Exploring The Economic Impact Of The UAW Strike

After an existing contract expired last week, the United Auto Workers (UAW) launched a limited strike against the United States’ top three automakers: Ford, Chrysler-owner Stellantis, and General Motors.

Specifically, about 12,900 UAW workers went on strike at a Ford plant in Michigan, a Stellantis plant in Ohio, and a GM factory in Missouri. Most of the UAW’s 150,000 members at the three companies have kept working so that the UAW can maintain leverage in ongoing negotiations.

It is the first time the union has staged walkouts against all three of these companies at once.

U.S. auto manufacturing is one of the most productive industries in the world, which is why a strike could have a significant economic impact on the country and around the globe, including the world’s metal industry.

Every vehicle that rolls off the Detroit Three assembly lines contains components made by over 5,600 U.S. suppliers, including many small businesses. Argus Media estimated U.S. consumption of flat steel could shrink by as much as 409,000 short tons (st)/month with an additional 138,200st/month of other steel consumption and 134,300st/month of aluminum consumption. Copper consumption would be curtailed another 13,800st/month.

The overall impact on the U.S. economy is expected to be significant if the strike expands.

A recent report by Anderson Economic Group found a strike of 143,000 UAW members against GM, Ford, and Stellantis could lead to an economic loss of $5.617 billion after just 10 full days. (For context, a 42-day strike in 2019 at one of the three vehicle manufacturers put the state of Michigan into a quarter-long recession and resulted in an economic loss of $4.2 billion.)

The New York Times has said the effects of the strike could be “far-reaching” and would include:

• Rising prices on new and used Ford, GM, Chrysler, Dodge, Jeep, and Fiat cars if the strike persists and vehicle inventories wane;
• Laid-off and striking workers with less spending power, likely hurting businesses in the parts of the Midwest that rely on the auto industry the most; and
• Layoffs as suppliers of headlights, brakes, and other auto parts receive fewer orders.