Raphael Stevens

The United Auto Workers union is preparing to conduct targeted strikes against the Detroit automakers if the sides fail to reach new deals by 11:59 p.m. ET.
UAW President Shawn Fain called the plans “historic,” but there are potential risks regarding what the union is calling “stand-up” strikes.
The targeted strikes could have unintended ripple effects for members and open the door for the companies to hire permanent replacement workers and even conduct plant lockouts.

United Auto Workers President Shawn Fain greets workers at the Stellantis Sterling Heights Assembly Plant, to mark the beginning of contract negotiations in Sterling Heights, Michigan, U.S. July 12, 2023.
Rebecca Cook | Reuters

DETROIT – The United Auto Workers union is preparing to conduct unprecedented, targeted strikes against Ford Motor, General Motors and Stellantis if the sides fail to reach new deals by 11:59 p.m. ET Thursday.
Targeted, or bottleneck, strikes are an alternative to national actions in which the union only strikes select plants. They’re different from when members walk out of all factories and onto picket lines, like what occurred four years ago during the last round of UAW negotiations with General Motors.

Targeted strikes typically focus on key plants that can then cause other plants to cease production due to a lack of parts. They are not unprecedented, but the way UAW President Shawn Fain plans to conduct the work stoppages is not typical. They include initiating targeted strikes at select plants and then potentially increasing the number of strikes based on the status of the negotiations.
“We will strike all three companies, a historic first, initially at a limited number of targeted locations that we will be announcing. Then, based on what’s happening in bargaining, we’re going to announce more locals that are going to be called to stand up and strike,” Fain said Wednesday during a Facebook Live.
Fain referred to the union’s plans as a “stand-up strike,” a nod to historic “sit-down” strikes by the UAW in the 1930s.
While “historic,” the targeted strikes could have unintended ripple effects. It’s not clear how one plant will impact on others. The actions could also potentially send non-striking union members to unemployment lines, if their state allows them to collect any benefits due to being out of work as a result of a strike.

What about lockouts?

The stoppages also more easily open the door for the companies to hire permanent replacement workers and even conduct plant lockouts, according to labor experts.

The UAW’s strategy puts “some heat on the companies,” but it also gives the companies “much more ability” to use such tactics, said Dennis Devaney, senior counsel at Clark Hill who formerly served as a board member of the National Labor Relations Board.

Read more about the Detroit labor showdown

“I think that obviously is not a good thing from the UAW’s perspective,” said Devaney, who also formerly served as an attorney for GM and Ford.
Plant lockouts, in which companies don’t allow workers into a facility, are more common overseas than in the U.S., but they have occurred.
For example, there was roughly a 10-month lockout of workers at an Exxon Mobil refinery in Texas that ended last year upon union ratification of a new agreement. The company said it was done in response to a strike notice issued by the union during negotiations in January 2021 for a new contract.
Automakers, however, may want to continue producing parts and vehicles at plants for as long as they can in the event of the strikes intensifying, especially following years of supply chain disruptions due to parts shortages and the coronavirus pandemic.
There are “significant, important factors” that companies need to take into account to determine if such “actions might be legal and appropriate,” said Jeffrey S. Kopp, a corporate labor attorney with 26 years of experience and a partner at Foley & Lardner.
The UAW knows lockouts are an option, citing “everything’s on the table” for both sides if it comes to striking under the expired deals, said a person familiar with the union’s plans.

Expired deals

The UAW hasn’t conducted a strike like this before because under terms of the union’s national contracts with the Detroit automakers, strikes at individual plants must be over local contracts, not national issues. But Fain said the UAW will strike at local plants over national issues.
(For context, the UAW as an organization has an “international” unit that operates a leader, or umbrella, for local UAW units that all have their own contracts in addition to a national agreement.)
Typically, such actions would be breach of the contracts and could lead to litigation or a complaint with the NLRB. In 1998, for example, GM filed a lawsuit against the UAW claiming a bottleneck strike at two Michigan plants that affected dozens of other company facilities was illegal.

