According to CNBC, on August 17, a report released by the Anderson Economic Group (AEG), a consultancy firm in Michigan, U.S., indicated that if the United Auto Workers (UAW) decides to strike against the three major Detroit automakers upon the expiration of the current labor contract, the economic impact would quickly amount to several billion dollars.
The analytics firm estimated the total economic losses by calculating the potential losses of UAW workers, manufacturers, and the industry. This does not include UAW strike wages, unemployment benefits or unemployment tax, income tax, and other potential impacts, such as settlement bonuses.
AEG stated that if nearly 150,000 employees of General Motors, Ford, and Stellantis go on strike, causing a work stoppage, the economic loss would exceed $5 billion after 10 days. The impact on each company would vary based on their business volume and number of employees. AEG mentioned that if the strike lasts for 10 days, General Motors would suffer a loss of $380 million, Ford's loss is estimated at $325 million, and Stellantis's loss would be around $285 million.
In the final round of negotiations in 2019, a breakdown in talks between Detroit automakers and UAW led to a 40-day nationwide strike against General Motors. General Motors stated that the strike resulted in a profit loss of approximately $3.6 billion for the company that year.
Previously, the UAW would select a lead company among the Big Three during the negotiation phase and use the collective bargaining contents, including strike threats, as a target. However, the new union leadership is more aggressive and has not yet committed to limiting such efforts to one automaker.
On August 15, UAW President Shawn Fain reiterated on a Facebook Live event that the contract expiration date is the final deadline. He stated that the union has no plans to extend the current contract, so it will not continue negotiations post-contract expiration without striking, unlike in the past.
A day before AEG released its report, RBC Capital of Canada suggested that the potential impact of a strike on automakers might be "exaggerated." Analyst Tom Narayan indicated in an investor report that General Motors' significant "bounce-back" after the 2019 work stoppage suggests such events might be manageable.
However, the strike four years ago was against only one automaker, not all three. Concurrently, a strike could trigger a domino effect more quickly, especially for suppliers still trying to recover from production cuts.
