After all three Detroit automakers increased their offers to the
UAW but did not fully meet the UAW demands, the union went on
strike at key plants at midnight on September 15. The following
includes initial analysis from S&P Global Mobility as of the
afternoon of September 15.

Fast Facts

• S&P Global Mobility estimates that the combined impact
  could be about 3,200 units per day, on a straight-time production
  schedule.
• Prior to the strike action, the S&P Global Mobility
  light-vehicle production forecast expected combined production at
  these three plants to decline 17% compared with 2022. In 2022,
  these plants produced about 770,000 units.
• Days supply: Reports indicate that at the end of August
  Wrangler had 74 days supply, Gladiator 188 days supply and Canyon
  62 days, though Colorado only 35 days, Bronco 40 days, and Ranger
  only 26 days.
• Toyota is about to launch an all-new Tacoma, while the strike
  will hamper start of production for Ford Ranger and ramp-up of
  updated GMC Canyon and Chevrolet Colorado and Jeep’s transition to
  minor updates to Wrangler and Gladiator, potentially handing
  segment-leading Toyota an inventory advantage
• According to S&P Global Mobility estimates, Ford, GM and
  Stellantis combined account for about 49% of US light-vehicle
  production in 2022. Prior to the strike, the forecast was expected
  to drop to 45% in 2023.

Outlook

The UAW strike against three key mid-size truck and utility
plants affects the Chevrolet Colorado/GMC Canyon and Chevrolet
Express/Savana; Ford Bronco and Ranger, and Jeep Wrangler and
Gladiator. Through July 31, 2023, these products have accounted for
a total of 324,507 units registered, according to S&P Global
Mobility light-vehicle registration data, which is 14% lower than
at the same point of 2022, when 377,914 units were registered. In
full-year 2022, these vehicles saw a combined 617,732 units
registered. The plants affected include Ford’s Michigan Assembly
Plant, GM’s Wentzville Assembly Plant and Stellantis’ Toledo
Assembly Complex (including both Toledo North and Toledo Supplier
Park). According to S&P Global Mobility light vehicle
production forecast data, closures of these plants suggest
potential impact of about 3,200 units per day of lost production,
assuming a straight-time schedule.

Under revised offers, GM offered a 20% raise to hourly workers,
while Stellantis has offered a 17.5% raise and Ford has offered
20%. However, based on the information disclosed publicly by all
sides, the automakers and the UAW remain far apart on several
issues. It is unclear how long the strike will last, though
Automotive News reports that the UAW has said it will not
negotiate on Friday, September 15, indicating the strike will run
at least through the weekend. The UAW has indicated that other
strategic targets will be added if negotiations continue to fail,
though what these will be is also not yet specified.

In terms of disrupting upcoming production launches of updated
vehicles, the Michigan Assembly Plant is scheduled to see start of
production of a new model of Ranger in September while Jeep is
adjusting for minor updates to Wrangler and Gladiator for 2024
model. The strike against these mid-size pickup trucks is also
happening as the latest-generation segment-leader Toyota Tacoma is
set to arrive. Ford is scheduled to start production of the new
Ranger in September; the strike could delay that production start
and further complicate GM’s ramp of Canyon and Colorado, both of
which are new for 2023 model year.

The choice to target mid-size trucks instead of full-size trucks
reflects the fragility of the strike effort. While there is a need
to strike where there will be noticeable impact, the UAW avoided
the full-size pick-up truck plants in this initial action. Though
ultimately EV versions of the products at these facilities is
expected, the transition is forecast to be outside the expected
contract period for the Ford projects and late in the contract
period for Stellantis. GM is expected to see EV production of its
vans in Wentzville about 2026. The UAW is aiming to impact
automakers at important points and selecting pick-up trucks clearly
is aimed at looking at a high-margin, high-impact product. Sales of
these mid-size products are substantially below the much more
profitable full-size pick-up trucks.

Initial observations from our team include:

Stephanie Brinley, Associate Director, Automotive
Intelligence, S&P Global Mobility:

“The depth of the strike impact will depend on the length
and whether it is expanded to other plants, and these are unknowns
so far. However, in terms of perception and consumer expectations,
the uncertainty created by a well-publicized strategic strike has
potential for a more immediate impact. This could play out in
consumers looking to close vehicle purchases more quickly over a
perceived concern for lack of inventory, while others may pull back
and opt to wait it out. And if the strike does continue and does
expand, there will be actual and not only perceived inventory
issues.”

Joe Langley, Associate Director, North American
Production Forecasting, S&P Global Mobility:

“While the UAW strike starts with three vehicle assembly
plants, this signifies the beginning of a potentially long-lasting
and damaging strike. This strategy aims to gradually intensify
pressure on the manufacturers in the coming weeks with more plants
expected to strike. It starts with daily losses of 3,264 units and
could ultimately lead to cumulative losses reaching hundreds of
thousands of units.

On a straight-time basis, production losses spanning
GM-Wentzville, Ford-Michigan Assembly and Stellantis-Toledo
Assembly Complex totals 3,264 units per day or 16,318 per a
five-day workweek.”

Michael Robinet, Executive Director, Consulting
services, S&P Global Mobility:

“A prolonged labor dispute could cause irreparable damage to
an already fragile supply base weathering numerous challenges.
Suppliers are dealing with higher interest rates, extreme labor
inflation, fluctuating vehicle demand and the need to invest in
electrified propulsion. Supplier viability is a major
concern.”

Eric Anderson, Associate director, North American
Powertrain Forecasting:

“Although no battery electric vehicle plants have
been targeted in the initial strike action, this may change in the
coming weeks. Some of the impacted Jeep volume is PHEV production,
so that could have repercussions if the situation is not resolved
soon. The UAW also recognizes that although there may be some risks
in the transition to BEVs, securing BEV investments is likely to
secure a long-term future for the respective plants. Currently,
internal combustion engine-based vehicles remain the higher volume
products, and likely more profitable, and therefore were targeted
first.”

We are continuing to monitor the situation and will share
additional details as we have them available. In the meantime,
please reach out to us with questions at mobility@spglobal.com .

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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• Source: http://www.spglobal.com/mobility/en/research-analysis/uaw-strike.html