How to minimize fleet impact from OEM union workers’ strike
August 28, 2023
General Motors, Ford and Stellantis are negotiating contracts with their respective unions. In the U.S., they are negotiating with the United Auto Workers (UAW), and in Canada, they are engaging with Unifor. These discussions could cause significant impacts on the future of the automotive landscape, such as production disruptions, vehicle shortages and higher acquisition costs should the unions’ contracts expire on September 14 (UAW) and September 18 (Unifor), prior to reaching agreements.
Explore information about contract negotiations and Element Fleet Management’s expertise on forecasted outcomes and potential impacts fleets could experience if a union strike occurs. Help your fleet maintain operational and fleet vehicle acquisition stability by applying our proactive recommendations.
Initial contract negotiations between the original equipment manufacturers (OEMs) and union workers include discussions surrounding wages, benefits, job security and other labor-related issues. These topics emphasize a need to strike a balance between ensuring competitive pay for the workforce while maintaining the sustainability and profitability of the manufacturers.
Potential union strike scenario
A strike is very likely if the OEMs and unions can't agree on contracts before they expire. A union strike would halt production lines, disrupting the timely delivery of vehicles. This situation could exacerbate existing supply chain challenges and create a ripple effect that could impact various stakeholders including fleet operators, transporters, upfitters and more.
Forecasted outcomes should union strikes occur
Short-term production disruptions
A strike would lead to the temporary closure of assembly production and parts plants, disrupting vehicle supply. This could cause delays in fleet vehicle replacements and could force some fleets to seek alternative solutions.
Fleet vehicle shortages
Extended union strikes can result in a shortage of popular fleet vehicle models in the market. Fleet professionals may face difficulties in securing specific vehicles that cater to their operational needs, potentially leading to higher costs to maintain existing vehicles and operational inefficiencies.
Higher acquisition costs
With demand exceeding supply, fleets could encounter higher acquisition costs for alternate vehicles and new vehicles once production resumes. This could strain budgets and force businesses to reassess vehicle replacement prioritization.
Rental market surge
During a strike and potential vehicle shortage, businesses may turn to the rental market to meet their short-term mobility needs. This sudden increase in demand could cause temporary availability challenges.
Impact on vehicle upfitting and service
The repercussions of a union strike could extend to vehicle upfitting and service providers, as they may face delays or disruptions in receiving essential OEM components and spare parts, affecting fleet maintenance schedules.
Recommendations and resources to help mitigate fleet disruption
Fleet managers must adopt proactive measures to minimize potential disruptions caused by a union strike. The following recommendations can assist you in navigating possible uncertainties associated with OEM union workers’ strikes.
- Diversify fleet vehicle suppliers: Identify comparable alternate OEM vehicles to help mitigate the impact of a strike from a single manufacturer.
- Proactive strategy: Gain advanced approval for alternate vehicles and specs prior to a potential strike, and obtain pre-negotiated incentives and pricing agreements with OEMs for these alternate vehicles.
- Inventory management: Maintain an adequate inventory of essential vehicles to buffer against sudden vehicle supply constraints. Consider prioritizing which fleet vehicles will be replaced or kept in service should a strike cause limited supply.
- Vehicle repairs: Element has always emphasized the importance of regular, preventative maintenance. Given the current circumstances, prioritizing this approach is more crucial than ever to mitigate the risk of significant vehicle issues.
The discussions between vehicle manufacturers and workers' unions are crucial and could significantly affect the fleet industry and operations. Contact Element Fleet Management for expert advice on preparing for union strikes and minimizing their impact on your business.
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