support of the UAW’s right to take action. He said union members “deserve a contract that sustains them and the middle class” in remarks quoted by several media outlets.

So let’s put this in context. The Big Three face diminished market share compared to the last century, competition from nonunion automakers, and a difficult and expensive transition to EVs. What does that mean for a resolution to this strike? Beyond that, how much of a role will the government take behind the scenes, and how do election-year politics factor into that? We’ll have to wait and find out.

What Does It Mean for Steel?

One thing we didn’t have to wait around for was any direct impact of the strike on the domestic steel industry. Mills contacted by Steel Market Update (SMU) were reluctant to share their contingency plans.

However, on Monday, Sept. 18, U.S. Steel announced it was temporarily idling blast furnace B at its Granite City Works near St. Louis because of the strike. That effectively halted steelmaking there because the only other blast furnace at Granite City, the A furnace, has been idle since April 2020.

“Following the announcement of UAW strike actions, we are executing our risk mitigation plan to ensure our melt capacity is balanced with our order book,” a company spokeswoman said in an email to SMU.

Keep in mind that significant fall maintenance outages had already been in the works before the strike became headline news. Could we see other steelmakers announce furnace idlings or extend maintenance?

Also to consider is the steel industry’s own union: The United Steelworkers (USW). In a show of solidarity, the union posted the following on X, formerly Twitter, on Monday, Sept. 18: “Ford, GM, and Stellantis made $250 billion in North American profits over the last 10 years, but our sibs at the UAW haven’t gotten their fair share. Their strike is a fight for all of us!”

Sen. Bernie Sanders, D-Vt., has thrown in with the UAW, going so far as to call for a four-day workweek. Does that message resonate beyond his supporters or beyond the UAW? Whatever happens, you can be sure that union-represented employees across manufacturing are taking note of how many of the UAW’s demands are met.

The USW inked new four-year contracts with domestic steelmakers last year. Those contracts don’t expire until September 2026. That may seem like a long time from now. But if the last three years are any indication, we can be sure that the next three won’t be business as usual.

Steel 101 Goes to South Carolina

SMU will take its Steel 101 workshop on the road to Charleston, S.C., Oct. 24-25. The workshop will include a tour of Nucor Steel Berkeley.

In the morning of the first day of the course, those new to the industry will learn how steel is made. They’ll then see it being made in the afternoon at Nucor, an experience that really makes that knowledge stick.

Attendance is limited, so don't miss out. Register here.

Also, our next big show after Steel Summit last August is the Tampa Steel Conference, which we do together with Port Tampa Bay. That event is Jan. 28-30 at the JW Marriott Tampa Water Street. That’s the high season for tourism in Florida, and rooms go fast. Consider registering early, which you can do here.