UAW Strike, It’s Not Going To Happen
The UAW is the United Auto Workers and they are currently in negotiations with Ford, GM, and Stellantis. If these talks fail then 150,000 workers will go on strike. These strikes would cost the US economy 5.5 billion dollars after ten days. It would be best if you did not worry about this unless you’re actively trying to buy a car.
Some funds are starting to panic slightly, but I’m not worried. While Berkshire Hathaway has reduced its money by half in GM, I am still not worried. Not just because I don’t own any automotive at all, but because I don’t think there will be a strike. I also don’t think that these insane demands are going to be fully met. First of all, Biden will not let the strike happen just like he didn’t allow a recession to happen. In an election cycle, a strike of this proportion would be something he will fight. The deadline the UAW has set is September 14 (a day before my birthday just in case you want to give me a gift) at which point they will go on strike. Car brands like Ram, Ford, Lincoln, Chevy, GMC, and more will grind to a halt. Prices will shoot up across the board as other car companies lunge at an opportunity to raise prices.
The demands of the union are so stupid that it boggles the mind. In an already hyper-competitive industry, you cannot chain a company down like this. There is only so much weight you can tie to a swimmer’s ankles. It would cost each of these car brands $80 billion more to pay out these contracts. Wage increases of 46%, the return of traditional pensions, and reducing the workweek from 40 to 32. This would take the cost per hour for a company to pay its worker from $64 to $150. Not all of their demands are outlandish, their cost of living increases are totally reasonable as are increasing retiree benefits. However, their three main demands, the ones I highlighted are completely outlandish. It is also painfully shortsighted.
If these car companies kneel to the demands, they will be crippled for decades to come. There is never any going back from pay increases and benefit increases of this scale. These companies will be paying out $80 billion each more each year, just to pay these inane demands. That is money that could go into research, production, or marketing. Demands like this are what drives companies overseas. I’m pretty sure it was Family Guy that said about unions “Oh, aren’t those the guys who everyone cheered for, and then they got greedy and cost everyone their jobs?“ At the time, I thought that was stupid, I thought it was just greed from corporations, and it partially was. But this is just crazy, how do they expect Ford to continue to stay innovating and improving with this weight to tug? They will just move everything South (Georgia, Texas, Florida, North Carolina) or they will move everything South (Mexico). There is no good ending for union demands this stupid.
The disgusting recklessness of idiotic leadership such as this will be catastrophic for the masses who were foolish enough to elect a man of such staggering ignorance. Shawn Fein and his leadership have completely blown it: Icarus.
From a stock market perspective, you shouldn’t be worried. As I mentioned earlier Joe Biden won’t let this happen, but you should get out after this. While the car companies won’t have to bend completely to the whims of the union, it will still be bad, and the next negotiation will be worse. In such a hyper-competitive industry, greed such as this will not go unpunished.
