The United Auto Workers union, in a massive escalation in its fight against the Detroit Three, is expanding strikes to highly profitable plants at both Stellantis (STLA) -) and General Motors (GM) -). The union called on 6,800 workers at Stellantis' Sterling Heights Assembly Plant in Michigan to stand up and strike Oct. 23. The plant produces the company's Ram 1500 full-size pickup trucks.
On Oct. 24, hours after GM reported a third-quarter earnings beat, the union called on approximately 5,000 workers at GM's Arlington Assembly plant in Texas to strike. The highly profitable plant is responsible for producing GM's full-size SUVs, including the Cadillac Escalade, Chevrolet Tahoe and Suburban SUVs.
Around 45,000 members of the UAW are now actively on strike after this back-to-back escalation, which marks the first work stoppages since the union changed its strategy Oct. 13.
Related: Former Ford CEO has a blunt warning for UAW union strikers
"We've tried to do things the right way. We've taken our time, we've been patient with these companies," UAW President Shawn Fain said Monday. "It's time to amp up the pressure."
Stellantis, whose latest offer included 23% wage increases, a roughly 50% increase in company contributions to retirement plans and other benefits, was "outraged" by the strike expansion.
"Following multiple conversations that appeared to be productive, we left the bargaining table expecting a counter-proposal, but have been waiting for one ever since," Stellantis said in a statement. "Instead, the UAW has decided to cause further harm to the entire automotive industry as well as our local, state and national economies."
Stellantis, highlighting the union's apparent strategy of "wounding" the Detroit Three, warned that there will be "long-lasting consequences" to every strike expansion, namely centered around a loss of market share to non-union competitors, something that will gradually eat into the automakers' profitability and ability to compete. This is an especially concerning area for the Detroit Three as they attempt to build out electric vehicle infrastructure, a sector that has been notoriously unprofitable for legacy automakers.
General Motors is bleeding cash
After reporting third-quarter net income of $3 billion, a 7% decrease from last year's period due to ongoing strikes, GM withdrew its full-year guidance, warning that the strikes have cost the company around $800 million in earnings thus far. The company said that it now expects to lose an additional $200 million every week that the strike persists.
Related: UAW president hides a hypocritical secret as union enters 'new phase' of strikes
"The implications of the UAW contract, when it is agreed to and ratified, will flow significantly through cost of goods sold in our margin performance," GM CFO Paul Jacobson said during the company's earnings call Tuesday. "We're going to have to look at potentially reducing fixed-cost further; we're going to have to look at efficiencies across the board."
Hours after GM released its report, the union announced the strike expansion against the company's Texas plant. The Arlington plant, according to some analysts, is the most "profitable auto plant in the world."
"We want our fair share. So let's get to it," Fain said Tuesday, Oct. 24. "We don't want to be out here on strike, but we're going to do whatever we have to do to get it. Let's get it done."
After dipping hard post-earnings, GM shares have stabilized.
The company said that it would provide a roadmap on EV profitability and margins at its Investor Day in March.
Shares of Stellantis are down 1% Tuesday morning.
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