The lingering United Auto Workers (UAW) strike at General Motors, now in its fourth week, is starting to have far-reaching impacts — and there’s no clear end in sight.
While almost 50,000 unionized GM workers stand on the picket lines earning just $250 per week in strike pay, the economic ripple effects appear to be increasing, according to economists and automotive industry experts.
“Going into it we were certainly hopeful it would be a shorter incursion, a week or two,” Mike Wall, a Grand Rapids-based automotive industry analyst at IHS Markit, told the Advance in an interview this week. “GM can navigate [that], most suppliers can weather that. Now into week four, the impact is starting to reverberate through the supply chain.”
Given Michigan’s tight labor market and an unemployment rate of 4.2% as of August, Wall said most suppliers are doing anything they can to avoid layoffs, and possibly the permanent loss of workers. The years-long upswing in the auto industry offered little breathing room and a slowdown caused by a strike offers some chance to tackle delayed maintenance and other functions that can keep workers on the job.
Still, Wall says they’re ready for it to be done.
“Most suppliers would say, ‘enough of the blessing in disguise at this point, we’re good,’” Wall said.
The New York Times this week reported on the widespread impacts of the strike around the state.
Workers made concessions after GM went into bankruptcy in 2009, but the company has rebounded and posted $8.1 billion in profits last year. However, the company announced it would be eliminating roughly 14,000 jobs.
As the Advance has previously reported, key issues for the union as it seeks to settle the strike are:
- Long-term temporary workers need to be made permanent employees
- More jobs need to be re-shored — or returned to Michigan from overseas
- Benefit levels need to be maintained
UAW Vice President Terry Dittes said in a statement on Wednesday that the sides remain far apart and that “job security” issues, in particular, remain the key sticking point.
“All of us here, in this set of negotiations, are very concerned about the issue of job security. Job security impacts you, your families, and the communities where we live and work,” Dittes said.
“On day 23 of our strike, this still remains as one of our top agenda items with little progress to report,” he continued. “Economic gains in this Agreement will mean nothing without job security. Collectively, we are fighting for a middle-class way of life.”
GM has maintained that its “goal remains to reach an agreement that builds a stronger future for our employees and our business.”
Wall said that even once the union and GM reach an agreement, they’ll also have to bargain with the two other large automotive companies, Ford and Fiat-Chrysler Automotive (FCA), although he’s hopeful those talks will go more smoothly.
GM was selected as the target company for negotiations in early September. The eventual deal will serve as a model for talks with the other companies.
“It’s going to make for an eventful October and November, but hopefully not into November,” Wall said. “I do think a lot of the heavy lifting is being done now and it should make the remaining two hopefully a little more uneventful.”
Given the $225 billion economic impact the auto industry has in Michigan, the ripple effects are far-reaching.
East Lansing-based economic consulting firm Anderson Economic Group (AEG) on Tuesday projected that what began in September as 49,000 striking GM workers has now impacted 150,000 autoworkers around the country.
Through Sunday, AEG estimated that GM has lost $660 million in profit; direct wage loss for employees is more than $412 million; federal income tax and payroll tax revenues are down $155 million, and the state has lost $9.1 million in tax revenue.
“What started as a concentrated event affecting a select group of workers has now ballooned in scope,” Brian Peterson, AEG’s director of public policy and economic analysis, said in a statement. “75,000 employees who work for auto parts suppliers who have either been temporarily laid off or had their wages reduced since GM assembly plants no longer have demand for their parts or services.”
Given the state’s dependence on the auto industry and other looming challenges in the state’s economy, questions persist of whether Michigan could be heading toward a recession.
Michigan State University economist Charles Ballard said on Michigan Radio this week he believes it’s too early to tell whether the state is careening toward a recession.
However, he and Wall both appear to agree that the current situation doesn’t resemble the economic collapse of a decade ago and saw both GM and FCA receive federal bailouts to keep from going out of business.
Wall notes that automotive companies today are largely in far better financial shape than in the run-up to the Great Recession and he’s hopeful that some of the lessons learned during that time are still top-of-mind.
“You dust off the old playbook in terms of tightening the belt,” Wall said. “Where can you streamline operations; where can they hunker down somewhat to be able to weather this. It’s a much smaller scale than we saw in 2008 or 2009 because remember, in 2008 and 2009, everyone was down. This wasn’t just a GM story.”