Detroit Strike Could Mean US$2 Billion Loss for Mexico
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Detroit Strike Could Mean US$2 Billion Loss for Mexico

Photo by:   Unsplash, Ivanna Cajina
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Reneé Lerma By Reneé Lerma | Journalist & Industry Analyst - Fri, 09/08/2023 - 17:23

Detroit automotive workers are threatening to go on strike. If they do, Mexico could potentially incur a monthly loss of US $2 billion. The strike is scheduled to begin on Sept. 14 unless a resolution is reached. This potential economic setback is attributed to Mexico's production of auto parts and components, crucial supplies for these manufacturers in the US, coming to a standstill.

According to Alberto Bustamante, former Director General, INA, Ford, GM and Stellantis workers advocating for the strike are members of the United Auto Workers (UAW) union in the US. "If they go on strike, it automatically stops the reception of all auto parts and components that Mexico sends to Ford, GM and Stellantis in the US," Bustamante stated in a Reforma interview. He also anticipates potential production halts in Mexico lines due to reduced demand, although this will depend on the duration of the planned strike.

A simultaneous strike by UAW workers from all three automakers could result in downtime for Mexico, particularly affecting the production of these three manufacturers. This downtime could start as early as the third week of the strike but might extend to the sixth or eighth week, contingent upon the availability of manufacturers, products and components, as reported by  S&P Global Mobility.

Bustamante highlighted that the US could potentially experience losses of $5 billion due to the ripple effect on the supplier chain within the country. Implications could be grave, considering that the entire automotive industry, including foreign-owned companies operating within the US, contributes approximately 3% to the US’ national GDP, as reported by The New York Times.

Among workers’ demands are a 46% salary increase, a 32-hour workweek with a 40-hours workweek pay and the reinstatement of traditional pensions. According to Bloomberg, the UAW plans to make a counteroffer to Ford Motor after rejecting the company's initial proposal last week, according to individuals familiar with the matter.

Photo by:   Unsplash, Ivanna Cajina

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