Skip to content

Walking Out On The Auto Industry

The strike comes at an inflection point for automotive production.

A picket fence guards the perimeter of the quintessential suburban home.  Pickets also periodically guard the perimeter of factories, preventing entry.  We’re getting a live display of this practice at American auto plants.

After a summer of unsuccessful negotiations, the United Auto Workers (UAW) initiated strikes against the three large U.S. car makers last Friday.  13,000 walked off their assembly lines, with more of the UAW’s 146,000 members potentially to follow in the weeks ahead.

The union is seeking substantial improvements in compensation.  A 40% pay increase over four years, automatic cost of living adjustments and broadened pension benefits are among the demands.  The auto strike culminates a year full of labor actions, the product of tight job markets that have provided workers with renewed leverage.

The UAW has also taken notice of very strong earnings among the “big three” since all recovered from near bankruptcy in 2008.  More recently, supply chain disruptions created product scarcity in 2021 and 2022, increasing selling prices and company profits.


The negotiations will also be colored by the evolution towards electric vehicles (EVs), which have fewer components and require fewer workers to assemble.  The UAW will seek to preserve jobs; the big three will seek the same flexibility and efficiency that non-union EV manufacturers enjoy.

If the strikes continue for a period of weeks, they will scramble economic measures like industrial output and employment.  One analyst estimates that a walkout comparable to the last major action in 2019 would cut fourth quarter real growth by a full percent.  That loss would, presumably, be made up in the quarters after a settlement is reached.

The strike may not have much of an impact on inflation.  Auto workers make up only about 0.1% of the private sector workforce, and auto inventories are not nearly as thin as they were a year ago.  With consumers showing signs of fatigue, dealers will almost certainly have less pricing power.  

Both sides have planted stakes in the ground, because the stakes in the dispute are significant.  That may make fence-mending more difficult. 


Information is not intended to be and should not be construed as an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Under no circumstances should you rely upon this information as a substitute for obtaining specific legal or tax advice from your own professional legal or tax advisors. Information is subject to change based on market or other conditions and is not intended to influence your investment decisions. © 2023 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For legal and regulatory information about individual market offices, visit

Carl R. Tannenbaum

Executive Vice President and Chief Economist
Carl Tannenbaum is the Chief Economist for Northern Trust. In this role, he briefs clients and colleagues on the economy and business conditions, prepares the bank's official economic outlook and participates in forecast surveys. He is a member of Northern Trust's investment policy committee, its capital committee, and its asset/liability management committee.