Union Demands Effect Trade

The recent ILA strike effecting the West and East coasts has caused significant issues and trade barriers.  World Trade 100 estimates the strike could cost over $200 billion this peak shipping season. Companies shipping merchandise are undoubtably going to be affected by the strike. Many shipping lines have diverted their cargo from portland to other west coast ports in an attempt to avoid delays that would cost companies millions in revenue. A strike of this magnitude is not the first of its kind. Bonnie Chan a senior analyst on the industrial and transportation research team says it took shipping lines over a month to clear out congestion when U.S. west coast ports were shut by strikes for 10 days in 2002.

Union strikes hinder and can sometimes cease shipping. In extreme cases like the ILA strike, if union demands are not negotiated and met the situation creates detrimental trade barriers. As previously mentioned, union strikes are not uncommon and when a strike effects trade it can be detrimental to people, companies and the economy. It's extremely curious that a policy has not been created to eliminate a trade barrier, should another strike arise. To my knowledge, no such policy exists. The effects of unions on shipping and trade in respect to costs is significant, but the effect of unions on strike is much more astonishing. A policy should be created specifically for union demands, so trade barriers are eliminated and the economy is remains unaffected. Trade is an essential factor in the stability of the United States economy, its astounding that nothing exists to prevent the negative effects of something as common and inevitable as a union strike.

Health Care Benefits Affects Comparative Advantage

After reading "Globalization Drives Changes for U.S. Automakers" its apparent that as long as the Big Three (GM, Ford, and Chrysler) are burdened with outrageously high health care costs and benefit packages it will be nearly impossible for them to compete with foreign car manufacturers. In 2008 GM spent 4.8 billion on health care costs alone. This in turn increases the price of every vehicle produced by $1,500. Health care costs for Japanese competitors are not nearly as high as U.S. manufacturers, because of this Toyotas health care costs create only a $200 increase per vehicle. This gives Toyota a $1,300 cost advantage. 

If this isn't enough to completely eliminate any chance of the Big Three competing with foreign manufacturers, these companies are also paying $6 more per employee in wages then Toyota and Honda factories located in the U.S.. With GM and Chrysler receiving a $17.5 billion loan to prevent them from going into bankruptcy in 2008, its clear these U.S. car manufacturers cannot competitively compete while they are expected to pay such high wages and benefits.

Hello Everyone,

My name is Brielle Casar and I attended Johnson and Wales University where I received my Bachelors degree in fashion merchandising and retail marketing. Currently, I am working towards a Masters degree in business.  In this blog I hope to share with you some of my thoughts and opinions on current economic issues. Throughout my college career, past and present economic issues have arose and been discussed; my hope is that having a degree in fashion, as well as business will give readers a different view of current economic situations.