The United Auto Workers (UAW) strike action is having an impact on U.S. automakers, including production losses at the Detroit Three's General Motors, Ford and Fiat Chrysler. The profit impact is estimated to be about $40 million to $60 million per week for each automaker.
Affected by the strike, the Detroit Big Three's labor costs have been greatly affected. One of the UAW's demands is to increase employee wages, and the Detroit Three already pay more hourly wages to employees than Tesla. Dan Levy, senior automotive analyst at Barclays, noted that Tesla employee wages are likely to rise as ongoing strikes continue to impact the U.S. automaker's labor costs.
However, Levy believes that Tesla's strategy of providing stock to employees has been very successful, and this policy has also brought a lot of benefits to employees. Tesla CEO Musk has argued that Tesla’s compensation plan has made many Tesla employees millionaires over the years. However, the UAW's demands could put the Detroit Three on the fast track to bankruptcy. Musk has been looking for solutions.
The UAW announced on Monday that it and General Motors (GM) were unable to reach a new labor agreement that would benefit GM workers and would therefore initiate a strike. This could affect GM's supply chain and the jobs of nearly 100,000 UAW members. The strike is the first strike action led by union president Gary Jones since taking office. Negotiations between the UAW and the Detroit Three have been ongoing, but so far, the two sides have been unable to reach an agreement.
Overall, the UAW's strike action will have a profound impact on the U.S. auto industry. Automobile companies need to pay more attention to employee compensation and welfare issues to ensure smooth production. As the world's leading new energy vehicle manufacturer, Tesla's decision on employee compensation issues will attract attention from all walks of life. Tesla employees may benefit from its successful stock plan, but in a competitive market environment, staying competitive is imperative. Now, the real situation about Tesla has become the focus of attention.