UAW strike: Objectives and implications

author: FutureCar Staff    

A strike has been announced by workers against car manufacturers Ford, Stellantis, and General Motors, which could have significant effects on the US economy. On Friday, approximately 13,000 employees went on strike after the United Auto Workers trade union leaders failed to reach an agreement with the major car makers, also known as the "Detroit Three," regarding contract demands.

This strike by the UAW poses a risk to the production and distribution of new vehicles, and its impact is likely to quickly affect the US economy. President Joe Biden has expressed his support for the UAW and announced that two White House officials would be heading to Detroit to participate in negotiations. He stated, "No one wants a strike, but I respect workers' right to use their options under the collective bargaining system. And I understand the workers' frustration."

At the forefront of the union's demands is better pay for its members. The UAW is requesting a 36 percent increase in wages, while car manufacturers have offered increases ranging from 17.5 to 20 percent. Additionally, the UAW is seeking pension benefits for employees, more paid time off, and an end to the tiered employment system, which results in lower pay and fewer benefits for newer workers.

The union is also aiming to protect workers by securing the right to strike against potential plant closures as the Detroit car industry transitions to electric vehicles.

The UAW strike is expected to have significant implications for the US economy, even if it is relatively short. According to a report from the Anderson Economic Group consulting firm, a 10-day strike against all three Detroit car makers could result in an economic loss of $5.6 billion. This loss would manifest in wage losses, manufacturing losses, direct economic loss, and other areas.

In 2019, the UAW last went on strike for six weeks, involving 48,000 workers across more than 50 plants. However, this current strike could potentially involve even more workers, car manufacturers, and plants. Patrick Anderson, the principal and chief executive of AEG, stated, "If that happens, even a short strike would impact economies throughout Michigan and across the nation."

Consumers would feel the effects of the strike, with an estimated $2.1 billion in losses due to the unavailability of necessary repairs or replacement parts for their vehicles. Furthermore, the strike would cause disruptions in the supply and distribution of new vehicles, resulting in higher car prices. This would be another blow to the industry, which already suffered during the Covid-19 pandemic. As the strike continues, it would also impact used car prices, as the options for new vehicles become increasingly limited.

FutureCar Staff