Report: UAW strike against Michigan’s Big Three could cost economy $5.6B

• More than 143,000 United Auto Workers members are preparing for a potential 10-day strike
• Auto workers say they want better pay and benefits as manufacturers gain record profits
• The strike could mean $5.6 billion in economic losses as automakers say they're working in good faith toward a deal

LANSING — More than 143,000 United Auto Workers members nationwide are preparing for a potential 10-day strike against the three biggest automakers in Michigan, as the Aug. 24 deadline to authorize a strike nears amid stalling contract negotiations. 

The potential price tag of a strike? A total $5.6 billion in national economic loss, according to an analysis released Thursday.

The analysis  was conducted by Anderson Economic Group, an East Lansing-based consulting firm. A 10-day strike at three automaker giants — General Motors, Ford Motor and Stellantis — would lead to a total $859 million in direct wages lost and $989 million in car manufacturer losses, the report said.

All told, a strike would bring about $3.5 billion in industry losses and another $2.1 billion in consumer and dealer losses, the analysis added.

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The potential strike against the three manufacturers — also known as the “Big Three” — has garnered national attention amid a wave of ongoing strikes, including by screenwriters, actors and service workers. The Atlanta-based United Parcel Service Inc., one of the biggest delivery companies in the country, reached a temporary deal with its workers to avoid a 10-day strike that could have cost the economy $7 billion.

President Joe Biden, a Democrat, on Tuesday urged the automakers to reach a deal with the union to avoid a walkout when the existing contract expires on Sept. 14. 

 U.S. Sen. Gary Peters, D-Bloomfield Township, also urged the companies to commit to the negotiation during a Thursday appearance in Lansing with dozens of auto workers.

“This negotiation is going to mean a lot for the future of the country,” Peters told the workers, noting that the result will set wages as automakers make further investments in electrifying their fleets.

The contract negotiations are about “fighting for fair wages, retirements with dignity and the ability to have quality health care,” he said.

UAW President Shawn Fain said Tuesday the strike would be a chance to remind automakers of the power unionized auto workers hold. Auto manufacturers, such as the “Big Three” they plan to strike against, have reported record earnings while workers continue to live “paycheck to paycheck,” he said. 

Fain added that he will not call for an extension to keep negotiations going after Sept. 14.

The union is demanding better pay and asking the companies to do away with a two-tier pay system — a policy that creates two pay structures for current and future employees. 

“This isn’t just a strike vote,” Fain said in a livestream event Tuesday night. “It’s a demonstration of our strength. It’s a sign of our unity, and it’s a statement about our resolve.”

Automakers say they are working in good faith with the union. 

“We've been working hard with the UAW every day to ensure we get this agreement right for all our stakeholders,” GM spokesperson David Barnas said in a statement  Thursday. 

“We know that our U.S. economic impact supports more than six jobs for every job created by GM. We take that responsibility very seriously, and we continue to bargain in good faith each day to support our team members, our customers and dealers, the community, our suppliers, and the business.”

A Ford spokesperson told Bridge the company is “looking forward to” working with the union “when our dramatically changing industry needs a skilled and competitive workforce more than ever.”

A Stellantis spokesperson called the negotiations “constructive and collaborative.”

Michigan business leaders across industries are watching the negotiations and bracing for impact from a potential strike, the Detroit Regional Chamber of Commerce and its auto-focused division MICHAuto said this week in an email to members.

“Most industry experts and observers expect a work stoppage of at least one auto manufacturer, or perhaps even multiple firms,” the email said. “The posture of the UAW mirrors that of a more aggressive organized labor movement occurring nationally and across the globe.”

A strike could lead to a loss of production and sales momentum. A 30-day strike by the UAW would result in a production halt of 450,000 vehicles nationally, according to international analytics firm GlobalData. 

The production pipeline would drop by 1.42 million units after 100 days, GlobalData reported at the recent Management Briefing Seminars in Traverse City organized by the Ann Arbor-based Center for Automotive Research. About 570,000 of that would be borne by Ford, 540,000 for GM and 310,000 for Stellantis.

The strike threat comes as “both the economy and the auto sector are outperforming expectations” through the first half of 2023, said Jeff Schuster, executive vice president at GlobalData at the CAR event. 

In the U.S., that includes low unemployment and a declining rate of inflation, while the auto industry is regaining sales lost during the pandemic and resulting supply shortages, heading toward at least 15 million personal vehicles forecast to be sold in 2023, compared to about 17 million in 2019.

The economic impact could exceed $1 billion even if auto workers only launch a 10-day strike against one of the three automakers, according to the estimate released Thursday by Anderson’s group.. 

The economic impact of the potential strike could prove more devastating than a similar strike organized by the auto workers union in 2019 against GM, Anderson said in a statement Thursday. 

More than 48,000 workers went on a 40-day strike in fall 2019, costing the automaker giant almost $4 billion, according to the company at the time.

The 2019 strike cost GM 300,000 vehicles that were not produced during that time, according to international analytics firm GlobalData, which estimated the cost to the company was close to $3 billion. Sales fell immediately and continued into October, and production did not reach pre-strike levels until more than month after the strike was settled, GlobalData said. 

Ripple effects spread also to Mexican factories as well as Canadian operations, and Teamsters also supported the strike and did not deliver vehicles to dealers.

“Michigan experienced a single quarter recession,” Anderson said of the 2019 strike.

But a 10-day strike could be more damaging now compared to 2019, because vehicle inventory was at “record low” during the pandemic and is slowly building up, the consulting firm said in its release. 

There were only 162,000 cars for sale in June statewide, well below the 649,000 cars in September 2019, the release said. That’s why “a strike in current conditions would likely affect dealers and customers much sooner,” said Tyler Theile, vice president of the Anderson Economic Group.