UAW's historic strike costs automakers billions
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A person holding picket signs outside of a Stellantis plant in Sterling Heights, Michigan, in October 2023. Photo: Emily Elconin/Bloomberg via Getty Images
The UAW's historic strike earlier this year cost the Big Three automakers billons in profits, new data shows.
Why it matters: The automakers — GM, Ford and Stellantis — still expect to rake in multibillion dollar profits this year, in part buoyed by high vehicle prices and increased trucks and SUVs sales.
- Company earnings reports this week reflected losses due in part to labor disruptions.
- The strike resulted in record labor contracts and represented a reversal in a decades-long trend of U.S. auto unions losing power.
- The union secured pay increases, the elimination of a two-tiered wage system for newer hires, the right to strike over plant closures and other benefits for workers.
Context: The strikes were in part set off by the auto industry's earnings surge in the aftermath of the pandemic — which did not sufficiently trickle down to workers, who were facing rising living costs due to inflation.
GM: The company said in a new earnings report on Wednesday that the strikes dinged its profits before interest and taxes by around $1.1 billion.
- The company reduced its outlook for full-year net income of between $9.1 billion and $9.7 billion, down from between $9.3 billion and $10.7 billion.
Ford: The strikes cost Ford around $1.7 billion, but it expects to make a pre-tax profit of between $10.0 billion to $10.5 billion in 2023.
Stellantis: In its third-quarter earnings, Stellantis said the strikes reduced its revenue by $3.2 billion.
- But it also reported that net revenues so far this year were at $48 billion, up 7% compared to the same quarter in 2022.
Thought bubble, via Axios' Joann Muller: The Detroit automakers will be able to make up for the hundreds of thousands of vehicles in lost production, although perhaps not all of it before year-end.
- More important, the higher labor costs will push them to search for ways to make their cars, especially electric vehicles (EV), more efficiently, which will only benefit customers by lowering prices.
- Because they're pushing off some investments in EVs to wait for consumer demand, they'll likely have strong profits in the next few years, as well.
The big picture: UAW's win at GM, Ford and Stellantis, as well as union victories at UPS and for Hollywood writers, could inspire additional labor organizing efforts around the country, Axios' Emily Peck writes.
- Using momentum from the strike against the Detroit Three manufacturers, UAW also set off on a campaign to organize workers at 13 non-unionized automakers.
Go deeper: UAW launches organizing campaign at 13 non-unionized automakers
