Detroit auto workers strike would cost US economy nearly $6 BILLION in just 10 days, study predicts as union prepares to vote on work stoppage

A 10-day strike by the United Auto Workers shutting down the “Big Three” automakers in Detroit would cost the U.S. economy about $5.6 billion, according to a new analysis.

With less than a month before a Sept. 14 deadline to reach new contracts, concerns about the impact of a strike by UAW members are mounting at any or all of the Detroit Three.

The new analysis from Anderson Economic Group, an economic consultancy, breaks down the potential losses at each automaker, with Ford Motor set to lose $1.49 billion, General Motor $1.466 billion and Jeep maker Stellantis $1.183 billion.

While GM, Ford and Stellantis represent only a portion of the total U.S. auto industry, their workforce is concentrated in Michigan – a critical electoral state in 2024.

President Joe Biden on Monday urged automakers and the union to come to a “fair deal,” even as a strike authorization looms next week.

Of the $5.6 billion in total losses if the UAW hit all three automakers, $859 million would be lost to striking workers, Patrick Anderson, the company’s president, told Detroit’s Automotive Press Association during a video conference Thursday.

Anderson opted for a ten-day work stoppage to prepare an economic forecast. The UAW has not said whether it will affect any of the Detroit automakers and for how long.

In 2019, UAW employees walked away from GM for 42 days. That cost workers nearly $1 billion in lost wages, Anderson estimated. GM posted a $3.6 billion pre-tax loss related to the strike.

Strikes at the Detroit Three could benefit Tesla and other non-union automakers, including Toyota Motor, Honda Motor, Nissan Motor and Hyundai Motor, Anderson said.

However, inventories of unsold vehicles are unusually low due to supply chain disruptions that have hampered production for much of 2022, continuing to put pressure on production for some brands.

Meanwhile, about 146,000 UAW members will vote next week on whether to allow union president Shawn Fain to call strikes against Detroit automakers.

Members of the UAW, representing more than 143,000 manufacturing workers at the Detroit Three automakers, are voting to authorize union president Shawn Fain to call for a strike if new contracts are not agreed by the Sept. 14 deadline.

Fain told members in a Facebook Live appearance on Tuesday that talks, which began in mid-July, are moving slowly and have yet to get to wages and other economic issues.

“If we want to make progress at the negotiating table, we have to show the companies that it’s not just talk,” Fain said of the strike vote.

He told local offices to report the results of their votes to union headquarters before August 24.

While votes to approve strikes are a normal feature of negotiations in the US auto and other industries, the tension surrounding this year’s contract talks in Detroit is not.

Fain has outlined an ambitious set of goals, including ending the current tiered pay system that pays new hires less than veterans, reinstating cost-of-living adjustments, or COLA, and reinstating defined benefit plans that automakers ended years ago for new hires.

The UAW president has rattled automakers with belligerent rhetoric, delivered through Facebook Live videos, including one of him tossing Stellantis contract proposals into a trash can.

The UAW has not said how it will manage contract negotiations this year. In the past, the union has picked one of the Detroit Three and negotiated a deal that it then used as a pattern for contracts with the other two.

Fain has said he does not intend to follow past practice in this round of negotiations.

The advantage for the union of targeting one company at a time is that when workers go on strike, the strike fund only pays the workers of one company.