However, according to the union, this rule no longer matters because members are working under expired contracts that nullify those terms.
Ben Dictor, who serves as legal counsel for the UAW, said most of contracts such as wages and working conditions are still in effect but the “no strike, no lockout clause” expires. That means the union can strike, but it also opens the door for the companies to potentially lock out workers.
“As part of the stand-up strike, some of us will be working without a contract. This is an essential part of our strategy to keep the companies off balance by calling locals out on strike based on what is happening in negotiations,” Dictor said in a video posted online Thursday by the union. “That will keep them guessing and turbocharge your national negotiators in bargaining with the big three.”

Strike fund

Conducting targeted strikes can be complex, as it’s not clear how one plant will impact on others. The actions could potentially send non-striking union members to unemployment lines, if their state allows them to collect any benefits due to being out of work as a result of a strike.
Targeted strikes also will save the union cash, as it won’t have to give “strike pay” to as many members from its $825 million strike fund.
The fund pays each eligible member $500 per week, which would mean it has enough cash for roughly 11 weeks if all members went on strike. However, that doesn’t include health-care costs that the union would cover, such as temporary COBRA plans, which would likely drain the fund far more quickly.
When asked about the ability for the strike fund to support the union, Fain has regularly referred to how past union leaders conducted work stoppages without pay and how UAW members need to stick together.
“Nobody’s coming to save us. Nobody can win this fight for us. Our greatest hope, and or only hope is with each other, standing together,” Fain said. “I’ll tell you this, I’m at peace with a decision to strike if we have to because I know that we’re on the right side of this battle.” More

GM offered the United Auto Workers a sweetened deal that includes 20% wage increases.
The union plans targeted strikes if it cannot reach labor deals with the major Detroit automakers by 11:59 p.m. ET on Thursday.

General Motors CEO Mary Barra talks with reporters following a meeting with lawmakers from Michigan and Ohio at the U.S. Capitol June 05, 2019 in Washington, DC.
Chip Somodevilla | Getty Images

DETROIT – General Motors is attempting to avoid a looming strike by the United Auto Workers union through a new offer Thursday that includes significant pay increases, more vacation days and better benefits for retirees, among other perks.
The proposal, which GM CEO Mary Barra called “compelling and unprecedented,” addresses many of the union’s demands but continues to fall short on others, such as a 40% pay increase over the four years of the deal that UAW sought.

GM released details of the deal roughly nine hours before the UAW could initiate targeted strikes against GM, Ford Motor and Stellantis if deals are not reached by 11:59 p.m. ET on Thursday.
“We’re at a crossroads on our path to building a company that can sustain all of us for decades to come,” Barra said in a public letter. “Today, we put a compelling and unprecedented economic package on the table that reflects the significance of this critical moment.”
GM’s latest offer matches several provisions in a Ford proposal that the UAW made public last night. But it still falls short of the union’s public demands in several key respects.
The automakers were warning Thursday about the potential effects of meeting the UAW’s terms.
Ford sources said the automaker would have lost $14.4 billion over last four years if the current demands had been in effect, instead of recording nearly $30 billion in profits. UAW President Shawn Fain seems determined to achieve those terms.

The sources, who agreed to speak on the condition of anonymity due to the ongoing discussions, also pushed back on the UAW’s argument that members aren’t making a living wage. They said the average compensation under Ford’s current proposal for first-year UAW employees would be $132,000, including $92,000 in cash and $17,500 in health care coverage.
Here are the key pieces of the GM offer made Thursday:

Wages: A 20% increase over the four-year term of the contract, with a 10% raise in the first year. That’s up from 18% in GM’s last offer. The UAW has demanded increases of 40% over the term of the contract, which they say is in line with the pay increases seen by the Detroit automakers’ CEOs over the last several years.
Faster path to top pay: Under the current contract, newly-hired workers receive incremental wage increases over time, reaching top-level wages in eight years. GM’s proposal cuts that to four years. The UAW has demanded an end to the tier system.
Inflation protection: GM’s offer includes an unspecified level of cost-of-living protection for maximum wage earners, meaning wages will increase to – in theory, at least – keep pace with inflation. The union has demanded a return to a more generous system used in the past.
Job security: GM is promising not to shut down any of its U.S. manufacturing or warehousing facilities over the life of the contract.
Work-life balance: GM had previously proposed to recognize Juneteenth as a holiday. It’s now offering up to five weeks of vacation and two weeks of parental leave. That matches Ford’s Wednesday offer, at the time the only proposal that included parental leave. The UAW has demanded more time off, including a four-day work week.

