Ford fired 600 workers after the big strike in the US.
Tension increased when Ford laid off hundreds of workers after approximately 13,000 workers who were members of the United Auto Workers Union (UAW) in the U.S. went on strike because an agreement could not be reached on a new contract.
After no agreement was reached on September 14, the expiration date of the current contract, 13,000 workers decided to strike at the General Motors assembly plant in Missouri, at the Ford factory in Michigan and at the Stellantis Jeep in Ohio.
Although Ford announced Friday that it had fired 600 workers at its Michigan factory who did not go on strike, it accused other workers who went on strike in the paint and final assembly departments of a “ripple effect.”
Claiming that production is interconnected, the company stated that striking workers directly affect operations in other parts of the facility.
BIDEN APPOINTED MEDIATOR
The decision to fire Ford came after President Joe Biden ordered two senior White House officials to mediate the talks.
Biden had called on the parties to reach a deal to end the work stoppage because of its potential to harm the economy.
In his statement at the White House on Friday, Biden called on the UAW and automakers to return to the negotiating table to find a win-win deal and said auto companies’ “record profits” should be accompanied of “record contracts”. ” by the UAW.
Biden also said he appointed U.S. Labor Secretary Julie Su and White House economic adviser Gene Sperling to mediate the talks.
UNION EXPECTATIONS AND EMPLOYER OFFER
The UAW is demanding wage increases of up to 36 percent over four years, while automakers offer no more than 20 percent.
The union also wants to end the two-tier pay system, in which new workers take four years to reach the same pay as long-term employees.
Economists worry that prolonged strikes could raise car prices and hamper authorities’ progress in containing inflation.
JPMorgan economists say a continuation of the strike could halt the recent weakening of the motor vehicle component of the consumer price index and create another tipping point for disinflation.
Additionally, economists say that if the final contract agreement includes a significant wage increase, it would also pose an upside risk to inflation in the sector.
ECONOMIC LOSS WILL EXCEED 5 BILLION DOLLARS
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.
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.