The United Automobile Workers union went on strike at General Motors, sending nearly 50,000 members at factories across the Midwest and South to picket lines on Monday morning.
With the two sides far apart in the talks, UAW regional leaders in Detroit voted unanimously on Sunday morning to authorize the strike, the union's first such walkout since 2007. It began at midnight, after the union's current bargaining agreement expired on Saturday.
"Today, we stand strong and say with one voice, we are standing up for our members and for the fundamental rights of working-class people in this nation," Terry Dittes, a union vice president, said after the meeting.
The UAW is pushing GM to improve wages, reopen idled plants, add jobs at others and close or narrow the difference between pay rates for new hires and veteran workers. GM wants employees to share a greater portion of their health care costs and to increase workforce productivity and flexibility in factories. Although the company has been earning substantial profits in North America, it has idled four plants in the United States as car sales slide and overall demand weakens.
The strike is unfolding as President Trump's trade war with China wears on manufacturers and has stirred fears of a slowdown.
The shutdown could disrupt local economies in factory towns in several swing states like Michigan and Ohio, where President Trump has promised to increase manufacturing jobs. But any impact on the broader economy will depend on the strike's length.
The auto industry, even if it is far from its employment heights in the 1970s, remains crucial to the economy, counting some 220,000 people who work to manufacture cars. According to the Alliance of Auto Manufacturers, the broader vehicle industry supports 9.9 million jobs and historically accounts for about 3 percent of gross domestic product.
At the same time as the talks, a federal corruption inquiry has been looking into union officials and at least two Fiat Chrysler executives. The investigation has detailed the use of union funds for lavish travel and personal spending by senior UAW officials, including the president, Gary Jones.
It is a challenging time for the industry overall, with auto sales slowing in the U.S., China and other major markets, and new technologies such as electric cars and self-driving vehicles requiring billions of dollars in investments.
"Carmakers' profits today distract from two challenges," said Erik Gordon, a University of Michigan business professor who follows the auto industry. "The makers will be going into a downcycle of demand in their two most important markets, and they will have to make the biggest technology investments in their history to change to electric propulsion."
Among its goals, the union is hoping to get GM to reopen an idled car factory in Lordstown, Ohio, a goal that President Donald Trump has supported. The plant had made the Chevrolet Cruze, a compact car whose sales plunged nearly 40% between 2015, when the previous labor contract was signed, and 2018. The factory ceased production in March.
In a statement, GM said it had offered to make more than $7 billion in new investments in plants in the U.S., add 5,400 jobs and increase pay and benefits. "We presented a strong offer that improves wages, benefits and grows U.S. jobs in substantive ways, and it is disappointing that the UAW leadership has chosen to strike at midnight tonight," the company said Sunday. "We have negotiated in good faith and with a sense of urgency. Our goal remains to build a strong future for our employees and our business."
Lots of inventory on hand
It could take GM some time to feel the effect of a strike. The company has enough inventory on dealer lots to last 77 days at the current rate of sales, according to Cox Automotive.
The union did not resort to nationwide strikes against GM when it negotiated contracts in 2011 and 2015. Its members walked out of GM plants for three days in 2007 before a deal was reached.
GM employs 49,000 full-time and temporary UAW members, fewer than the numbers employed at Ford Motor and Fiat Chrysler. GM has a smaller UAW workforce than its rivals because larger portions of the vehicles it makes in North America are assembled in Mexico and Canada.
While the prospect of a strike has at least temporarily taken the spotlight off the union's legal troubles, the scandal has made members suspicious of UAW leadership, said Paul Wohlfarth, a retired UAW member from Toledo.
"It seemed like a few bad apples at first, but it's not," he said. "It's a whole bushel."
Since 2017, nine people have been charged in connection with a variety of schemes in which union money was allegedly used for extravagant personal spending. In one case, Fiat Chrysler's top labor executive bought a Ferrari sports car and renovated his home using money earmarked for a training center run by the union and automaker.