This is how the massive port strike could affect the automotive industry

Longshoremen on the East and Gulf Coasts officially went on strike early Oct. 1 after the union and a port operator alliance were unable to reach an agreement Salary increases and automation. Now, Container traffic is held Maine To Texas. This could, as you may have already imagined, spell disaster for the country Automotive supply chain.

The Ports The companies covered by these striking longshoremen handled approximately $37.8 billion in vehicle imports in the twelve months ended June 30, 2024. Automotive News Reports. This number doesn't even give the full picture because it doesn't include that Shipping of vehicle parts and other car-related items. A shortage in this area could spell disaster for the country Automotive industry if the hit persists. Some experts believe that if the strike lasts long enough (read: CEOs don't give workers what they deserve), factories and production lines could shut down and layoffs could occur.

Here's how this all came to a head after months of negotiations Automotive News:

The labor contract between the International Longshoremen's Association union, which represents 45,000 longshoremen, and the employers group United States Maritime Alliance expired late Monday as pay negotiations reached an impasse.

The USMX said in a statement on Monday that it had offered to increase wages by nearly 50 percent, exchanged new proposals with the union in the last 24 hours and asked for an extension of the current framework agreement.

“We are confident that this will allow us to fully resume collective bargaining on the other outstanding issues in an effort to reach an agreement,” USMX said.

This strike could apparently cost the US economy up to $5 billion a day, analysts at JP Morgan said AutoNews. The automotive industry accounts for a fairly large portion of this, as millions of cars enter and leave US ports each year. The Port of Baltimore In 2023 alone, 847,158 vehicles were handled.

Here's how this could affect the automotive world and what automakers are doing to make ends meet during this crisis:

Retailers and automakers have accelerated their holiday imports in recent months and are shifting other shipments to the U.S. West Coast where possible.

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The strike will have far-reaching effects on the auto industry, said Jack Hollis, sales manager for Toyota Motor North America.

“I don't care if it's one day or two days – any single day of these things can cause problems that people need to think about,” he said. “And yes, this will affect everyone; It just does.”

Barclays researchers expect European automakers such as BMW, Mercedes, Volkswagen and Volvo to be among those whose imports would be affected, but noted that relatively high inventories would buffer the immediate impact.

Hyundai Motor America is in “close contact” with its logistics subsidiary Hyundai Globis, said CEO Randy Parker. The automaker uses ports in Philadelphia and Brunswick, Georgia.

The automaker is “working on contingencies to ensure we have stable processing and delivery of Hyundai vehicles,” he said. “They have been good at managing disruptions over the years and so we will do our best to try to manage those disruptions as well.”

It's not just foreign car companies. This also affects the The three major car manufacturers. However, they don't seem to be quite as worried:

General Motors is “carefully monitoring the situation and [has] “Contingency plans are in place,” a spokesman said, adding that the company would work to mitigate any impact on its operations.

Ford is monitoring the situation, a spokesman said, adding that it is too early to speculate on possible impacts.

So far there has been no impact on Stellantis' operations, it said in a statement.

“The company is taking necessary measures to mitigate any possible impact on production or our ability to deliver vehicles to our customers,” the automaker said.

It's not just the cars, though. Parts are also a big topic now. This is what a Barclays analyst said AutoNews that 70 percent of auto parts imported into the United States come from ports where strikes are currently taking place. However, it is likely that some inventory was built up in anticipation of this strike.

Okay, that's enough from me. Go over to Automotive News to get a more comprehensive picture of how the first ILA strike since 1977 could affect the automotive industry and the global economy as a whole. Oh yeah, pay the workers what they deserve too.