UAW members could go on strike in less than a week if the union does not reach an agreement on a new contract with Ford, General Motors and Chrysler maker Stellantis by the end of September 14.
The auto industry consulting firm Anderson Economic Group estimated in August that if the entire union of more than 140,000 workers went on strike for 10 days, it would cost the US economy $5 billion, or nearly half a billion dollars annually. day.
This number reflects the weight of the American auto industry in the economy – not only in terms of manufacturing but also in the supply chain and research and development.
However, it is not yet certain that the entire UAW will strike if a new contract is not agreed upon with Detroit’s Big Three automakers. One tactic is discussed in Modern story By auto industry trade publication Automotive News will see fewer workers leave their jobs. The goal would be to halt production at some UAW plants, such as sites where Ford workers build engines and transmissions for the popular F-150 pickup truck and other models.
Ford Motor Company did not immediately respond to a request for comment.
The concept, if the union chooses to pursue some form of it, “is intended to create compensation asymmetry,” said Eric Gordon, a professor at the University of Michigan’s Ross School of Business.
“You’re shutting down production of their best-selling, probably most profitable product” of the F-150, Gordon said of the potential tactic, adding that the length of the downtime would determine how much damage it could cause.
Gordon says the UAW has enough money in its strike fund to pay every member strike pay for 11 weeks. This would limit the length of time its members could remain out of work. But a more targeted measure like one focusing on Ford’s popular pickup truck could last longer and at lower cost to the union, as workers who are not on strike but who have been laid off may be able to receive unemployment payments instead. Pay strike. (The exact details depend on your state’s unemployment eligibility rules.)
“Then you have a small number of workers who benefit from a strike, but you have restricted production, shut down production, throughout the company,” Gordon said. “So the company is losing money on all those vehicles that can’t be produced, but only a small number of the UAW are on strike.”
That would obviously hurt Ford, but Gordon says there are risks in targeting the F-150 in particular.
“Pickup truck owners tend to be very loyal. You tend to be an F-150 person or a Silverado person or a Ram person,” he said, referring to competing trucks from General Motors and from Stellantis, the parent company of the Ram truck brand. Commercial.
The shutdown could also lead to higher prices in the new and used car market. Shrinking inventory of new Ford F-150 trucks could cause prices to rise as demand rises. The cost of used models will also rise. And with the 60-month auto loan prime rate at the highest point since 2006 according to historical Federal Reserve data, rising car prices will inevitably lead to more expensive monthly payments.
The strike would impact the U.S. economy in three different ways: Workers would lose pay, manufacturers would lose money, and the auto sector overall would lose, said Erin McLaughlin, chief transportation and infrastructure economist at the Conference Board, a nonprofit organization with business members. Industry suppliers, traders and retailers will lose sales.
While Anderson Economics Group’s estimate of $5 billion for the potential impact of a UAW strike on the U.S. economy is significant, McLaughlin says that’s not enough to cause a recession. It also won’t have the same complex and frustrating effects as some of the other recent strikes, such as the West Coast dockworkers’ strike this summer or the threatened strikes by railroad workers in 2022 and UPS workers in 2023.
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