The Biggest Auto Strikes Looms, Here's Everything You Need To Know

The United Auto Workers (UAW) has outlined plans for a series of strikes targeting individual U.S. auto plants, marking its first-ever simultaneous strike against the Detroit Three automakers if agreements are not reached by 11:59 p.m. Thursday. Even striking at a handful of plants would significantly disrupt production and impact the automakers' revenue.

To incentivize striking workers, the union has planned to pay $500 per week while also covering the cost of health insurance premiums. The UAW boasts an $825 million strike fund, which could cover payments to workers in a full strike against all three companies for about three months.

The United Auto Workers (UAW) has presented a list of demands, which includes ambitious targets of a 40% hourly pay increase, a reduced 32-hour workweek, and a shift back to traditional pensions. The UAW is also seeking the elimination of compensation tiers and a restoration of cost-of-living adjustments, among other items.

Currently, full-time assembly plant workers at Ford and GM earn $32.32 an hour, while part-timers earn approximately $17 an hour. Full-time employees at Stellantis earn $31.77 per hour, with part-time workers earning almost $16 per hour.

The union leaders argued that the car companies are highly profitable and that workers deserve a larger share of that success.

While the UAW's initial demands included ambitious targets of a 40% hourly pay increase, recent proposals have called for a mid-30% raise instead.

The automakers are contending with both near-record profits and the costly transition to electric vehicles. To stay competitive, GM, Ford, and Stellantis (the parent company of Chrysler) are investing billions of dollars into developing new technologies and electric models, building new battery plants, and retooling older factories. As EVs require fewer parts and less labor to build than gasoline-powered vehicles, the transition to them will inevitably lead to closures of plants making engine parts for traditional cars which means the cut-off of traditional workers.

The United Auto Workers (UAW) is leveraging high inflation and labor shortages to gain leverage in its negotiations with automakers, particularly as many auto-factory workers have experienced the challenges of working on the assembly line during the pandemic.

(1) Consumer

A potential United Auto Workers (UAW) strike could have a significant impact on automakers and buyers alike. While a sharp pay hike would benefit workers, some experts speculate that it could lead to higher prices for electric vehicles at a time when the industry is already grappling with parts shortages and other manufacturing line disruptions.

According to automotive consulting firm J.D. Power, a two-week-long strike could push up new vehicle prices by 2%. Additionally, a protracted work stoppage could reverse the progress made so far this year in lowering new-vehicle prices while causing financial strain for parts suppliers.

(2) Big 3 and investors

The impact of a partial or complete strike could have far-reaching economic consequences, given that the auto industry contributes about 3% of the nation's gross domestic product. A strike could also destabilize the broader auto supplier network, leading to disruptions and lost revenue for suppliers across the industry.

For investors, the question is how this situation will impact stock prices and performance. A potential United Auto Workers (UAW) strike could cost automakers up to $40 billion in production, based on North American output for the Detroit Three manufacturers. The UAW's proposed demands, including wage increases and profit sharing agreements, could potentially lead to a 45-day work stoppage. Michigan-based Anderson Economic Group estimates that even a 10-day-long strike could cost carmakers, suppliers, and workers over $5 billion.