Mack Trucks and the striking United Auto Workers have suspended negotiations. Mack risks taking a hit in its off-highway business versus sweetening a new master contract that union leaders endorsed but employees rejected.
The nearly 3-week-old strike by 3,900 UAW-represented workers in three states stopped truck production at Mack’s main assembly plant near Allentown, Pennsylvania. It also affects a remanufacturing facility in Pennsylvania and parts distribution centers in Maryland and Florida.
An engine plant that supplies Mack and Volvo Trucks North America is located in Hagerstown, Maryland. The Mack contracts existed before Volvo acquired Mack in 2000. The company and UAW agreed to continue bargaining under that framework.
Volvo Trucks North America has canceled two shifts on Monday at its New River Valley plant in Dublin, Virginia. The company plans regular production the rest of the week, a Volvo Group spokesperson said in an email Saturday. A 12-day UAW strike at Mack in 2019 also cut into Volvo manufacturing because of a lack of engines.
Mack shares more details of rejected contract
In a statement Thursday evening, Mack said company and UAW bargainers reached tentative agreements this week on the four local agreements that were not ratified by UAW members on Oct. 8. “However, the most recent UAW leadership economic demands at the master contract level continue to be unrealistic.”
Mack is in a tough place. It is losing production — and revenue — every day the strike continues. But it is holding the union accountable to live with what local and international leaders endorsed before 73% of the workers voted down the tentative agreement.
Demand remains strong for the company’s products, which primarily target the off-highway, severe service and energy segments. Purchases of tractors for on-highway truckload carriers are softening amid a freight recession and higher interest rates.
“Mack stands by the economic terms of its Oct. 1 tentative agreement with the union. UAW leadership endorsed and called a ‘record’ contract for the heavy truck industry,” the company statement said.
Mack laid out more details of its rejected offer:
- The average wage increase over five years would be 36%,. The average immediate wage increase for all covered employees is nearly 15%.
- For nearly half the total workforce not yet receiving top-tier wages, the average increase over five years would be 55%. The average immediate wage increase would exceed 20%.
- Most employees already at the top rate would receive an immediate wage increase of 10%, and up to 20% compounded over five years. The company says research shows top-tier Mack workers make above-market rates.
- Premiums for the company’s health care coverage have not increased in more than six years despite a 66% increase in the company’s costs over the past decade. They would remain unchanged under the five-year agreement.
Gauging Detroit Three-UAW talks influence on Mack
To an unknown extent, the separate Mack master contract is being influenced by negotiations in a UAW strike that began Sept. 15. The union strategy of targeting specific General Motors, Ford and Stellantis plants has kept two-thirds of its 146,000 members working.
A tentative agreement with Ford reached Wednesday, including a 25% hourly increase over 4 1⁄2 years, appears richer than the Mack deal. Ford has 51,000 hourly workers and far higher revenue and profits than Mack. GM and Stellantis had not reached tentative agreements as of Friday afternoon.
The Detroit talks and a vocal socialist presence within the UAW at Mack appear to be emboldening local union leaders to push for more money and improved benefits to make a deal.
Mack leadership, which hoped to avoid being embroiled in the Detroit Three talks, also may have chosen stridency because it remembers that multiple tentative agreements between Volvo and the UAW were rejected by workers who struck Volvo’s New River Valley operations in Dublin, Virginia, for about five weeks in 2021.
At the time, it was hard to tell whether workers were angrier with their local union bargainers or the company. Volvo ultimately imposed terms of the third agreement, which received a split vote.
Editor’s note: Updates 4th paragraph with impact on Volvo Trucks North America production.