The UAW strike is likely to happen due to a wide gap in negotiations with the automakers: Analyst
A possible strike by United Auto Workers union at Detroit’s Big Three automakers could impact auto suppliers and hit profits for companies such as General Motors Company, according to an analyst covering the industry.
The union is demanding a 36 per cent boost pay raise for employees at GM, Ford and Stellantis. While the companies have countered with an 18 per cent increase in wages by GM, 20 per cent by Ford and 17.5 per cent by Stellantis, it doesn’t seem to be enough to avoid a strike before the looming deadline of midnight on Thursday, said Tom Narayan, global auto analyst at RBC Capital Markets.
“I think it’s very likely we’re going to have a strike, a work stoppage,” he told BNN Bloomberg on Thursday.
The last time a strike of this magnitude happened was in 2019 and the financial impacts on automakers was considerable, he said, creating a hit of US$3.6 billion to General Motors’ operating profits.
“That was (a) one time hit in the quarter, which is sizeable, but very quickly numbers snapped back, production came right back,” Narayan said.
Work stoppages are usually a one and done occurrence, he explained, adding that automakers tend to recover from quickly.
“The lesson that we learned was that these are largely one-time events,” Narayan said. “Work stoppage has an impact, no doubt about it, a financial impact, but there’s a quick snap back and auto production does come back for these original equipment manufacturers (OEMs).”
He added that it is suppliers who usually feel the most impact from these strikes.
“Suppliers can’t just keep building components and build up in inventories, during a work stoppage until the OEMs come back, because there’s nowhere to really store it,” he cautioned.
With files from The Associated Press