Dockworkers are now staging a historic strike across the East and Gulf coasts. The strike by 45,000 longshoremen may be justified as they seek fair wages in this inflationary age, but it will surely costs jobs — and kill car sales.
Here’s how the dock strike will wreck the car supply chain. Our docks receive more than food and appliances. The East and Gulf coast docks bring in thousands of assembled cars, car parts and other components. Many domestic car factories also depend on shipments of parts that come in through the ports.
This large of a dock shortage will force car manufacturers to use air freight for lighter parts. This increased expense will reduce car manufacturers’ profit margins, which will lead to fewer products and, inevitably, layoffs.
The impact will be quicker than you may think as these companies use “just-in-time” inventory planning (JIT). This means that parts and components arrive just as they factories need them. Lack of parts could stall production of car production in a a little as a week.
The impact will be much like what happened during COVID, when the shortage of new cars put pressure on the used-car market. The result is that both new and used car prices will rise as long as this strike continues to persist.
And the strike does not appear as if it will be settled anytime soon. Negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) broke down earlier this summer. The two sides remain far apart on key issues, with the contract expiring on Oct. 1, 2024.
The ILA says it represents about 85,000 longshoremen, and the USMX says the current contract covers around 25,000 port workers. This would be the union’s first strike since 1977.
Estimates for the economic impact of the strike cover a wide range: The business research nonprofit The Conference Board puts the cost at around $540 million per day, while analysts at JP Morgan estimated the cost could be up to $5 billion daily.
Despite the potential economic impact, President Joe Biden said he would not invoke the Taft-Hartley Act, the 1947 law that allows the president to request an 80-day, court-ordered cooling-off period if a strike would “imperil the national health or safety.”
Said White House spokesperson Robyn Patterson: “We support collective bargaining. We believe it’s the best way for both American workers and employers to come to a fair agreement — one that benefits the workers in a way that reflects the success of the companies.”
Patterson also noted that this weekend, “senior officials have been in touch with USMX representatives urging them to come to a fair agreement fairly and quickly — one that reflects the success of the companies. Senior officials have also been in touch with the ILA to deliver the same message.”
Rep. David Rouzer (R-N.C.) argued that the “Biden-Harris administration has failed to act to protect our economy and American consumers,” in a post on the social platform X Monday.
“A week-long strike would create a backlog at our ports until November,” said Rouzer, who represents Wilmington, Delaware, where one of the ports to be impacted by the strike is located.
U.S. Chamber of Commerce President Suzanne Clark pushed Biden Monday to invoke Taft-Hartley, warning it “would be unconscionable to allow a contract dispute to inflict such a shock to our economy.”
“These ports collectively handle more than 68 [percent] of all containerized exports and 56 [percent] of imports for the nation, with a daily trade value exceeding $2.1 billion,” Clark wrote. “Simply put, you have the authority to keep contract negotiations going while keeping the ports open.”
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Lauren Fix, The Car Coach is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.