Total losses reach $3.95 billion for the first two weeks
EAST LANSING, Mich. – Michigan economic consulting firm Anderson Economic Group, LLC (AEG) estimates that the “stand up” strike by the UAW against the Detroit Three automakers resulted in $3.95 billion in economic losses in the first two weeks, consisting of:
- Direct Wages Lost – $325 million
- Detroit 3 Manufacturer Losses – $1.12 billion
- Supplier Losses – $1.29 billion
- Dealer and Customer Losses – $1.2 billion
These figures do not include plant closures, additional strike targets, or layoffs taking effect on or after Friday, September 29. These will be included in our loss calculations in the third and successive weeks.
Week Two Was More Costly Than Week One; Suppliers Hit Hard
The second week was more costly than the first. “Suppliers were particularly hard-hit by the UAW’s strategy of announcing specific plants to be struck just hours before they were shut down,” said Patrick Anderson, AEG’s principal and CEO. “The shutdown of 38 parts distributions centers also crimped dealership service operations and, of course, caused more UAW workers to lose wages.” He noted that when distribution centers were shut down, the strike’s impact spread to dealers, customers, and additional suppliers–none of whom are party to the strike negotiations. “When the innocent bystanders begin to feel it,” Anderson explains, “it will affect the generally supportive sentiment Americans have been expressing about the UAW’s demands thus far in the strike.”
What to Expect in Week Three
AEG anticipates that the coming week will be significantly more costly for Ford after the company was largely spared in second week targets. The newly announced targets will result in Ford dealers and customers losing one of their most popular (and profitable) models, specifically, the Ford Explorer and Lincoln Aviator models in the mid-size SUV category.
Estimating Economic Losses
Categories of Loss
To determine the economic impact of a potential UAW strike, AEG estimated losses that include:
- Lost wages to workers, including striking workers and others temporarily laid off or forced to decrease work hours. 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, daily wages for a range of pay scales including overtime, and lost health care benefits.
- Lost earnings for the Big Three auto manufacturers. AEG estimates company losses originating from additional facility costs and production costs. Losses are estimated after considering wages not paid to striking workers, ability to sell inventory, and limited ability to substitute workers.
- Supplier, dealer, and customer losses. Because a strike would reduce demand for automotive parts and components, the firm included estimates for lost supplier wages and earnings. Automotive suppliers and auto dealers would also see losses in the short and long term.
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).
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.
Source: Anderson Economic Group, LLC.
Notes: Strike-caused economic losses include only direct losses to affected workers, businesses, and customers.
Estimated losses do not include settlement bonuses, transfer payments, strike pay, unemployment insurance taxes or benefits, or income tax changes.
Columns may not total precisely due to rounding.
Presumes no permanent change in production or employment caused by strike.
Company losses are direct economic losses and will differ from accounting charges. They include both facility losses (additional costs per facility) and production losses spread across multiple facilities.
“Week 1” is defined as Friday, September 15 through Thursday, September 22, 2023. “Week 2” is defined as Friday, September 23 – Thursday, September 28.
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.
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