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Potential UAW Strike Would Cost Billions, Analysis Shows

If the ten-day strike threatened by the United Auto Workers union (UAW) materializes, the total cost to the economy could be higher than $5 billion, according to research newly published by Anderson Economic Group or AEG.

The full economic loss would only occur if the UAW strike affected all of the Big Three or Detroit Three automakers – GM, Ford, and Stellantis – at once, with lesser losses if strikes only occurred at one or two.

A sign from the 2019 UAW strike.

AEG says the economic losses would occur in three ways. These include lost wages to the striking workers from the UAW and lost profits to the automakers. Additionally, the production halt would affect other businesses and industries heavily dependent on the Big Three such as dealerships or auto component suppliers.

The researchers pointed out that a 2019 strike of 48,000 UAW workers, approximately a third of the number that could potentially go on strike in the near future, caused a measurable recession in the state of Michigan for three months (one quarter). While the 2019 strike involved less workers, it lasted much longer than the 10-day labor halt possible in 2023, continuing for six weeks.

Dealerships and consumers would likely feel the negative effects of a current UAW strike faster. “About one-fifth of the inventory that was on-hand in 2019” is currently at Big Three dealerships, AEG VP Tyler Theile points out. Because average inventories are now at roughly 55 days supply “a strike in current conditions would likely affect dealers and customers much sooner,” she noted.

The Renaissance Center logo of General Motors, party to UAW negotiations.

With negotiations apparently failing to produce significant agreement between GM, Ford, and Stellantis and the UAW, the chance of a major strike seems higher. A union vote on strike authorization is currently set to occur during the week of August 21st.

Neither side is seemingly prepared to budge on their position as of mid-August as the two sides attempt to hammer out a new four-year contract. The UAW wants an immediate 20 percent pay raise – part of a 46 percent increase over the life of the contract – COLA, a return of pensions that were dropped during the “Great Recession,” a 32-hour work week, and union representation at the GM Ultium battery plants.

The automakers claim in return that the UAW demands would raise their annual expenses by $80 billion, potentially leading to the outright destruction of the companies. GM argued “it’s important to protect U.S. manufacturing and jobs in an industry that is dominated by non-unionized competition.”

Close-up of President Joe Biden.

Meanwhile, President Joe Biden called on “all sides to work together to forge a fair agreement” and develop “a contract that sustains the middle class.”

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Comments

  1. A union is a bad negotiator if they dont threaten strike and bring negotiations down to the 11th hour. Course this is threatened, and will get resolved with both parties happy.

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  2. I’m actually hoping that they strike. SOMETHING needs to cool this economy.

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    1. 50% sales increase over q2 2022 just released dont bode well for GM… they will give in, jack up msrp even more and the cycle continues!

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  3. So basically they want a 40 hour pay check on 4-8hr day work week. I agree on the pensions. But that’s a high demand on the former.

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  4. robots are learning from humans and then perform on their own potentially eliminating humans AI is taking over especially in the field of assembly.

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    1. Next, the robots will probably threaten to go on strike …..

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  5. Immediate 20 percent pay raise – part of a 46 percent increase over the life of the contract – COLA, a return of pensions that were dropped during the “Great Recession,” a 32-hour work week, give me a break. Biden and this administration is what caused our current inflation, high gas prices, groceries, interest rates and it is getting worse. UPS averted a strike and the drivers are now getting $172K a year. Have you shipped something lately? Prices are through the roof. UAW wants a 46% increase over 4 years. I feel your pain in this economy but these outrageous demands are only increase costs across all sectors and we the consumers are going to suffer more. The only way we are going to get our of this economic mess is get the democrats out of the White House, Senate and Congress. I didn’t car for the last president, but the economy, border, foreign policies, crime and life was a hell of a lot better than it is now.

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    1. Only one big loser emerges in the final outcome of this mess. As always, it’s the American new car/truck buyer.

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    2. Do you own an EV?

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    3. Most of the union demands are not only unreasonable but ludicrous. The only “demand” that seems reasonable is the return of COLA to wages and pensions.
      For any auto factory to run with any sort of efficiency it must run 24 hours per day and, at the very least, 5 days per week. However, a 7 day work week is better in efficiency but overtime wages negate much of that. There is where the necessity of robotics come into play.

