© Reuters. FILE PHOTO: Ford logo is pictured at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany September 10, 2019. REUTERS/Wolfgang Rattay/File Photo
By David Shepardson and Joseph White
DETROIT (Reuters) -United Auto Workers on Wednesday shut down Ford (NYSE:)’s biggest plant globally, halting production of lucrative pickup trucks with little warning, in a sharp escalation of the union’s four-week targeted strike against the Detroit Three automakers.
The UAW said that 8,700 union members at Ford’s Kentucky truck plant went on strike after the union said the No. 2 U.S. automaker refused to move further in contract bargaining.
UAW President Shawn Fain’s decision to shut down assembly lines that build Ford Super Duty pickup trucks and Lincoln Navigator and Ford Expedition large SUVs is a blow to Ford that could quickly undermine the automaker’s full-year profits.
Ford’s Kentucky truck plant, its most profitable operation, generates $25 billion in annual revenue, about a sixth of the company’s global automotive revenue. The company’s shares fell about 2% in after-hours trading, after closing 0.4% higher on Wednesday.
The Kentucky walkout is also a warning to General Motors (NYSE:) and Stellantis (NYSE:), whose wage and benefits offers fall short of Ford’s, based on summaries the automakers and the UAW have released.
The UAW had expected for the last two weeks an improved proposal from Ford, and on Wednesday it brought the same offer, a union source said.
Wednesday’s move came as Ford and UAW bargainers were working to resolve differences on retirement security and union representation at the company’s future battery plants, a Ford official said.
The Ford official said Fain and other UAW officials called a meeting with the company at 5:30 pm ET (21:30 GMT) on Wednesday and demanded a new offer, which Ford did not have.
“You just lost Kentucky Truck,” Fain said, according to the Ford official and the union source, speaking on condition of anonymity because the talks are not public.
“This is all you have for us? Our members lives and my handshake are worth more than this,” Fain added, according to the union source.
For the past four weeks, Fain has made decisions about new walkouts on Fridays at the Detroit Three’s plants in video addresses. But Fain has said time and again his aim is to keep the automakers off balance.
Even with Wednesday’s walkout, only about 22% of the 150,000 UAW workers at the Detroit Three automakers are on strike. However, thousands more have been furloughed from jobs at operations that are not on strike because automakers said the walkouts made their work unnecessary.
The walkout in Kentucky will put stress on Ford UAW members beyond the sprawling factory near Louisville.
Workers at a dozen other Ford plants that supply engines, transmissions and other components to the plant could be furloughed. Suppliers to the plant’s trucks and SUVs could also be forced to temporarily lay off workers.
Ford said the decision is “grossly irresponsible but unsurprising given the union leadership’s stated strategy of keeping the Detroit 3 wounded for months through ‘reputational damage’ and ‘industrial chaos.'”
“It is a very profitable plant and because there was no notice at all, it will be particularly disruptive,” said Harley Shaiken, labor professor at the University of California, Berkeley.
“This is a major step hitting the bottom line,” Shaiken said. “This sends a signal that the union could escalate this strike any moment of the day or night. This is uncharted territory for both sides. The union has never used this strategy and Ford has never experienced this strategy.”
The UAW on Friday had held off on additional strikes against Detroit Three auto plants, citing GM’s unexpected willingness to allow workers at joint venture battery plants to be covered by union contracts. GM and the UAW have been discussing the precise terms this week.
The UAW and Stellantis have another major round of bargaining set for Thursday, sources said.
Before Wednesday’s Ford announcement, the union had ordered walkouts at five assembly plants, including two Ford assembly plants, at the three companies and 38 parts depots operated by GM and Stellantis.