How the UAW Strike May Impact Fleets

Since September 15, the United Auto Workers (UAW) union has been on strike against America’s “Big Three” automakers—Ford, General Motors and Stellantis. What began with 13,000 workers walking out of three assembly plants in the Midwest has since expanded into a nationwide labor action.

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Why is the UAW on strike?

By going on strike, the UAW hopes to negotiate better wages and improved job security for its members. First and foremost, the union is demanding a roughly 40% general wage increase. Citing historic inflation, $21 billion of collective profit for the Big Three this year and rising CEO pay, the UAW argues that this pay raise is essential for the livelihoods of its members and completely feasible for the auto manufacturers. At the time of writing, the Big Three have offered an approximately 20% pay jump that the union has rejected.

Additionally, the UAW is aiming to reinstate cost-of-living-adjustments (COLAs). During the 2008 financial crisis (that ultimately culminated with the US bailing out GM and Chrysler to the tune of $17 billion), autoworkers gave up these protections. Now, the union is demanding these inflation countermeasures be brought back to insulate its members from future economic turbulence. In recent weeks, Ford, GM and Stellantis have floated COLA proposals to the UAW, but all have been dismissed.

Updates on the UAW Strike

• September 22, 2023 – An estimated 5,600 UAW workers at 38 General Motors and Stellantis-operated parts distributions centers join the picket line, putting further pressure on the nation’s largest domestic auto manufacturers to comply with the union’s demands.
• September 29, 2023 – About 6,900 workers at Ford’s Chicago and GM’s Delta Township manufacturing plants join the strike. Approximately 25,200 employees (or about 17% of UAW members covered by expired contracts with the Big Three) are now participating in work stoppages.
• October 11, 2023 – Approximately 8,700 UAW members at Ford's Kentucky Truck Plant, the automaker's largest and most profitable factory, walk out. It's estimated that about 33,700 UAW members are now participating in the strike.
• October 23, 2023 – Close to 6,800 workers at Stellantis' Sterling Heights Assembly Plant (the largest that it operates) leave their posts to join the picket line. Over 40,000 autoworkers are now on strike.
• October 26, 2023 – The UAW announced that it has reached a tentative agreement with Ford, calling for all workers to return to their jobs. While the agreement still has to be approved by 57,000 union members, it could create a playbook for resolving the strike across all three automakers.
• October 28, 2023 - Just a few days after their breakthrough with Ford, the UAW announced a tentative deal with Stellantis. While yet to be finalized via an acceptance vote by union members, the deal is reported to include major wage increases and the reopening of an Illinois factory shuttered early this year. As things stand, tentative agreements have now been reached with two of Detroit’s Big Three automakers.
• October 30, 2023 - After six weeks of being on strike, the UAW has announced a tentative deal with General Motors, the last Big Three holdout. Various news outlets are reporting that the yet to be ratified deal includes several concessions to the union's demands related to wages, job security and more. A series of acceptance votes by UAW members may bring the strike to an end in the near future.

*Updates as of October 30, 2023

What is the potential impact of the strike?

With production of Ford, GM and Stellantis vehicles and parts diminished, fleets might want to brace themselves for the possibility of higher prices and longer delivery times. While leagues better than just a few years ago, global and domestic supply chains are still recovering from disruptions suffered during the pandemic. Fewer active manufacturing plants certainly won’t help prices and availability return to normal faster.

That being said, it’s important to stress that any price increases and order delays are unlikely to be of the magnitude fleets experienced during the height of the pandemic. At the time of writing, the UAW is coordinating work stoppages at select locations operated by the Big Three. This means that, instead of halting or impeding production across the board, vehicles and their parts are still being made across the US. If the UAW continues with this approach, fleets will likely have to pay more and wait longer when procuring vehicles and parts, but not by drastic amounts.

Of course, if the current strike escalates to more plants, repercussions will become more severe.

What can fleet managers do to limit the impact of the strike on their fleet?

If the strike ends up impacting the supply in a significant way, we could end up seeing some of the vehicle procurement issues that we've seen throughout the pandemic. To compensate, you might have to hold onto vehicles in your fleet longer than you had initially planned. Here's how to extend the life of your aging fleet vehicles.

Keep a close eye on DVIRs

Driver vehicle inspection reports (DVIRs) act as a first line of defense safeguarding your fleet from costly breakdowns. But too often defects recorded in DVIRs go unaddressed if they are not deemed to be an issue requiring immediate service. Because even seemingly innocuous flaws can lead to serious equipment failures in the future, fleets would be well-advised to refrain from kicking the can down the road.

Instead, fleets (especially those with aging vehicles) should closely track their DVIRs to ensure failed items are responded to in a timely manner. Fleet managers can use fleet performance monitoring software to easily track their DVIRs and observe trends.

Follow OEM guidelines for high mileage maintenance intervals

As people age, doctors advise their patients to visit them on a more frequent basis. In much the same way, original equipment manufacturers (OEMs) recommend their vehicles be serviced more regularly once a certain odometer reading has been reached. These OEM guidelines typically suggest that particular maintenance actions be conducted based on intervals of mileage (e.g. oil changes every 3,000 miles) or time (brake inspections every year).

By following these recommendations, fleets can prevent minor wear and tear from snowballing into costly breakdowns, keeping their vehicles on the road longer.

Fleet management software can make staying on top of high mileage maintenance intervals easy by automatically reminding you when service is due. Users can configure these reminders to appear based on time or vehicle meter reading-based intervals (or both).

Track TCO to identify cost outliers

While nearly every organization tracks the cost of acquiring new vehicles, far fewer record how much they invest in maintaining their vehicles over the years. As a result, these fleets often fail to see when they’ve spent excessive amounts on a vehicle that would be better off being replaced. This lack of total cost of ownership (TCO) visibility is especially problematic when dealing with aging vehicles due to their greater maintenance needs.

Fortunately, fleets of all sizes can easily track TCO with the help of a fleet management system (FMS). One of the greatest benefits of fleet management software is their ability to capture every expense associated with a vehicle (e.g. fuel, insurance, maintenance, etc.) and report TCO in real-time. This intelligence enables fleet managers to make more informed decisions regarding vehicle utilization and replacement policies.

Assign assets based on their CPM

While there are many metrics fleet managers should be cognizant of, cost per mile (CPM) stands out as one of the most useful. Derived from dividing a vehicle’s TCO by the number of miles it has traveled, calculating a vehicle’s CPM can help fleet managers better understand the expenses associated with completing a particular job with that specific vehicle. With that knowledge, fleet managers can improve their fleet’s profitability by assigning assets based on their CPM.

For instance, if a job requires considerable travel, dispatching a vehicle with a lower CPM will be more cost-effective than using a vehicle with a higher CPM. Because aging vehicles are more likely to have a higher CPM, fleet managers can use this CPM-based approach to assign them to jobs closer to where they are stored.

The right software can make fleet asset management a breeze by consolidating all information related to your assets into a single source of truth. From logging assignment histories to storing documents and surfacing critical fleet utilization metrics, digitizing your asset management approach can dramatically enhance the efficiency of your operations.

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