According to various estimates, the protest, which was attended by more than 34,000 workers, cost the US economy $7 billion. Ford alone reported a loss of US$1.3 billion. The settlements reached by OEMs and the UAW should provide some stability to both workers and suppliers. These include a 25% increase in base pay and terms and conditions running until April 2028.
The auto industry is the primary sector of the largest steel producers in the United States, accounting for nearly a third of revenue. Despite the impact of losses in auto production, the MEPS survey shows U.S. steel prices have recovered from summer lows.
Hot rolled coil prices have fallen to their lowest level this year, reaching US$660 per short ton, since a strike began in September. G90 coated hot-dip galvanized coil fell to $965 per short ton, its lowest level since October 2020.
However, U.S. steel prices have been rising in recent months. Stable demand relative to that in many other major global economies, as well as efforts by steel producers to cut capacity, have cushioned the impact of the auto sector's woes.
Sector Outlook
U.S. new vehicle sales are expected to grow more than 10% in 2023. The first half of the year in this sector was stronger than expected. However, rising interest rates are expected to dampen consumer appetite in the new year. Vehicle sales in emerging auto markets around the world should drive global growth for the sector in 2024.
Steelmakers will be closely watching developments in emerging markets and OEMs' commitment to sustainable production in the medium term.
China now dominates global auto production, producing more than 26 million units in 2022, compared with nine million units produced in the United States. In the first half of 2023, China's BYD sold 1.25 million vehicles. It is now the world's largest manufacturer of plug-in hybrids and electric vehicles.
Automakers' steel needs are changing. Net-zero OEMs are looking to lighter, higher-strength steels. Meanwhile, Stellantis told MEPS it is creating “closed-loop” supply chains to support each of its manufacturing sites. Its goal is to reduce the transportation of raw materials by using local sourcing partners. Stellantis has also set a target of using at least 40% recycled or sustainable materials in all new vehicles from 2030.
Union targets Tesla and Asian OEMs
Amid this growing sector, further strikes in the US auto sector could create obstacles in the future. The UAW's success in campaigning for workers at Ford, GM and Stellantis has led it to set a goal of improving employment conditions for employees of other OEMs.
Hyundai, Toyota and Honda have announced they will raise wages for their US workers in light of a new agreement with Ford, GM and Stellantis. However, these brands and Texas-based Tesla have now become the union's new focus. UAW President Sean Fein called his workers "the UAW members of the future."
