Ford CEO Jim Farley told CNN the offer from Ford of a 20% raise over the life of the contract is the most lucrative offer the company has made to the union in the 80 years it has been there. But he said meeting the union’s demands of close to a 40% raise, along with a four-day work week and other benefit improvements, would have been unaffordable.
“This could have a significant impact. It could tip us certainly into a very tough situation economically,” Nardelli told CNN in a phone interview on Tuesday.
However, economists say a UAW strike is unlikely to cause a recession, though it would do damage to local economies and parts suppliers.
According to Anderson Economic Group, a 10-day strike against the Big Three would cost the US economy $5 billion.
If all three faced a strike, shrinking auto production would cut quarterly annualized growth by 0.05 to 0.1 percentage points for each week it lasted, Goldman Sachs estimates. However, Goldman Sachs said growth would then rise by the same amount it declined in the quarter following a strike.
Beyond the impact to GDP, Nardeli worries about how rising wages will worsen the inflation situation and keep interest rates high.
“It’s not just the union workers doing a landgrab here. Everybody is rushing to get wage increases. You can’t fault them for trying to deal with inflation that is hurting their families,” the former Chrysler CEO said. “I don’t blame them. But unfortunately, this just adds to the inflation problem.”
The UAW has angrily disputed the idea that higher wages for its members would raise car prices, with some justification. Car prices have soared 30% over the life of the current UAW contract. Pandemic-related shortages of parts, especially computer chips, caused limited new vehicle inventories in the face of strong demand. Prices are similarly higher at both unionized and nonunion automakers, and the wages of UAW members hour wages rose only 6% during this period that saw car prices skyrocket to record levels.
this ought to go well. All they asking is a 40% pay raise and a 32 hour work week. Who do they think they are? The Bidens?
I own some Ford stock at $12 from a year ago. I'm tempted to buy some here because it's held up pretty well these last couple of days. The strike probably is in the price. The question that gives me pause is that labor is feeling leverage for the first time in 40 years and they may play their hand aggressively. Is a protracted strike in the price?
Also, the S&Ps are pretty firm with this news. Probably higher levels coming. I think the market is overvalued but probably going to get more overvalued.
Thanks mcfarm and joj!
watching how a market/price reacts to news is often one of the best indicators of its underlying strength or weakness. So you’re applying a solid methodology, joj.
Hopefully, this will resolve quickly. This will likely add to inflation pressure and future economic uncertainty and risk.
The demands do seem pretty excessive. The UAW in the past was very powerful in getting workers benefits. I was part of that union in my college years working for Ford in the Rouge complex (Dearborn assembly making Mustang 2s and Iron Foundry) while going to school.
was that .7 for last month? White house says that is great not inflation.....hey guys times 12 months? ohhhh 8.4.....sure hope the voters don't notice the food the gas the lumber the most anthing
The United States is headed into some potentially extremely tumultuous times the next 14 months.
If the UAW strike lasted longer than expected, it would just add to that.
1. We have the hearings and trial news for extremely corrupt Trump.
2. And very corrupt Biden's impeachment investigation.
3. The potential for the US to default on the debt.
4. The worst atrocity on the planet by an astronomically wide margin.......the US war with Russia, using Ukraine which very corrupt Biden wants escalated (with no hope of winning) using more US tax dollars and no negotiating for peace. https://www.marketforum.com/forum/topic/98691/
Those are the main problematic issues but let's add these wild cards
5. The UAW strike?
6. COVID is increasing again with some far right leaders, advising people that follow them to not protect themselves in order for them to generate votes/appeal to their base at the cost of lives. Additional deaths WILL happen because of this, no IF's about it. Hopefully, there's enough built up immunity to lessen the threat of it causing major/widespread disruptions to most of our lives. Death is a pretty disruptive element to a person's life )-: and it WILL happen to unvaccinated people that would have lived had they been vaccinated.
7. Potential MAJOR conflict with China over Taiwan.
Published September 15, 2023 at Heartland Institute https://heartland.org/opinion/will-the-uaw-strike-perpetuate-the-death-spiral-already-mandated-for-the-automobile-industry/