“We are working with urgency and have proposed yet another increasingly strong offer with the goal of reaching an agreement tonight,” Barra said in the letter. “Remember: We had a strike in 2019 and nobody won.”
Key demands from the union have included 40% hourly pay increases, a reduced 32-hour workweek, a shift back to traditional pensions, the elimination of compensation tiers and a restoration of cost-of-living adjustments, among other items.
Ford’s most recent proposal includes a 20% wage increase over the four-year deal; $6,500 ratification bonuses; elimination of wage tiers at two components and parts plants; a cost-of-living adjustment; halving the time to reach full pay for four years; and other benefits.
The standoff also has the attention of Washington. President Joe Biden, who has cultivated a pro-union, blue collar reputation, spoke with UAW chief Fain and leaders of the automakers, the White House told NBC News.
This is a developing story. Please check back for additional details. More

Spirit Airlines announced its pilot training pipeline program is coming to Liberty University.
The school is the 10th partner for the Spirit Wings Pilot Pathway program.
The industry is facing a shortfall of aviators and other airlines have also moved to train more pilots.

A Spirit Airlines plane takes off at Los Angeles International Airport in Los Angeles, June 1, 2023.
Mario Tama | Getty Images

Spirit Airlines on Thursday said it will partner with Liberty University, the 10th school that it’s working with, to help beef up a pilot training pipeline as the industry continues to face a shortfall of aviators.
The program will allow students pursuing aviation degrees at the university’s School of Aeronautics in Lynchburg, Virginia, to apply to the company’s pipeline program after completing their sophomore year. Prospective trainees will need a recommendation from a faculty member before being eligible to begin the program.

Students working toward an aviation degree can get conditional job offers as they finish their studies and work on accruing flight hours. They must then complete airline pilot training programs, joining as first officers.
“We put a lot of hard work into developing the Spirit Wings Pilot Pathway Program and assembling a great group of partners making it incredibly rewarding to reach this key milestone,” Ryan Rodosta, senior director of flight operations and system chief pilot at Spirit, said in a press release.
Other carriers have also sought to increase their supply of new pilots. U.S. commercial airline pilots can only fly until age 65 under U.S. law. A surge in retirements and buyouts during the Covid-19 pandemic have exacerbated a shortfall, particularly at regional carriers.
JetBlue announced last month that its Gateway Rotor Transition Program will teach U.S.-military trained helicopter pilots to transition to airline pilots. More than 10% of JetBlue’s new pilot hires in 2023 are expected to come from one of its Gateway programs, JetBlue said at the time.
In February 2020, United Airlines purchased a flight academy in an effort to hire more than 10,000 new pilots within the decade.
Airlines are incentivized to train new pilots using pipeline programs. U.S. law requires pilots to receive 1,500 hours of training to fly with commercial airlines. Exceptions exist for some, such as U.S. military-trained pilots and those who attend two- and four-year programs that include flight training. More

More companies are warning that a surge in the cost of fuel and employee pay hikes will eat into profits this quarter.
Airlines, whose biggest expenses are jet fuel and labor, are getting hit particularly hard.
UPS and airlines are digesting big new labor deals, while Hollywood and the auto industry are at odds with unions.

An American Airlines 787 is loaded with cargo at Philadelphia International Airport.
Leslie Josephs/CNBC

More companies are warning that a surge in the cost of fuel and employee pay hikes will eat into profits this quarter.
Companies from aerospace manufacturers to package delivery giant UPS are digesting big new labor deals. Meanwhile, unions from the auto industry to Hollywood are pushing for better compensation. Airlines, whose biggest expenses are jet fuel and labor, are getting hit particularly hard.

