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Strike Threatens Automotive Industry: Americans Brace for Price Hikes

In a surprising turn of events, the United Auto Workers (UAW) have initiated a strike against the Big Three Detroit automakers – Ford, General Motors, and Stellantis. This bold move is poised to have ripple effects that could disrupt vehicle supplies and send prices skyrocketing, leaving consumers worried about their ability to purchase both new and used vehicles.

Supply Chain in Peril

As the strike extends its grip, there is growing concern about its potential consequences. Tyson Jominy, the Vice President of Data and Analytics at JD Power, warns that this strike isn’t limited to the Detroit automakers alone. “Consumers of any brand are likely to see higher prices if the strike persists somewhere around four to six weeks or so,” Jominy cautioned.

Union’s Calculated Risk

The UAW’s strike is initially confined to protect its $825 million strike fund, designed to support a walkout for approximately 11 weeks by its 146,000 union members. However, there is a looming threat of escalation if Ford, General Motors, and Stellantis fail to make substantial progress in negotiations.

A Targeted Approach

With approximately 13,000 autoworkers picketing at assembly plants in Michigan, Ohio, and Missouri, the strike is strategically targeting the production of mid-sized pickup trucks, as well as Jeep Wranglers and Ford Broncos. Jominy observes, “They seem to be targeting a space that has very limited inventory to begin with.” This means that consumers looking for mid-sized pickup trucks may soon face tight inventory and higher prices.

The Price Surge

Currently, vehicle prices are around 4% below the peak levels reached last year during the supply chain crisis. However, in a worst-case scenario, this strike could push prices back to those record highs. For the average $46,000 vehicle, consumers might have to shell out an additional $1,500 to $2,000.

Used Vehicles in the Crosshairs

The strike’s impact might not stop at new vehicles. When consumers can’t find the new cars they desire, they often turn to used vehicles. Simultaneously, dealers anticipate a potential inventory shortage and snatch up as many used vehicles as they can, which, according to Jominy, can lead to higher prices in the used car market.

Historic Disruption

This strike marks the first time in the UAW’s 88-year history that it simultaneously walked out on Ford, General Motors, and Stellantis. The central bone of contention in this standoff is higher pay. The UAW is demanding a 36% pay raise for rank-and-file members over four years, a reduction from their initial demand of 46%. Currently, full-time assembly plant workers at Ford and GM earn $32.32 an hour, while part-timers earn about $17 an hour. At Stellantis, full-time employees earn $31.77 an hour, and part-timers earn close to $16 an hour.

Union’s Bold Demands

In addition to higher wages, the UAW is advocating for cost-of-living pay adjustments, an end to forced overtime, and increased pension benefits for current retirees. They also seek the restoration of pensions for new hires, among other benefits. UAW President Shawn Fain has described these demands as the “most audacious and ambitious list of proposals they’ve seen in decades.”

Corporate Response

Automakers, who are currently grappling with a multibillion-dollar shift towards electric vehicles, have countered with more modest pay increase offers. GM, Ford, and Stellantis have all proposed 20% pay hikes. Ford CEO Jim Farley voiced his concerns, stating that the UAW’s proposal could potentially bankrupt the company. He asserted that had the proposed contract been in place since 2019, Ford would have incurred losses of about $15 billion.

This strike, with its far-reaching implications, has not only put the automotive industry in turmoil but has also raised questions about the balance of power between labor and corporate interests. As negotiations continue, consumers remain on edge, hoping for a swift resolution to avoid further disruptions to the already fragile supply chain.

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