This year’s UAW/Unifor negotiations come at a critical time in the automotive industry. The UAW, under new leadership, has established a long list of demands and expressed its willingness to strike. The automakers are experiencing significant profits since the pandemic but need those funds to invest in new technology and remain competitive. Both the UAW and automakers face opportunities and challenges that raise the stakes in the collective bargaining process.
Negotiations have been ongoing since mid-July and culminate on Thursday, Sept. 14 when the current contract covering approximately 150,000 workers expires. With the threat of a strike all involved are getting prepared.
Although at this time we don’t know what automaker the UAW will strike or how long a strike will last, we do know that the impact of a prolonged strike across one or all three companies will have a major impact on the automotive supply chain and the economy.
Over the past several years manufacturers have experienced significant challenges – the pandemic, supply chain disruptions, material cost increases, weather disasters, increased cost of doing business, talent shortages – that have made it increasingly more difficult to be profitable.
According to an analysis conducted by Harbour Results, Inc., based on 2022 financial performance 30% of nearly 400 small to medium-sized manufacturers were in poor financial health while another 21% were in moderate financial health. Furthermore, the benchmarking study indicated that 84% of manufacturers predict flat or a decline in revenue and profit in 2023.
This paints a bleak picture for Tier 2 and 3 suppliers. A shutdown of more than two weeks resulting in a significant decrease in volume will create an untenable situation for many, which puts the entire supply chain at risk.
Unlike COVID where manufacturing was deemed essential, and shops kept operating. In a strike situation automakers will no longer need parts, which will create a ripple effect forcing suppliers to make tough decisions on how to wind down operations and take out costs. Also, maybe even more importantly, is how businesses will ramp back up after the strike ends to meet the demand.
The impact of a long labor disruption will be far-reaching and, ironically, may impact those outside of the negotiations – dealers, suppliers and the economy – the most. Anderson Economic Group estimates an economic impact of $5 billion for a 10-day strike at all three automakers.
Reports indicate progress is being made, but the each party’s demands are still far apart and UAW President, Shawn Fain, has reiterated this week that the union would strike any company it does not reach a tentative agreement with by 11:59 p.m. Thursday.
Read the full article here