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    4. GMs next gen body shop( metal assembly before paint) has 0 operators

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    5. UAW went 16 yrs with O raises, and only 2$/hour since then.. adjusted for inflation that is a 45% paycut, cola will never return it is too unstable,32hr work week is a joke, should go away very quickly as a negotiating point, The current 401 on avg costs GM money as most new hires max it out.

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  6. Unions and union members in general support and vote for Democrats. Then when the Dems ruin the economy with their vote-buying policies the unions encourage their members to hold up the companies and threaten strikes if they don’t get paid more to cover the inflationary cost of living spikes caused by the very political party they vote for and support. Union dues are a percentage of the wages so the unions get more money to support even more Dems. And the cycle continues. Prices are getting so out of sight we will soon look like Havana with all the 50 – 70 year old cars being kept alive because there is no way to afford a new car for the middle class family.

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    1. Nor for a retiree family. Un fortunately, now even the used vehicle prices are outrageously high. We still drive our 2001 Cavalier and 2001 Savana van. Sure wish we could afford a newer vehicle.

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  7. Detroit and the UAW are walking hand in hand on the path to a death spiral down to bankruptcy. The UAW does not care about the disadvantage the contract they want would put Detroit in against their non-union foreign competition building vehicles in the US. GM seems unable to deliver high quality vehicles needed to fend off competition.
    Price, quality and design will win the day eventually.

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  8. There is no public support for a strike and another disruption to the market and another round of price hikes.

    The UAW’s current contest is way more than the “average” American earns.

    Without any changes to other benefits, the all-in hourly labor cost for the automakers would more than double from at least $64 per hour to more than $150 per hour, according to media reports.

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  9. UAW needs to be taken down a couple of notches.

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  10. Let’s hear it for Mary Buick Envision Made in China-Barra and the $29 million in compensation she received in 2022.

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  11. Look GM gave in to the UAW to the point they had to build cars and sell them at a loss. Why because it was cheaper to lose money on the cars vs paying workers 80% for sitting at home.

    The cold harsh reality is that this is not a partnership. This is a business and you should get a fair wage but not some crazy wage. These are not generally skilled jobs as most you can train a chimp to do.

    The UAW is in competition globally now not just just the plant down the street. They need to learn to be competitive globally.

    It is like you get an estimate on a roof. One company gives you a high estimate while another owned by some out of the area gives you a cheaper estimate. Generally you will take the lower estimate. If it is the same quality.

    Years ago UAW plants held the quality advantage but no more.

    If you want to make big money get a degree or become a plumber.

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    1. UAW new hires for ten years make less than the door greater at big city Walmarts, or McDonalds. The avg turn over is 80% in one week for production workers.

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  12. I like all the armchair experts and the bad takes on current events.

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  13. This is the real deal if we could get Washington to quit spending more than they take in the working class could afford to make less money. It isn’t GM or the UAW’s fault it is our crooked politicians!

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  14. Most of the union demands are not only unreasonable but ludicrous. The only “demand” that seems reasonable is the return of COLA to wages and pensions.
    For any auto factory to run with any sort of efficiency it must run 24 hours per day and, at the very least, 5 days per week. However, a 7 day work week is better in efficiency but overtime wages negate much of that. There is where the necessity of robotics come into play and the skilled trades to build, program and maintain them.

    Reply
  15. Let’s hear it from Mary Buick after receiving 29 million $$$$$ . Every year they party and open their mouth about how much profit they make. Share the whealt you greedy bastard. Let’s strike.

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  16. I reasonable wage increase would be to take inflation, which is about 9% and add an increase, 3%, for a total of a 12% increase. Now, that would be a fair increase. I only got a 1.5% increase this year. Take it and consider themselves lucky and let’s get those Camaros that are on order built.

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  17. Did 31 years at GM Oshawa. Our contracts were basically 3 years with a 3%, 2% and 2% increase with COLA rolled into our base wage. Minimal pension increases if it was a pension contract. I’m not a businessman but these demands scare me. New vehicles are almost unattainable for the average person now. People are paying more for a vehicle payment now than I’ve ever paid for my mortgage!! Prices for everything from housing, to food and vehicles is unsustainable and a correction is coming, and it’s gonna be devastating for anyone not close to, or debt free. I’ll stick with my 2006 Impala that costs me $40/month insurance and goes 675 kms without any range anxiety.

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  18. Lastly the profit share was 1000/1billion with 80,000 employees now is 1k/1B with 40k employees.. with the increases base wages the profit share will drop a little, but the workers weekly pay will be fairly stable

    Reply

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