Big Three US automakers eye return to full production after union ratifies new contracts

HOUSTON (ICIS)–The Big Three automakers in the US said they are ready to move forward and reach full production schedules in the coming days now that membership in the United Auto Workers (UAW) union have ratified new contracts and ended a six-week strike.

The Big Three – General Motors (GM), Ford, and Chrysler parent Stellantis – combine to produce almost 43% of new vehicles in the US.

The auto sector is important to the chemicals industry as a typical vehicle contains nearly $3,950 of chemistry including chemical products and chemical processing.

Virtually every component of a light vehicle, from the front bumper to the rear taillights, features some chemistry, according to Kevin Swift, ICIS senior economist for global chemicals.

The UAW, representing a combined 150,000 autoworkers at the Big Three, said on Monday that 64% of voting members voted in favor of the agreements.

The new contracts include significant wage increases of at least 33% and faster progression to top pay, shortening the time it takes to reach top pay levels to three years from eight years.

Stellantis agreed to reopen its Belvidere, Illinois, plant, which was shut down in February, and committed to building a $3.2bn battery plant on the site.

The UAW won commitments from all three automakers to bring electric vehicle (EV) and battery jobs under the union’s national agreements.

GM chairman and CEO Mary Barra said she was pleased with the ratification.

“We can now move forward as one team doing what we do best – delivering great products for our customers and winning together,” Barra said.

Mark Stewart, COO of Stellantis North America, said the company will now focus on executing its 2030 strategic plan.

Ford president and CEO Jim Farley said the company is on track to reach full production schedules in the coming days at its assembly plants in Michigan, Kentucky and Illinois that were affected during the strike.

IMPACT ON CHEMICALS
Ramesh Iyer, director, engineering plastics at Chemical Data (CDI) said the ratification is good news for the industry and that the impact was not as drastic as it could have been because strike only shut down high-volume vehicle production for a couple of weeks.

An analysis of industry data obtained by ICIS at the start of the strike showed monthly polymer demand likely fell by 26,000 tonnes for polypropylene (PP), 11,000 tonnes each for polyurethanes (PU) and nylon, and 5,000 tonnes each for acrylonitrile-butadiene-styrene (ABS) and polyvinyl chloride (PVC), based on H1 2023 volumes.

At the height of the strike, about 36% of the Big Three’s North American auto production was offline and associated plants had to cope with layoffs because of disruptions to supply chains related to the strike.

The National Automobile Dealers Association (NADA) said preliminary estimates from Wards Intelligence is that sales losses related to the strike totaled about 35,000 units, and that sales losses do not appear to have been made up by other original equipment manufacturers (OEMs).

Production losses were higher, NADA said, at about 200,000 units, but the loss did not significantly affect total industry inventory levels.

New light-vehicle inventory on the ground and in transit at the beginning of October totaled 2.06m units and October’s month-end inventory totaled 2.15m units, an increase of 4.4%.

“We believe that inventory levels will continue to build throughout the remaining two months of the year,” NADA Chief Economist Patrick Manzi said.

NADA is projecting new light vehicle sales to come in at 15.4m units for full year 2023.

Focus story by Adam Yanelli

Additional reporting by Al Greenwood

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