According to Dolphin Research APP, due to the breakdown of negotiations between labor and management, the strike by the United Auto Workers (UAW) against the three major U.S. automakers - General Motors (GM.US), Ford (F.US), and Stellantis (STLA.US) - officially began at midnight on September 14th Eastern Time (12:00 PM on September 15th Beijing Time).
This historic strike involves approximately 145,000 workers. The UAW stated that the strike will start at several factories, mainly assembly plants, rather than a comprehensive strike, in order to systematically reduce vehicle production that brings profits to these automakers, disrupt their production plans, and minimize the impact on the UAW strike fund. The UAW stated that additional strike locations will be added based on the progress of negotiations. The union also stated that it is expected to return to the negotiating table on September 16th.
Ford temporarily lays off 600 people, dissatisfaction from the three major automakers regarding the strike
According to the latest news, Ford announced on Friday afternoon Eastern Time that the company has temporarily laid off approximately 600 workers at an assembly plant in Michigan where a UAW strike is taking place. Ford stated that the temporary layoffs are mainly due to the disruption caused by the strike, and the laid-off workers are unable to apply for unemployment benefits. In addition, Ford expects that if the strike continues, it will have to take temporary layoff measures for more workers.
A Ford spokesperson said, &#34;Our production system is highly interconnected, which means that the UAW's targeted strike strategy will have a chain reaction on factories that are not directly targeted by the strike.&#34; &#34;In this situation, the strike at the Michigan assembly plant directly affects the operation of other parts of the plant.&#34;
General Motors stated that due to the &#34;ripple effect&#34; caused by the strike at the Wentzville assembly plant in Missouri, 2,000 workers at the Fairfax assembly plant in Kansas City have stopped working. Mary Barra, CEO of General Motors, expressed dissatisfaction with the strike, stating that the latest offer provided to the union by the company is the best offer in its 115-year history. She said, &#34;I am very disappointed and frustrated. This is an unnecessary strike.&#34; She also added that the company is prepared to continue operations during the shutdown.
Stellantis expressed &#34;extreme disappointment&#34; with the UAW leadership's refusal to participate in negotiations. The company stated, &#34;We are immediately placing the company in emergency mode and will take all appropriate structural decisions to protect our North American business.&#34;
Biden attempts to mediate negotiations between labor and management
U.S. President Biden stated on Friday that he will send two government officials, the acting Secretary of Labor and a White House advisor, to Detroit in an attempt to mediate between the two sides and facilitate an agreement. Biden stated that the American automakers have not fairly shared record profits with union members, but he hopes they can &#34;reach a win-win agreement.&#34;
Biden said, &#34;Due to the extraordinary skills and sacrifices of the workers, the automotive companies have achieved record profits in recent years. In my opinion, these record profits have not been fairly shared with the workers.&#34;
&#34;These companies have already made some significant offers, but I believe they should further ensure that record-breaking corporate profits mean a record-breaking contract for the UAW.&#34;
UAW demands may be difficult to meet, and the ongoing strike will continue to impact the U.S. economy
The UAW has been making a series of broad demands, including wage increases, additional paid leave days, increased worker cost-of-living allowances, and pensions. Reports indicate that if the union's demands are fully met, the three major automakers' labor costs would increase by $45 to $80 billion, resulting in an average hourly labor cost of over $150, a staggering 134% increase from the current $64. However, considering that these three automakers are investing over $100 billion in electrification transformation and reducing costs elsewhere to ensure electric vehicle production, it is unlikely that the UAW's demands will be met.
It is reported that Ford has proposed a 20% wage increase, General Motors has proposed an 18% wage increase, and Stellantis has proposed a 17.5% wage increase. These proposed wage increases by the three major automakers are far below the 36% (initially 40%) wage increase proposed by the UAW.