Delta Air Lines on Thursday cut its adjusted earnings forecast for the third quarter to between $1.85 and $2.05 a share, down from an earlier forecast of $2.20 to $2.50. The carrier said it is paying more for fuel than it expected but said maintenance costs were also higher than anticipated.
U.S. jet fuel at major airports averaged $3.42 a gallon as of Tuesday, up 38% from two months ago, according to Airlines for America, an industry group.
On Wednesday, American Airlines trimmed its earnings forecast, following revisions at Alaska Airlines and Southwest Airlines. American expects adjusted earnings per share of between 20 cents and 30 cents in the third quarter, down from a previous forecast of as much as 95 cents a share, citing more expensive fuel and a new pilot labor deal.

The company expects to recognize a $230 million expense for that new contract, which includes immediate 21% raises for pilots, and compensation increasing more than 46% over the duration of the four-year contract, including 401(k) contributions.
Elsewhere, labor unions from Detroit to Hollywood have pushed hard for raises, better benefits and schedules in new contracts. UPS and the Teamsters union representing about 340,000 workers at the package carrier in July reached a new labor deal that includes raises for both full- and part-time workers, and narrowly avoided a potential strike.

UPS workers ratified the agreement last month. By the end of the five-year contract, a driver could make $170,000 in pay and benefits, the company said.
Earlier this week, the delivery giant outlined the costs associated with the deal and said the expenses derived from it will increase at 3.3% compound annual growth rate over the next five years.
“Year one costs more than we originally forecast,” said Brian Newman, the UPS finance chief, said on an investor call this week. He said it will cost $500 million more in the back half of 2023 than expected, he said.

As of midday Thursday, the United Auto Workers and Detroit automakers still appeared far apart in talks for new labor deals, setting up “likely” strategic strikes at the companies after an 11:59 p.m. ET Thursday deadline, UAW President Shawn Fain said Wednesday night. The union has sought nearly 40% hourly pay increases over new contracts as well as a reduced 32-hour workweek and other improvements.
Other unions also are seeking higher compensation. The Hollywood writers and actors strikes began in May and mid-July, respectively, with members demanding better pay to match changing industry dynamics in the entertainment-streaming era.
American Airlines offered flight attendants 11% pay increases the date a new contract starts, and 2% raises after that. But the Association of Professional Flight Attendants said the union wants 35% increases at the start of a new deal, followed by 6% annual raises.
Unions have argued that workers didn’t get raises during high inflation in recent years since the Covid pandemic derailed talks.
Strong travel demand has helped the largest carriers more than cover their higher expenses. But some carriers are seeing cracks in sales just as a slower travel period begins. Spirit Airlines on Wednesday said it expects a deeper loss than previously forecast and lower revenue.
Frontier Airlines warned Wednesday that “in recent weeks, sales have been trending below historical seasonality patterns,” and forecast an adjusted loss for the quarter.
– CNBC’s Michael Wayland and Gabriel Cortes contributed to this article. More

Air Force Secretary Frank Kendall said that last year Elon Musk’s SpaceX was making “unilateral decisions” about its Starlink service in Ukraine.
The Air Force chief said the growing importance of space has increased collaboration between the military and the private sector.
He said the Air Force, like many parts of the government and private sector, is looking for ways to use AI.

U.S. Air Force Secretary Frank Kendall does not shy away from commenting on controversy — even as it relates to the world’s richest person and a key Department of Defense contractor.
Kendall weighed in Tuesday after SpaceX CEO Elon Musk acknowledged withholding Starlink satellite service to Ukraine as it planned a surprise attack on Russian forces last year. The disclosure sparked criticism of Musk, and Sen. Elizabeth Warren, D-Mass., called for a probe into SpaceX.

The Air Force works with the company on a variety of missions, such as national security launches, but did not play a role in the use of Starlink in Ukraine when Musk made the decision last September. 
“At the time, SpaceX made some unilateral decisions about what to do for Ukraine. They were not on contract to the U.S. … I think they were definitely donating their services essentially, so they had discretion,” Kendall said in an interview with CNBC’s Morgan Brennan from the Air Force Association’s annual Air, Space & Cyber conference.
The dynamic has since changed. The Pentagon now has a contract with SpaceX for Starlink services in Ukraine.
“We write our contracts to basically ensure that we can get the services we need, as expected from them, and those are enforceable contracts, whatever the business arrangement may be — whether it’s individual ownership or a publicly held company. We write agreements with those businesses, they get us what we need at a reasonable cost,” said the Air Force secretary.

