The strike of 12,000 workers affiliated with the United Automotive Workers Union (UAW) in the United States due to the impossibility of reaching an agreement on a new contract may cause economic losses due to supply problems and price increases.

After UAW negotiations with General Motors, Ford Motor and Stellantis over a new contract for approximately 150,000 workers failed to reach an agreement, as of September 14, the end date of the current contract, 12,000 workers decided to strike. .

Thus, for the first time in the union’s 88-year history, workers at three automobile factories went on strike together. Following the strike decision, unionized workers went on strike at the General Motors assembly plant in Missouri, the Ford plant in Michigan, and the Stellantis Jeep plant in Ohio.

IT CAN STRESS THE ECONOMY

If the auto workers’ strike continues for a long time, vehicle stocks, already low due to supply chain disruptions due to the pandemic, are expected to decline further and put pressure on workers. car prices. It is claimed that this situation may put even more pressure on the economy, which is already suffering from high inflation.

Although the strike seems unlikely to trigger a recession on its own, there are claims that it could slow the US economy and lead to job losses.

If the wage increases and entitlements demanded by the union are accepted, there are expected to be billions of dollars in additional costs for automakers.

The union is demanding a 36 percent wage increase from automakers over a four-year period. On the other hand, General Motors and Ford propose a 20 percent wage increase, while Stellantis’ offer is 17.5 percent.

WILL EXCEED 5 BILLION DOLLARS

According to calculations by the consulting firm Anderson Economic Group (AEG) on the possible losses suffered by UAW workers, manufacturers and the auto industry in general, a strike by approximately 150 thousand UAW members at 3 automakers could result in a loss total economic. of more than 5 billion dollars if it lasts 10 days, it is estimated.

It is estimated that if the strike lasts 10 days it will cause a total wage loss of $859 million and a producer loss of $989 million.

However, with current stocks at around 1/5 of their 2019 level, a strike under these conditions is likely to affect distributors and customers much sooner.

Given that a quarter of steel demand in the United States comes from automobiles, the strike in question also closely affects the steel industry.

Moody’s Analytics Chief Economist Mark Zandi said that if the auto workers’ strike continues for a long time, it will negatively affect the economic growth of the US economy.

“If the UAW goes on strike against the three domestic vehicle manufacturers from mid-September to the end of October, this will reduce real GDP growth in the fourth quarter by about 0.2 percent annualized,” Zandi said.