Autoworkers strike expands significantly against GM and Stellantis

If the United Auto Workers (UAW) launches a full-scale strike against the Big Three automakers and it lasts through the end of the year, economic growth could come to a “virtual standstill” during the fourth quarter, according to Moody’s Analytics chief economist Mark Zandi.

The unprecedented strike entered day four on Monday and negotiations on a deal are ongoing.

A full-scale UAW strike that lasts six weeks would reduce annualized GDP growth in the fourth quarter by an estimated 0.2%, Zandi told CNN in an email.

“This is a small impact, but meaningful, particularly in the context of other potential headwinds to growth in coming months,” Zandi said.

Those headwinds include a potential government shutdown, higher mortgage rates, the return of federal student debt payments and higher energy prices as gasoline hit fresh 2023 highs on Monday.

Given those obstacles and the UAW strike, Moody’s Analytics is projecting GDP will grow at an annual rate of just 0.8% in the fourth quarter.

“Real GDP would flatline in the fourth quarter if the UAW strikes the three automakers for the entire fourth quarter and all other assumptions hold,” Zandi said.

Another impact: A long strike would reduce low vehicle inventories.

Zandi said this will “forestall additional vehicle price declines, and even potentially push prices up, stymying the current disinflation and putting added pressure on the Fed.”

S&P Global Market Intelligence is warning of an even bigger hit to GDP of up to 2.17 percentage points in the fourth quarter if the strike lasts 15 weeks.

“A lasting strike…is looking highly probable,” S&P analysts wrote in a report on Monday. “The current political and economic conditions increase the odds of a longer strike.”

UAW President Shawn Fain warned over the weekend the union is prepared to escalate the strike.

“If we don’t get better offers, and we don’t get down to taking care of the members’ needs, then we’re going to amp this thing up even more,” Fain told CBS News.

Dealerships will stay open

You will still be able to shop for cars, even at Ford, GM and Stellantis dealers. They’re not going to shut down, as car dealerships are independent franchises that aren’t owned by the company whose logo is on the building.

Vehicles could get more expensive

Not all automakers are facing a strike right now. Not even most of them. Toyota, BMW, Hyundai, Nissan, Tesla, Volvo and Subaru, just to name some, are still producing cars, trucks and SUVs in the United States, and their workers are not unionized.

But dealerships for the Japanese and South Korean automakers have always tended to have less vehicle inventory on-hand than those for the Michigan-based automakers. Ultimately, this could translate to pricing pressure as domestic automaker inventories start to run low and their competitors may not have the vehicles ready to pick up the demand.

Not all production will stop immediately

At plants where workers aren’t out on strike, production will presumably continue. So, if you’re in the market for, for instance, a Ford Bronco, a Jeep Wrangler or a GMC Canyon pickup, you should probably get to the dealership soon before inventories start to get really thin in a few weeks.

You may be waiting longer

While pickup truck inventories are well-stocked, they will run down if the strikes go on a long time. And truck buyers, being especially brand loyal, will probably just wait it out rather than shopping for competitive models like the Toyota Tundra or Nissan Frontier.

It pays to be flexible

Dealers will still have vehicles to sell for a few weeks, but, as the strike wears on, the choices available will start to dwindle. As the options dwindle you could try making a deal on one of the “ugly duckling” vehicles left hanging around on the showroom floor.

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The union representing Canadian autoworkers at Ford reached a tentative deal with the US automaker on Tuesday, keeping more than 5,000 union members on the job and providing some good news for an industry dealing with unprecedented labor disruptions.

Details of the deal between Ford and Unifor, the Canadian union, were not immediately available. But it is likely very good news for Ford, which is already grappling with a strike by more than 3,000 members of the United Auto Workers union and facing the possible expansion of the US strike this coming Friday.

Read more here.

The strike, which started a week ago today, has targeted only one final assembly plant at each automaker.

But that was always designed to be just a starting point, and the union threatened to expand the strike if its demands weren't met. UAW President Shawn Fain announced Monday night that it would pick other plants if there is no “substantial progress” in the offers from the automakers.

"Autoworkers have waited long enough to make things right at the Big Three. We’re not waiting around, and we’re not messing around," Fain said Monday.

The UAW chose to target final assembly plants first, which has made the initial strikes quite targeted and tactical. While the temporary closure of a final assembly plant is designed to cause some pain, a strike of such a final assembly plant is not devastating in the short-term, as it would only effect the vehicle models that are assembled there.

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