Follow and listen to CNBC’s “Manifest Space” podcast, hosted by Morgan Brennan, wherever you get your podcasts.

The public frenzy, triggered by a revelation in Walter Isaacson’s new “Elon Musk” biography, added fuel to an already simmering debate about whether the U.S. government and allies are too reliant on SpaceX —and particularly its founder and chief executive — for national security matters.

“SpaceX is an important supplier to the government launch services, and we do buy some communications, and so on,” said Kendall. “But we do that through business arrangements that we can enforce.”

The military’s role in space grows

Air Force Secretary Frank Kendall III testifies during the Senate Armed Services Committee hearing on the “Department of the Air Force in review of the Defense Authorization Request for Fiscal Year 2024 and the Future Years Defense Program,” in Dirksen Building on Tuesday, May 2, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

For the Air Force, and the military more broadly, the revelation casts a light on a bigger topic: the ever-more critical role of space as a contested domain. The shift has required more collaboration between the government and the proliferating commercial space sector.
The Air Force, the Space Force under the branch’s purview, and other agencies have sought to capitalize on the changing landscape. They are seeking new satellite and launch capabilities, have pushed for more funding for initiatives in space and at times have crafted more creative contracts.
The effort has spanned multiple administrations, regardless of political affiliation, as the military aims to move more quickly and more affordably where possible.
“The military services that nations, great powers in particular, get from space are very important to their success. That’s true for us. It’s true for potential adversaries,” Kendall said.
He added that the Space Force is being designed with all of this in mind.

Tensions with China rise

The potential adversary the Pentagon is most focused on countering — on earth and arguably in space — is China. A possible conflict with Beijing was a major topic of the Air Force secretary’s keynote at the AFA conference this week.
He said China is preparing for war with the U.S. but added that doesn’t mean such a conflict is inevitable.
Kendall has been studying China’s military buildup efforts for over a decade. That buildup has raised concerns, he said, about a Chinese strategy to design a force to deter and defeat American intervention in the Western Pacific by exploiting perceived U.S. vulnerabilities.
What would that mean if China invades Taiwan, or the perhaps more likely possibility of a blockade? Is the U.S. military in a position to counter that, if called upon?
“We are, but there’s more operational risks than I would like to see. … It would be a tragic mistake, I think, if China were to do the types of things you’ve just described, but they are actively seeking the capability to be effective against us, and to defeat us if possible, and we can’t allow that to happen,” said Kendall.

Air Force looks to the future

Air Force leadership has been taking steps to deter next-generation technological threats. It has a list of “operational imperatives” that span everything from modernization of the air-based leg of the nuclear triad, with the B-21 Raider that’s expected to make its first flight later this year, to a “space order-of-battle,” to the development of a sixth-generation fighter jet in the Next Generation Air Dominance competition.
The plan for NGAD also involves what the service refers to as uncrewed Collaborative Combat Aircraft, or drones. The Air Force is dedicating billions of dollars to autonomous capabilities over the next five years, believing the technology is mature enough and cost-effective.
Like other aspects of the government and the private sector, the Air Force is also incorporating artificial intelligence applications.
“It’s really a basket of technologies that offer a different range of capabilities. Military applications include autonomy, pattern recognition, data, analytics, and so on, with some of the functions that humans would normally perform to be automated and done much more accurately and more quickly through AI,” Kendall said.
“We are not talking about turning over control of lethality to machines — that is not what we have in mind,” he said. “Humans will always be in the loop and responsible for any decisions that are made about lethality. But we cannot ignore this technology, it’s going to provide a huge military advantage.”
So much hinges, though, on the future of defense policy and funding. As has happened multiple times in recent years, Congress appears unlikely to pass a fiscal 2024 budget before a end-of-the-month deadline.
Analysts expect lawmakers to pass a continuing resolution (CR) that temporarily maintains the status quo on government spending. But there is also the rising risk of a partial government shutdown, or even more detrimental to military modernization, the growing possibility of an extended CR.
“That would be devastating,” Kendall said. “All CRs have a very negative impact. They’re very inefficient. They delay modernization that is very important. They delay increases in programs that are going into production, for example, and then make it very difficult for us to plan and to move forward.” More