A UAW strike of Fiat Chrysler could cost the Detroit automaker close to $1 billion a week in lost revenue and would quickly lead to a shortage of several hot-selling vehicles.
An extended shutdown could be devastating for FCA, the only major auto group whose U.S. market share has risen in 2015.
The union and FCA were sent back to the bargaining table this week after 65 percent of FCA’s UAW rank and file rejected a proposed contract. And late in the week, both sides were planning their next moves — moves that could include a strike.
FCA’s six U.S. assembly plants produce more than 35,000 vehicles per week — ranging from a $17,890 Jeep Patriot to the $112,090 Dodge Viper GTS Coupe.
Among those built in the U.S. are the auto-maker’s most popular vehicles: the Ram 1500 in Warren, Mich.; the Jeep Cherokee and Wrangler in Toledo, Ohio; and the Jeep Grand Cherokee in Detroit.
At an average wholesale price of $25,000 — estimating conservatively — that would total about $175 million in lost revenue per day if production of those vehicles were stopped. FCA’s costs also would decline because the company wouldn’t incur parts and labor expenses.
For dealers, supplies of some vehicles could become tight very fast. On Oct. 1, FCA said it had 590,503 unsold vehicles in inventory, a 76-day supply. But FCA reported just 28,202 unsold Wranglers available on Oct. 1 — a 40-day supply, while Jeep Compass inventories stood at 46 days.
FCA said it had a 90-day supply of unsold Ram pickups, including light- and heavy-duty versions. Heavy-duty Rams are built in Mexico, and wouldn’t be subject to a UAW strike. But automakers normally desire at least a 100-day supply of pickups because of the many configurations and trim levels.
While a general strike could potentially shut down all 40,000 hourly workers at FCA, the union could act strategically — and save expenses from its strike fund.
A strike only at FCA’s giant Kokomo Transmission operations in Indiana would shut down about 75 percent of profitable Jeep and Ram pickup production, said Kristin Dziczek, director of the industry and labor group at the Center for Automotive Research in Ann Arbor, Mich.
FCA workers not on strike but idled by a shutdown at a key component plant such as Kokomo would be eligible for unemployment insurance, rather than the $200 per week from the union’s strike fund. Neither the UAW nor FCA would comment.
No Strike Happening at F-150 Plant…
Ford and the United Auto Workers union reached a new local tentative agreement for the Kansas City truck plant that comes days before a strike deadline that could have slowed production of the F-150 pickup.
UAW Vice President Jimmy Settles announced that an agreement was reached and UAW Local 249 bargaining chairman Todd Hillyard also notified plant workers in a Facebook post.
“I am happy to report the Bargaining Committee and I have reached a tentative local agreement with Ford Motor Company,” Hillyard said. “I think we have reached an agreement that our members’ will be proud of.”
Hillyard said the agreement “protected all of our members seniority rights, improved safety provisions along with many other things.” Highlights of the agreement will be released soon, he said.
The plant makes the F-150 full-size pickup truck and the Transit full-size commercial van.
Ford did not want any disruption to pickup production. The automaker is trying to build all the F-150s it can as it builds to full inventory after a year of disruption while it retooled its two plants to switch from steel bodies to a new generation of full-size pickups made of aluminum. They are about to start building the new 2016 model.
Ford spokeswoman Kristina Adamski, in a statement, said, “Working with our UAW partners, we have resolved the open items at Kansas City Assembly Plant and have agreed to a tentative local agreement. Plant operations will continue as scheduled.”
The plant became a flashpoint as local talks appeared to be at an impasse, which prompted Settles to seek national strike authorization.
Kansas City workers had received their strike duty assignments.