If the strike continues for a long period of time, the U.S. economy will suffer. Oxford Economics estimates that if the nearly 150,000 union workers of these three companies ultimately go on strike, it could lead to the cessation of approximately one-third of U.S. automobile production, putting pressure on the labor market and driving up the prices of new cars. The researcher also stated that on an annualized basis, this would directly reduce U.S. GDP by up to 0.3%; including indirect effects, as long as this standoff continues, the impact on GDP will be even greater, reaching 0.7%.
Joe Brusuelas, Chief Economist at RSM, estimates that if the UAW goes on a comprehensive strike, the U.S. economy would face a daily loss of approximately $500 million. Anderson Economic Group, a consulting firm in Michigan, estimates that if the strike lasts for 10 days, it would cause $5 billion in economic losses to the United States, with all workers of the three companies losing $859 million in wages, and these companies losing $989 million.
How does the market view this?
On Friday, the U.S. stock market closed with Ford down slightly by 0.08%, General Motors up by 0.86%, and Stellantis up by 2.18%. Some analysts believe that the market's tepid response to the strike reflects uncertainty about how long the strike will last and the extent to which it will expand. However, analysts also point out that although the start of the major strike was more restrained than some expected, it sent a signal to Detroit automakers that if negotiations drag on, actions may escalate.
Previously, Marick Masters, a business professor at Wayne State University in Detroit, stated that parts factories for pickup trucks and large SUVs would likely be the first to go on strike. He stated that it makes sense for the UAW to target the weakest links in the supply chain. Some analysts expressed surprise that the UAW did not target the more profitable full-size pickup truck factories or key component factories, both of which could cause greater damage.
According to reports, in addition to the three car companies mentioned above, automotive parts suppliers will also be affected, especially some small suppliers who may lack the financial resources to cope with the strike, even if it is a short-term one. The National Association of Manufacturers stated in a statement, &#34;Small and medium-sized manufacturers across the United States will be the first to feel the impact of this shutdown, whether these companies have union members or not.&#34;
Barclays stated that automotive parts suppliers such as Dana (DAN.US), Magna International (MGA.US), Lear (LEA.US), and American Axle &amp; Mfg (AXL.US) are expected to be affected.
Regarding this strike, Wedbush published a research report stating that Tesla (TSLA.US) is clearly one of the winners. Wedbush analyst Dan Ives wrote in a report, &#34;We are concerned that this could be a long and serious strike, which is definitely a disaster for the Detroit Three.&#34; &#34;This is a very frustrating situation because (General Motors CEO) Mary Barra and (Ford CEO) Jim Farley have done well in transforming traditional car companies and preparing for the transition to electric vehicles, and now the UAW is like a 'meteorite' in the eyes of Wall Street.&#34;
In Dan Ives' view, the obvious winners will be Musk and Tesla because Tesla does not have any unions. Analysts believe that in the next few years, Tesla's biggest competitors in the electric vehicle market will face increasing costs and complexity, depending on how the situation develops, and raising the price of electric vehicles may not help.
Analysts from Bank of America also stated that the strike will bring uncertainty to supply and operations for car companies. Bank of America pointed out that the UAW chose to strike at assembly plants, which is less punishing for car companies than if they had chosen to strike at key component factories. However, the bank also noted that the assembly plants where the UAW started the strike are where the three car companies assemble some of their most profitable models, including the Chevrolet Colorado and GMC Canyon midsize trucks, Ford Mustang and Ford Explorer, as well as the Jeep Wrangler.
Bank of America stated, &#34;Considering these specific plants, we estimate that the strike will cost General Motors approximately $16 million per day in pre-tax profits, $20 million for Ford, and $33 million for Stellantis.&#34; The bank said that Ford seems to be closest to reaching a labor agreement, General Motors may not be far behind, while Stellantis still has a long way to go.

UAW stated that it will initiate strikes at several factories, primarily assembly plants, rather than launching a comprehensive strike action. The goal is to systematically reduce the vehicle production that brings profits to these automakers, while minimizing the impact on the UAW strike fund.

The first day of the major strike in the US automotive industry: Ford temporarily lays off 600 employees, Biden attempts to mediate.