Author: Brett Hurll Sept. 18. 2023
The recent strike by the United Auto Workers (UAW) has sent ripples through the United States automobile industry and beyond, as the union took a previously unseen targeted approach. Home to nearly 150,000 workers, the UAW has been negotiating contracts with the 'Detroit 3' – Ford, General Motors (GM), and Stellantis (formerly Fiat Chrysler). But failing to reach an agreement before the deadline, the union undertook a formidable strike, directly interrupting the production of high-margin products like Sport Utility Vehicles (SUVs) and pickup trucks, upon which these companies heavily rely.
A Targeted Approach
Remarkably, the strike was not waged against single automakers. Instead,
the union opted for a targeted intervention against all three companies,
focusing on the facilities where their most profitable vehicles are
manufactured. This strategy amplified the strike’s disruptive potential: all
three automakers have increasingly concentrated their efforts and resources
on lucrative vehicles while progressively phasing out cheaper sedans. This
unfolding scenario has even heightened the strike's reverberations across
the industry. A targeted disruption at only one of the Detroit 3 facilities
could generate a domino effect cascading down the complex supply chain, as
has been observed during the pandemic, when even minor closures
substantially affected sales and inventory (CNN, 2023).
The Ripple Effect
The reverberating impact does not stop at the doors of these companies. Hundreds of suppliers that provide essential parts to the manufacturers would be significantly affected. After the last UAW strike, suppliers experienced a troubling period as production at General Motors ground to a halt for 40 days. If repeated, this scenario would jeopardise other automakers dependent on the same component manufacturers, causing industry-wide disruptions (Politicom, 2023). An industry interconnected by a globalised supply chain could demonstrate the butterfly effect in real-time: the strike’s potential impacts could ripple far beyond the original site of the dispute.
UAW strikes affect more than the automobile industry. There are ripple
consequences to the economy, primarily felt in communities where
autoworkers live. During the strike, workers receive $500 a week in strike
pay from the union, which only substitutes about 40% of their regular pay.
Reduced income ensues, potentially resulting in diminished local spending
(The New York Times, 2023).
Should they continue for a protracted period, strikes could destabilise the
companies supplying parts to automakers, affecting even more workers.
Conversely, according to economists, the strike’s impact on the broader U.S.
economy is expected to be relatively minor. Even if all 150,000 workers
strike until late October, this would result in roughly a two-tenths of 1%
reduction in the country's GDP for the last few months of the year (NPR,
In short, the UAW strike could have significant, although not crippling,
impacts on the economy. The effects are likely to be more keenly felt in
communities where alleys of the Detroit 3 are located. Yet, this recent
strike’s collateral damage could have far-reaching consequences affecting
suppliers and the nationwide automobile economy at large. A strategic,
diversified supply chain mitigation strategy is, therefore, an imperative risk
management tool for resilient operations. The striking development in the
union's tactics emphasizes the interconnectedness intrinsic to modern
industries, a condition that will doubtlessly continue to shape strike
dynamics and their societal reverberations in the future.
CNN Business. (2023). UAW strike could impact auto industry more than you think. https://www.cnn.com/2023/09/15/business/car-prices-auto-strikeuaw/index.html
Politico. (2023). UAW strike could have massive impact on auto industry. https://www.politico.com/news/2023/09/14/uaw-strike-biden-info-00115977
The New York Times. (2023). UAW strike could have far-reaching economic consequences. https://www.nytimes.com/2023/09/13/business/economy/uawstrike-economic-impact.html
NPR. (2023). How a UAW strike would impact the economy. https://