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Unions are in focus across the country as more workers threaten industrial action and strikes continue to impact entire industries. Joining the train in 2023 have been pilot associations at major airlines like American (AAL) and Southwest (LUV), the Teamsters union at UPS (UPS), Workers United at Starbucks (SBUX) and the International Association of Machinists and Aerospace Workers at Spirit AeroSystems (SPR). Don’t forget the damaging double strike that continues to plague Hollywood – with both writers and actors conducting a historic double strike.
Bigger picture: Many workers feel compensation and conditions have worsened over the past three years despite bumper corporate profits since the pandemic. Besides pay not keeping up with the rising costs of living, employees might see a moment of leverage in a tight labor market, while big changes are threatening control of entire industries (think EVs/autos, or AI and the screenwriting process). A contagion effect is also rippling across sectors as employees see better working terms and pay hikes occur after companies come to the bargaining table, while new union leadership and and younger members continue to push for stronger deals.
The latest case in the spotlight is the United Auto Workers union, which has landed approval from workers at Ford (NYSE:F), General Motors (NYSE:GM) and Stellantis (NYSE:STLA) to strike if a new contract is not worked out before Sept. 14. A work stoppage by its 150,000 workers could result in an economic loss of more than $5B in just 10 days, according to the Anderson Economic Group, given current inventories and the manufacturing environment. Auto stocks have typically traded higher following resolution and contract ratification in the past – in what has typically been a recovery from aggressive selloffs during the contract talks – but some carmakers may be at more risk than others.
Outlook: On the corporate side, businesses have to decide whether to dig in for the long haul (Hollywood) or agree to new terms for their workers (UPS). At issue are terms that may impact a company’s bottom line and decrease competitiveness, or limit powers to balance merit-based progress and employee motivation. On the other hand, better worker terms can give corporations access to a steady and well-trained labor force, as well as a sense of operational cost predictability and the ability to attract talent in a tight labor market.
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