Comerica Park in Detroit, home to the Detroit Tigers
UAW Strike Deal
What Does It Mean For Us?
November 12, 2023
The United Auto Workers staged an unprecedented strike against the Big Three Detroit automakers — and they emerged with
- Three big, lucrative deals
WHAT DOES THIS MEAN FOR
AUTOMAKERS AND SUPPLIERS?
Gone are the days when the Big Three automakers dominated the U.S. market.
These new contracts will push up labor costs
for companies that already spend much more
on their workers than their non-unionized rivals.
Ford Field, home to the Detroit Lions
The union’s wage gains will also indirectly affect non-unionized companies (assembly plants, parts suppliers, etc.) by pressuring them to raise their pay.
Automakers have an incentive to keep their pay high enough to dissuade a union push in their plants. Already, Toyota has given its U.S. autoworkers a 9% pay raise since the UAW struck a deal.
WHAT DOES THIS MEAN
FOR BUYERS?
Higher pay for auto workers means higher costs for the Big Three automakers, and those costs will need to be absorbed somewhere.
Ford has indicated that the new deal will eventually add $850-900 to the cost of making each of its vehicles.
“Consumers will bear some of the cost burden over time, but [since] affordability is already a challenge for the market, the automakers will not have an easy time passing along all of the costs to buyers,”
Jonathan Smoke, chief economist at Cox Automotive.
Jonathan Smoke, chief economist at Cox Automotive.
WHAT DOES THIS MEAN
FOR AUTOMOTIVE WORKERS?
If ratified by members, the new UAW contracts would lock in raises in wages of at least 25% — and for some temps of as much as 168% — as well as boost retirement contributions and other benefits.
Some analysts have also cautioned that the lucrative deals for the UAW could backfire — by being so rich that it creates an incentive for companies to shift assembly jobs to other locations, like Canada or Mexico, or invest even more in automation.
The next battle? The UAW wants to use the momentum to unionize foreign automakers as well as Tesla.
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