UAW strike: Objectives and implications

Home > Industry Analysis > Content

【Summary】A strike by the United Auto Workers against car manufacturers Ford, Stellantis, and General Motors could have significant effects on the US economy. The union is demanding better pay, pension benefits, more paid time off, and an end to the tiered employment system. Even a short strike could result in an economic loss of $5.6 billion, impacting wages, manufacturing, and consumer access to repairs and replacement parts.

FutureCar Staff Sep 15, 2023 9:15 AM PT

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 "Detroit Three" major car makers regarding contract demands.

The strike by the UAW poses a risk to the production and distribution of new vehicles, and its impact will quickly reverberate throughout the US economy. President Joe Biden is scheduled to address the strike later on Friday, according to the White House.

One of the main demands of the UAW is better pay for its members. The union is requesting a 36 percent increase in wages, while car makers have offered increases ranging between 17.5 and 20 percent. Additionally, the UAW is seeking pension benefits for employees, more paid time off, and an end to the tiered employment system that provides lower pay and fewer benefits to newer workers. The union also aims to secure the right to strike against potential plant closures as the automotive industry shifts to electric vehicles.

The UAW strike is expected to have significant implications for the US economy, even if it is short-lived. An August report from the Anderson Economic Group consulting firm revealed that a 10-day strike against all three Detroit car makers could result in an economic loss of $5.6 billion. This loss would be felt through wage losses, manufacturing losses, and direct economic impact, among other factors.

In 2019, the UAW last went on strike, which lasted for six weeks and involved 48,000 workers at over 50 plants. However, this current strike could potentially involve even more workers, car manufacturers, and plants. Patrick Anderson, the principal and CEO of AEG, stated that if this were to happen, even a short strike would have an impact on economies throughout Michigan and the nation.

Consumers would feel the effects of the strike, with approximately $2.1 billion being the cost of not being able to obtain necessary repairs or replacement parts for their vehicles. Furthermore, the strike would cause further disruptions in the supply and distribution of new vehicles, leading to higher car prices. This comes at a time when the industry is still recovering from the impact of the Covid-19 pandemic. As the strike continues, it will also affect used car prices due to the limited availability of new vehicles.