Freepik

The UAW and the auto makers are miles apart on a new contract. UAW president President Shawn Fain has demands that would likely bankrupt the industry.

UAW Workers Overwhelmingly Vote to Authorize Strikes

CNMC reports UAW Workers Overwhelmingly Vote to Authorize Strikes

The UAW said 98% of hourly workers and 99% of salaried workers at Ford voted in favor of the strike authorization. GM passed by 96%, while the action was approved at Stellantis by 95%.

The UAW has more than $825 million in its strike fund, which it uses to pay eligible members who are on strike. The strike pay is $500 per week for each member — up from $275 per week last year.

Assuming 150,000 or so UAW members covered by the contracts, strike pay would cost the union about $75 million per week. A fund of $825 million, then, would cover about 11 weeks. One caveat: that doesn’t include health-care costs that the union would cover, such as temporary COBRA plans, that would likely drain the fund far more quickly.

What’s at Stake as US Autoworkers Threaten to Strike

Bloomberg comments on What’s at Stake as US Autoworkers Threaten to Strike

If talks with any one of the carmakers break down, the union may call a strike against it, as it did against GM in 2019. That 40-day walkout cost GM about $3.6 billion in earnings before interest and taxes, or about half a month’s worth of sales, according to RBC Capital Markets. While Fain has had particularly harsh words for Stellantis, he’s repeatedly said all three Detroit automakers are the target.

A halt in production caused by a strike would put pressure on vehicle inventories, already low due to pandemic-related parts shortages, and drive up near-record car prices. There would also be ripple effects up the auto supply chain, for example on steelmakers, who might be forced to idle production if car assembly plants go down. A strike by the 150,000 hourly workers at GM, Ford and Stellantis would cause an economic loss of more than $5 billion after just 10 days, according to a study by Anderson Economic Group, a Michigan based consulting firm.

On August 14, I noted UAW Declares War on Corporations, Seeks 46 Percent Wage Hike, September Strike Looms

UAW Demands

• 32-hour workweek
• 46 percent pay raise over 4 years
• Right to strike over plant closures
• Increased retiree benefits
• Defined pension plan for all workers
• Cost of living adjustments

Bloomberg estimates the UAW demands would add $80 billion to costs.

Car prices, already steep would have to rise that much, adding to inflation. But eventually, the demands would bankrupt GM again and Ford as well.

Repossessions Soaring

With EVs stacking up along with repossessions, this seems like a poor time to make biggest ever demands on the automakers.

Trucking Perspective

“Automotive and suppliers are estimated to be as much as 6% of trucking freight. If a UAW strike happens, it will have devastating consequences for truckload demand.”

Thanks for Tuning In!

Mish

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