The United Auto Workers (UAW) strike launched last week targeting specific plants at Ford, General Motors and Stellantis. The UAW is demanding wage increases of about 40%, reinstating cost of living protections, ending the two-tier system for wages and benefits and job security in the electric vehicle transition.
ISRI held a webinar with industry experts to review the potential the strike has to significantly disrupt supply chains and the economy, including the generation and demand for recycled materials. ISRI does not have a position nor does it take sides on this strike. The goal of the webinar is to put into context the potential short- and long-term effects of the strike and discuss possible strategies for the recycled materials industry.
How long will the strike last?
Joe Pickard, ISRI chief economist and director of commodities, explained that many factors are at play and provided data on previous auto manufacturing strikes to give some context on what to expect. “Nine of the 20 longest stoppages ending in the past three decades lasted longer than a year but most of the strikes in recent years didn’t last long. Among work stoppages with more than 1,000 workers in the past 30 years, the average was five weeks.” The UAW has an $825 million strike fund that would support a full strike for up to 11 weeks.
Jason Schenker, president of Prestige Economics and chairman of The Futurist Institute, highlighted that one of the crucial factors is the current low unemployment. “Unemployment in August was 3.8%. The labor market is currently super tight.” Schenker explained that with few people to hire and few people on unemployment, the UAW has good bargaining power. It also creates an incentive for the auto manufacturers to reach an agreement with the union.
What kind of impact will this have on recycled materials?
The immediate impact would be increased pressure on ferrous and aluminum markets with Argus reporting that the strike is, “weighing on prices and already resulting in some steel production cuts.” It’s difficult to gauge the extent as the market share of Detroit’s “Big 3” automakers has decreased over the past decades from 68% in 1999 to 40% in 2023.
Schenker explained that the strong US labor market, Fed policy rates nearing their peak and scavenger supply chain disruptions easing will help recyclers weather some of the impacts of the strike. Some risks that may exasperate the effects include slow global economic growth making it harder to sell recycled materials to other countries, tightening of monetary policy and the war in Ukraine. Schenker reiterated that more people have jobs, are making more money and are looking to buy cars, despite higher interest rates. Automakers know this and could lead to an earlier than expected resolution.