Number of Furloughed Workers Exceeds 56,000 Before Tentative Agreements;
Cost is More than Double the 2019 Strike Against GM
EAST LANSING, Mich. – Anderson Economic Group, LLC estimates that the direct costs of the UAW strike against GM, Ford, and Stellantis, reached in more than $10.4 billion in the sixth full week. These cumulative losses through week six include:
- Wages of OEM Workers, including those striking and laid off due to the strike – $650
- Losses to the Detroit 3 Manufacturers, including lost earnings on lost production, and facility costs – $4.3
- Lost Wages and Earnings to Supplier Companies and Workers – $3.3 billion
- Loses to Dealers, Customers, and Ancillary Auto Industry Workers – $2.0 billion
These calculations encompass losses through Thursday October 26. Tentative agreements were announced with Ford before the end of the week, and with GM and Stellantis afterwards. As noted below, the total cost of the strike will be higher than the six-week figure estimated here, even if all tentative agreements are ratified.
Big Victory for the UAW is Costly for Automakers,
Suppliers, and UAW Workers
AEG’s Patrick Anderson, principal and CEO, notes that “The UAW achieved all their major goals in this strike, including big wage increases and multiple other demands. As Shawn Fain proclaimed when a tentative agreement was reached with Ford, the UAW won a ‘lucrative’ contract.”
“That victory doesn’t come without costs,” said Anderson. “It occurred after the furloughing of over 56,000 Ford, GM, and Stellantis workers around the county, the idling of more than 70 facilities, and over a half billion in lost wages to UAW members.”
“By the time we ended week six, there were over 56,000 UAW workers either laid off or striking at OEMs in the United States, in move than 70 different facilities,” said Anderson. “That was substantially higher than the 48,000 striking UAW workers who left General Motors jobs in 2019. With the UAW striking different plants across all three automakers with very little notice, the losses to workers at supplier companies was especially severe” he added.
Estimating Economic Losses
To determine the ongoing economic impact of the UAW “stand-up” strikes, AEG estimated aggregate losses that include:
- Lost wages to workers, including striking workers and others temporarily laid off or forced to decrease work AEG estimates cover both UAW and non-union auto workers, along with workers employed by impacted suppliers. Estimates were made based on the number of UAW workers in the U.S, average daily wages, and lost health care benefits.
- Lost earnings for the Big Three auto AEG estimates company losses, noting wages that would not be paid to striking workers.
- Supplier Because a strike reduces demand for automotive parts and components, AEG estimates lost supplier wages and earnings.
- Dealer, customer, and other auto industry Automotive dealers and customers needing repairs both experience strike-related losses.
Loss estimates do not include 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). We count strike pay as a loss to the union and a gain to striking employees. See Table 1.
Table 1: Estimated economic losses for the first 6 weeks of the 2023 UAW strike ($millions)
Source: Anderson Economic Group, LLC.
Strike-caused economic losses include only direct losses to affected workers, businesses, and customers. They do not include settlement bonuses, transfer payments, strike pay, unemployment insurance taxes or benefits, or income tax changes.
Estimates presume no permanent change in production or employment caused by the strike, unless explicitly noted.
Original Equipment Manufacturer losses are direct economic losses and will differ from accounting charges and “ebit-adjusted” figures. OEM losses include both facility losses and production losses spread across multiple facilities.
Figures may not total precisely due to rounding.
“Week 1” is defined as Friday, September 15 – Thursday, September 22, 2023. “Week 6” is defined as Friday, October 20 – Thursday, October 26. Estimates for time periods during a strike are necessarily imprecise, reflecting apportionment and estimates of costs incurred under fixed contracts over longer periods of time.
Revisions in this AEG Estimate
During the strike, AEG regularly updated the estimates based on new or better information. Revisions in this estimate include 1) Original Equipment Manufacturer (OEM) losses given information provided to investors in the past week; 2) consumer, dealer, and ancillary industry losses given less-than-anticipated inventory losses; and 3) the number of striking or laid-off workers week by week, given an expanded AEG compilation of facility-by-facility employee losses.
Total Cost of Strike, After Ratification and Return to Work,
Will be Higher Than Six-Week Estimate
The total cost of the strike will be higher than that of the first six weeks, even if the tentative agreements are ratified quickly, as they will include additional production losses (such as at the Spring Hill plant in Tennessee, which the UAW struck after the end of week 6); allowance for possible ratification bonuses, adjustments for actual dates of plant reopening, the impact of delayed or postponed investments not yet considered in company earnings statements, and adjustments for strike-related losses accrued on October 27 or later. In addition, the AEG estimates of the economic cost of the strike do not include the full cost of postponed or canceled major investments, or the addition or removal of any production plans. As noted in prior AEG analyses of the strike, these are highly likely to occur and may or may not be attributed to the strike by the companies in their disclosures to investors.
2023 Research Methodology
The firm’s consultants followed the same proven methodology used to estimate impacts from the 2019 UAW strike, the threatened 2022 rail union strike, the threatened 2023 Teamsters strike against UPS, two West Coast port shutdowns, the 2003 East Coast electrical blackout, the 2022 Türkiye-Syria Earthquake, and other significant events in the firm’s 27-year history. Inputs to the estimates included production and sales figures for the industry and specific automakers, financial disclosures including form 10Ks, contract documents, public statements by the union and the companies involved, and other industry and economic sources. AEG has calibrated estimates by comparing recorded losses in GDP and earnings in affected states after prior events. The firm further compared its estimated cost of the 2019 UAW strike against General Motors with later reported GDP in Michigan, Ohio, and the U.S., and with accounting losses reported by General Motors in early 2020.
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About Anderson Economic Group, LLC
Clients of AEG have included original equipment manufacturers, tier I and tier II suppliers, automotive, business and manufacturing trade groups, auto dealers, labor unions, state governments, and colleges and universities. No party to the current labor dispute commissioned our analysis.
Anderson Economic Group routinely produces meticulous studies that illuminate economic trends in Michigan and across the U.S. AEG’s practice areas include public policy, market analysis, and strategy and business valuation. For more information about the East Lansing and Chicago-based company, now in its 27th year, see AndersonEconomicGroup.com.