A strike against the three Detroit automakers by 143,000 United Auto Workers members could result in a total economic loss of $5.617 billion after 10 full days, according to a new economic analysis.
The report from the East Lansing-based Anderson Economic Group presented on Thursday to the Automotive Press Association also includes the potential losses from a national strike at each automaker. It estimates $1.49 billion in losses from a strike at Ford Motor Co., $1.466 billion at General Motors Co. and $1.183 billion at Jeep maker Stellantis NV.
The results are increased from forecasts in 2019 because of higher vehicle transaction prices, lower inventory levels and rising sales of electric vehicles on which the automakers are losing money. The projected losses include lost wages from workers, lost profits by the automakers and impacts on the industry at suppliers and dealers. The forecast doesn’t include strike pay or unemployment benefits.
“I’m not predicting a strike but I am observing the level of rhetoric is very high from the union, and the stakes are also pretty high,” said Patrick Anderson, CEO of the consulting firm. “This is a real loss here. We saw it in the GDP numbers in 2019. This is something that would affect the states of Michigan, Ohio, Indiana in particular, and it would affect the dealers all across the country with consumer and dealer losses that exceed a half a billion dollars.”
In 2019 as a part of a strike that had GM workers off for 42 days, the Detroit automaker said it lost $2 billion in profits. Anderson Economic Group estimates the total economic loss was $4.2 billion, and it sent the state of Michigan into a one-quarter recession.
“Inventory was greater than the length of the strike, even though it was a long, painful strike,” said Tyler Thiele, director of public policy for the Anderson Economic Group. “Right now we’re at a fifth of that inventory.”
The contracts between the Detroit-based union and the automakers expire on Sept. 14. The union hasn’t selected a lead company, which traditionally has been announced around Labor Day. UAW President Shawn Fain, however, has said all three companies are targets.
It’s unlikely, however, that the union will go on strike at all three companies, Thiele said, and if it does strike a company, it could strike a single plant and not all of its locations.
“If you think about humans in the room during these negotiations, there are going to be some progress on certain factors and less progress on others,” Thiele said. “That said, if the UAW is just really determined to go on strike at all three, because they want to make a point, that’ll be that.”
Factoring into the decision-making will be the strike fund, which going into the talks sat around $825 million. The UAW has increase strike pay since 2019 to $500 per week per member, up from the $250 at which it started when the 2019 GM strike began.
How negotiations proceed will determine what actions the union takes. Fain, however, criticized the “slow pace” of the talks earlier this week. The UAW is demanding 46% increases in wages over four years, pensions and retiree health care, cost-of-living adjustments and a 32-hour work week paid as a 40-hour week. Meanwhile, the automakers want to preserve their ability to compete in the marketplace and make the costly transition to electric vehicles.
“At the end of the day, you need an agreement that allows you to stay in business,” Anderson said. “And the worst of all would be that you get no agreement that allows you to stay in business. That would be the worst outcome.”
bnoble@detroitnews.com
Twitter: @BreanaCNoble