Members of the UAW join Vermont Sen. Bernie Sanders, far left, on strike picket outside General Motors’ Detroit-Hamtramck assembly plant in Detroit, Sept. 25, 2019.
Michael Whelan | CNBC Money
DETROIT — If the UAW decides to go on strike against Detroit’s Big Three automakers when current labor contracts expire next month, the economic impact could quickly run into the billions, according to an auto workers union. report released Thursday.
Nearly 150,000 UAW workers shut down General Motors, Ford and star After 10 days, more than $5 billion in economic damage would result, according to Anderson Economic Group, a Michigan-based consultancy that closely tracks such events.
motor generator set The total economic damage is estimated by calculating potential losses to UAW workers, manufacturers and the broader auto industry if the parties are unable to reach a tentative agreement before the current contract expires at 11:59 p.m. ET on Sept. 14.
“Even if there is a very brief strike, the losses to consumers and dealers will usually not be much impacted,” said Tyler Theile, vice president of AEG. The industry looks different than it did during the last UAW strike.”
Talks between the Detroit automaker and the UAW collapsed during the final round of talks in 2019, leading to a 40-day nationwide strike at GM. The automaker said the strike cost it about $3.6 billion in lost earnings for the year.
During past negotiations, the UAW chose a lead company among the Big Three and targeted initial collective bargaining efforts, including threatening a strike. But the new union leadership, already more aggressive than in recent history, has made no commitment to limit such efforts to just one automaker, leaving all three automakers more vulnerable.
“This year is different than 2019,” AEG chief executive Patrick Anderson said in a webinar with the Automotive Press Association on Thursday. “The environment is different now.”
UAW President Shawn Fain reiterated at a Facebook Live event on Tuesday that the contract expiration was a deadline, not a recommendation. He said the union had no plans to extend the current contract to allow negotiations to continue without a strike, which had been common practice in the past.
The impact on these companies will vary depending on their U.S. operations and employees.
According to AEG, the 10-day strike will cost GM $380 million. That compares with Ford’s estimate of $325 million and Stellantis’ estimate of $285 million.
AEG’s estimates do not include UAW strike wages or strike wage assessments, unemployment benefits or unemployment taxes, payroll taxes, and other potential effects such as settlement bonuses.
AEG’s report came a day after RBC Capital said the strike’s potential impact on automakers may be “overblown.” Analyst Tom Narayan said in an investor note that GM’s “sharp rebound” following the 2019 shutdown “suggests that events like this are manageable.”
However, the strike four years ago targeted only one automaker, not all three. Simultaneous strikes could have a faster knock-on effect, especially for struggling suppliers who are still trying to recover from lower output caused by supply chain problems.
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