A new analysis presented to the Automotive Press Association today by consulting firm Anderson Economic Group (AEG) estimates that a strike on all three automakers by 143,000 United Auto Workers (UAW) members could result in a total economic loss of more than $5 billion after 10 full days. The UAW contract expires on 14 Sept, and it covers 150,000 autoworkers at Ford, General Motors and Stellantis. Wage losses if a strike occurs are at ~$859 million. AEG calculated the total economic loss by estimating potential losses to UAW workers, the manufacturers, and to the auto industry more broadly if negotiations are not successful before the current contract expires in September.

“When the UAW went on strike against GM in 2019, Michigan experienced a single quarter recession,” said Patrick Anderson, AEG’s principal and CEO. That strike, which involved 48,000 workers at more than 50 plants, lasted six weeks. In 2023, there appears that at the moment there is the potential that a strike could involve more manufacturers, workers and plants, which makes theoretical comparisons difficult until there are more data points. “If that (all makers are struck) happens, even a short strike would impact economies throughout Michigan and across the nation,” said Anderson.*

“Consumer and dealer losses are typically somewhat insulated in the event of a very short strike,” said Tyler Theile, vice president at AEG. “However, with current inventories hovering around only 55 days, the industry looks different than it did in during the last UAW strike.” She noted that automakers now have “about one-fifth of the inventory that was on-hand in 2019, so a strike in current conditions would likely affect dealers and customers much sooner.”

Loss estimates do not include strike pay or assessments for strike pay; unemployment benefits or unemployment taxes; income taxes on wages; any settlement bonuses (which are transfers from shareholders to workers and do not represent U.S. income lost); or any reputational damage to the union or the employer(s).*

The real question here Anderson observed in the midst of all the inflated rhetoric and coming off of a successful four-year previous agreement is “Do they have a sustainable contract? At the end of the day you need to get an agreement.”