Between September 15 and October 30 of this year, United Auto Workers (UAW) members working for Ford Motor Company, General Motors, and Stellantis (the owner of Chrysler and Jeep) held a 6-week labor strike on account of lackluster wage increases. While the strike ended with satisfactory concessions, the aftermath is still in effect.
Despite the pandemic’s financial harm and continuously rising costs of living, autoworkers had reported that the auto companies they work for were not providing adequate wage raises to accommodate the increasing costs. However, the autoworkers were able to successfully reach a deal with the companies, with General Motors being the last to agree on October 30 to a 33% pay increase for veteran workers along with payments for retirees through 2028. Stellantis and Ford had accepted similar deals a few days prior.
As a whole, the economy is likely to be slowed down as a result of the strike. Generally, when workers are on strike, not all wages are being paid out, meaning the company spends less throughout the strike. That equates to less money flowing through the entire economy as workers will consume less. Additionally, because the auto companies involved in the strike are so significant, their lack of production also means other businesses that supply car parts and services not directly fulfilled by the auto companies themselves will lose out on a lot of money. However, the deal brokered between the workers and the automobile industry giants will hopefully promote health in the industry in the near future.
According to the Associated Press, Ford had to cut sales by around 100,000 vehicles and lost out on about $1.7 billion as a result of the slowdown of production during the strike. However, the president of the UAW, Shawn Fain, was reported to say that labor costs represent only about 4% to 5% of the cost of producing a vehicle, which implies that vehicle companies likely had the capacity to raise the wages of the workers and avoid the full repercussions of the 6-week strike.
Additionally, car buyers can expect an increase in prices for vehicles coming from Ford, General Motors, or Stellantis brands. The Associated Press further reported that Ford CFO John Lawler amounted the total losses that Ford will sustain from the newly negotiated contracts to be around $8.8 billion. In order to cope with these losses, Lawler has provided that this amount of loss can equate to an approximate $900 rise in Ford vehicle prices by 2028. With Stellantis and General Motors taking similar deals to Ford, buyers can only expect the prices of their vehicles to rise a similar amount.
Despite conflict among the various elements of the automobile industry, no parties involved stand to benefit from the root cause of the strike: rising prices of living. Workers have no choice but to fight for sufficient wages, businesses lose out on profits, and the average consumer will have to pay a higher price for vehicles.
