The ongoing strike at key East and Gulf Coast ports poses a significant risk to the U.S. automotive industry, which relies heavily on a steady flow of automotive parts and supplies.
With 45,000 dockworkers participating in the strike, the potential economic fallout could reach staggering figures. The Auto Care Association has suggested that the automotive industry could face losses estimated at nearly $340 million per day.
The Auto Care Association’s concerns reflect the broader implications of the strike, as delays in receiving crucial automotive parts can hinder repair services and maintenance operations across the country. J.P. Morgan analysts have indicated that for every day of the strike, the recovery time could extend an additional five to seven days, compounding the challenges faced by the industry.
The strike would most heavily affect European automakers like BMW, Mercedes-Benz, Volvo, and Volkswagen.
The strike’s impact on the U.S. economy could be even more extensive, with potential costs reaching up to $5 billion daily if the situation persists. Analysts at Goldman Sachs have stated that some industries will be more affected industries like furniture, clothing, clothing, and appliances due to the high import rates.
As the strike continues, stakeholders in the automotive sector will need to closely monitor the situation and adapt to the challenges posed by supply chain disruptions.
“Each day that this strike continues, not only does our industry lose out on hundreds of millions of dollars in business, but the nearly 300 million Americans who drive are more at risk on the road as access to service and repair of their vehicles diminishes,” said Bill Hanvey, president, and CEO of the Auto Care Association.
The ongoing strike at East Coast and Gulf Coast ports poses a significant risk to the U.S. auto parts supply chain, which relies heavily on imports. With $138.9 billion worth of automotive parts imported annually, any disruption can lead to severe shortages, impacting not only the availability of parts but also the overall operations of the auto care industry, which employs over 4 million workers.
The strike, the first of its kind since 1977, stems from unresolved negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance. Key issues at the heart of the deadlock include wage packages deemed unacceptable by the labor unions and demands for a complete ban on automation, reflecting broader concerns about job security in an increasingly automated industry.
The ILA represents 85,000 port workers across the United States and is demanding a pay rise over the course of a 6-year period. The numbers being reported for the raise request range from 61.5% – 77%. They also want to see a ban on the automation of some jobs to ensure jobs are not lost.
Current port workers with more than six years of employment can make $39.00 per hour. Overtime and benefits can push that salary to over $200,000 annually.
The diversion of shipments to West Coast ports, while an attempt to mitigate delays, has led to congestion there as well, further complicating logistics and the flow of goods. Industry experts, like Greg Horn from PartsTrader, have warned that a prolonged strike could threaten improvements in parts delivery times, which have been crucial for repair shops.
The Auto Care Association has called on the Biden administration to intervene and help facilitate a resolution to avert a more significant crisis in the automotive supply chain.
