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What To Know About The UAW Strike Possibility At The Big 3 Automakers

Dave Royse

Members of the United Auto Workers union overwhelmingly voted to give their leaders authorization to strike, if necessary, as the union negotiates this year with the "Big 3" American automakers: General Motors Company, (NYSE: GM), Ford Motor Company (NYSE: F) and Fiat Chrysler Automobiles NV (NYSE: FCAU).

What To Know

The UAW announced Tuesday that 96% of the union employees at each of the Detoit car makers voted last week to support a strike if necessary. The current contracts expire just before midnight on Sept. 14.

“No one goes into collective bargaining taking a strike lightly," UAW President Gary Jones said in a statement. "But it is a key tool in the tool belt as our bargaining team sits across from the company.... Clearly the UAW stood up for them in a very dark time, now that they are profitable it is time for them to stand up for all of us.”

The UAW and General Motors will work over the next week and a half, and if they're able to work out a contract, that deal will serve as a blueprint for the UAW contract with Fiat Chrysler and Ford.

See Also: 5 Earnings Season Takeaways For Auto Investors

Strike Not Only Possibility In Stalemate

If the companies can't get an agreement from the union by the deadline, the current contracts could be extended until a new contract is ratified.

GM may have the most contentious relationship with its union workers right now. The company announced late last year it would effectively idle two of its five Detroit-area plants; its plant in Lordstown, Ohio near Youngstown; one near Baltimore; and one in Canada.

The future of some of those plants is expected to be part of the contract talks. Electric truck maker Workhorse Group Inc (NASDAQ: WKHS) is trying to buy the idled plant in Ohio, but the UAW opposes the sale.

Last GM Strike 12 Years Ago

The last time UAW workers went on strike against GM was in 2007. That 73,000-worker strike idled 80 plants for two days, costing the automaker about 0 million a day, and was the union's first against GM since 1970.

This year's talks are expected to be among the most difficult in years, in part because of changing dynamics in the auto industry, with sales trends forcing companies to back away from certain vehicles and uncertainty over the global economy and trade with China looming over the manufacturing sector.

Federal Investigation

Talks are also made more difficult by a federal probe into the UAW and executives at the automakers. The investigation involves alleged improper use money by union officials and allegations that auto executives bribed union officials. Three former Fiat Chrysler executives have already been sentenced in the case.

Federal officials last week raided UAW president Jones' home as the investigation widened.

Photo credit: Dwight Burdette

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