UAW Strike Could Cause $5B in Economic Losses; Peters Stands with Labor

Article courtesy MIRS News for SBAM’s Lansing Watchdog e-newsletter

A strike on Detroit’s Big Three automakers by 143,000 United Auto Workers (UAW) members could result in a total economic loss of more than $5 billion in 10 days, according to a new analysis released by consulting firm Anderson Economic Group (AEG).

AEG conducted the study in the midst of negotiations between the UAW and Ford, General Motors and Stellantis to head off a strike, with labor contracts expiring September 14, according to the Detroit Regional Chamber.

The Chamber reported newly-elected UAW leadership is taking a “more aggressive stance” than in past negotiations, requesting the elimination of wage tiers, wage increases, restoration of cost-of-living allowance increases, the reestablishment of retiree medical benefits and more paid time off, among others.

Many industry experts expect a work stoppage of at least one auto manufacturer, the Chamber wrote to members, and UAW leadership has repeatedly stated it’s prepared to strike against all three if necessary.

AEG calculated the total economic loss if all three Detroit auto manufacturers faced a strike, taking into account potential losses to both UAW and non-union auto workers, workers employed by impacted suppliers, Big Three auto manufacturers, consumers and the auto industry broadly if negotiations are not successful before September.

The estimate did not include strike pay, unemployment benefits, settlement bonuses or any reputational damage to the union or employers.

The firm used the same methodology used to estimate the impacts of the 2019 UAW strike, 2020 threatened rail union strike and 2023 threatened UPS strike, among others.

In the case of a Big Three shutdown, a 10-day strike would result in total wage losses of $859 million, and manufacturer losses of $989 million.

The lost wages and manufacturer losses would result in a direct economic loss of $1.848 billion, while the total industry economic loss is estimated at $3.511 billion, and the consumer and dealer losses at $2.106 billion.

The total economic loss is estimated at $5.617 billion.

If only one automaker faced a strike-related shutdown, with the example of Ford used, AEG calculated it could cause $665 million in direct economic losses, with $341 million in direct wages lost and $325 million in company-wide losses.

The total economic loss is estimated at $1.490 billion.

Patrick Anderson, AEG’s principal and CEO, said “when the UAW went on strike against GM in 2019, Michigan experienced a single quarter recession.”

He said that strike involved 48,000 workers at more than 50 plants lasting six weeks.

This time around, a strike could involve more manufacturers, workers and plants.

“If that happens, even a short strike would impact economies throughout Michigan and across the nation,” Anderson said.

The hit to vehicle inventory, which went up to 162,000 vehicles in June but has not yet reached September 2019’s 649,000 units, could have a swift impact on auto dealers and consumers, said Tyler Theile, AEG vice president.

“Consumer and dealer losses are typically somewhat insulated in the event of a very short strike,” Theile said. “However, with current inventories hovering around only 55 days, the industry looks different than it did during the last UAW strike.”

Automakers now have “about one-fifth of the inventory that was on hand in 2019, so a strike in current conditions would likely affect dealers and customers much sooner,” she said.

Peters Stands With UAW, Says They Helped Save GM 

On the last day of his annual motorcycle tour, U.S. Sen. Gary Peters (D-Oakland County) discussed the influence unions have on the economy with auto workers at Lansing’s United Auto Workers (UAW) Local 652.

UAW contracts expire next month for union employees at Ford, General Motors (GM) and Stellantis, or the “Big Three” unionized automakers. Peters said it’s important for the union and the companies to come together, but if they don’t, a strike could very well be on its way.

Peters’ stop at the UAW was to express his support for its members entering into contract negotiations, he said, due to the personal nature that labor issues have in his family. His mother became a union steward for the Service Employees International Union (SEIU) while working as a nurse’s aide, his father-in-law was a UAW worker and Peters’ father was a teacher and member of the Michigan Education Association (MEA).

Peters said he supports a strong agreement that takes care of significant issues like the tiered-wage system, health care, the ability to retire with dignity and bringing union representation to plants that are part of the electric supply chain.

President Joe Biden released a statement Monday urging the UAW and the Big Three to reach an agreement.

“I’m asking all sides to work together to forge a fair agreement,” the statement read.

The UAW is hoping to reverse the tiered wage structure that the union conceded to when the auto industry was struggling in 2008, which Peters said meant “taking a step back so we can take a step forward.”

“It was the UAW that helped save General Motors,” Peters said. “Now, fast forward. General Motors, Stellantis, and Ford are doing really well. It’s time both our workers and the UAW members are able to share in those good times, as well. They certainly took the hit during the bad times.”

Peters referenced the recent Teamsters negotiation with UPS that reached an agreement without a strike and said he hopes that will be the case here.

“What happens here is going to be pivotal for the future of the auto industry, (it’s) going to look a lot different going forward. We want to make sure the workers are a part of that and share in the prosperity,” Peters said.

Peters said the country benefits when the UAW is successful.

Also present at the event were congressional candidate Curtis Hertel Jr., State Rep. Kara Hope (D-Lansing), Ingham County Clerk Barb Byrum and Lansing City Councilman Jeffrey Brown.

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