Ford fired hundreds of workers after the United Auto Workers Union (UAW) in the US went on strike for the first time in its 88-year history.

Tensions escalated in the US as Ford laid off hundreds of workers after about 13,000 members of the United Auto Workers Union (UAW) went on strike due to the failure to reach an agreement on a new contract.

The 13,000 workers at General Motors' assembly plant in Missouri, the Ford plant in Michigan and the Stellantis Jeep plant in Ohio decided to go on strike after no agreement was reached by September 14, the expiration date of the current contract.

Ford announced on Friday that it had laid off 600 non-striking workers at its Michigan plant, blaming a "knock-on effect" on other workers who went on strike in the paint and final assembly departments.

Stating that production is interconnected, the company said the striking workers directly affected operations in other parts of the plant.


Ford's decision to lay off workers came after President Joe Biden directed two senior White House officials to mediate the talks.

Biden had urged the parties to find an agreement to end the work stoppage because of its potential to harm the economy.

In a statement at the White House on Friday, Biden had urged the UAW and automakers to return to the negotiating table to find a "win-win" deal, saying that the "record profits" of the car companies should be matched by "record contracts" for the UAW.

Biden also said he had appointed US Labor Secretary Julie Su and White House Economic Advisor Gene Sperling to mediate the talks.


The UAW is demanding wage increases of up to 36 percent over four years, while automakers are offering no more than 20 percent.

The union also wants to end the two-tier wage system in which it takes four years for new workers to reach the same wage as long-term employees.

Economists worry that prolonged strikes could push up car prices and hamper policymakers' progress in containing inflation.

JPMorgan economists note that a continuation of the strike could halt the recent softening in the consumer price index component for motor vehicles and create another breaking point for disinflation.

Moreover, the economists say that a final contract agreement that includes a significant wage increase would also pose an upside risk to inflation in the sector.


If the auto workers' strike lasts longer, pandemic-related supply chain disruptions are expected to further reduce already low vehicle inventories and thus put pressure on car prices.

According to the calculations of the consulting firm Anderson Economic Group (AEG) on the potential losses of UAW workers, manufacturers and the automotive industry in general, it is estimated that the strike of approximately 150 thousand UAW members at 3 automakers could lead to a total economic loss of more than 5 billion dollars if it lasts for 10 days.

If the strike lasts for 10 days, it is estimated to cause a total wage loss of 859 million dollars and a producer loss of 989 million dollars.

However, given that current inventories are around 1 in 5 of their 2019 level, a strike in these conditions is likely to affect dealers and customers much sooner.

The strike is also of particular concern for the steel industry, as 1 in 4 of US steel demand is automobile-driven.

Mark Zandi, Chief Economist at Moody's Analytics, said that if the auto workers' strike lasts longer, it will negatively affect the economic growth of the US economy.

"If the UAW goes on strike from mid-September to the end of October against all 3 domestic vehicle manufacturers, this would reduce real GDP growth in the 4th quarter by an estimated 0.2 percent in annualized terms," Zandi said.