UAW strike: Objectives and implications

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【Summary】Workers from the United Auto Workers (UAW) trade union have gone on strike against car manufacturers Ford, Stellantis, and General Motors over contract demands. The strike, which could have significant effects on the US economy, puts the production and distribution of new vehicles at risk. The UAW is demanding better pay, pension benefits, an end to the tiered employment system, and the right to strike against potential plant closures. Even a short strike could result in a $5.

FutureCar Staff Sep 16, 2023 6:22 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 major car makers, known as the "Detroit Three," regarding contract demands.

The strike by the UAW poses a risk to the production and distribution of new vehicles, which will have a quick impact on the US economy. President Joe Biden expressed his support for the UAW and stated that two White House officials would participate in negotiations by heading to Detroit.

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 makers have offered increases ranging from 17.5 to 20 percent. The UAW is also seeking pension benefits for employees, more paid time off, and an end to the tiered employment system.

The strike's impact on the economy could be significant, 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 be felt in terms of wage losses, manufacturing losses, and direct economic impact, among other factors.

In 2019, the UAW last went on strike, which lasted six weeks and involved 48,000 workers at over 50 plants. This strike has the potential to involve even more workers, car manufacturers, and plants. Patrick Anderson, the principal and chief executive of AEG, stated that if this were to occur, 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 estimated loss due to the unavailability of necessary repairs or replacement parts for their vehicles. Additionally, the strike would disrupt the supply and distribution of new vehicles, leading to higher car prices. This comes at a time when the industry has already experienced setbacks during the Covid-19 pandemic. Furthermore, the longer the strike continues, the more it will impact used car prices as the options for new vehicles become limited.