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October 17, 2019 08:35 AM

Even with settlement reached, UAW strike's economic impact grows

Dustin Walsh
Crain's Detroit Business
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    Sarah Kominek, Automotive News
    The UAW and General Motors Co. announced a tentaitive settlement to a strike on Oct. 16.

    While the UAW and General Motors Co. have reached a tentative labor agreement to end the five-week-long strike of the automaker, the economic impact continues to fester on the national economy.

    The 46,000-member strike of Detroit-based GM has amounted to the loss of more than $835 million in wages since the strike began on Sept. 14. Lost profits for GM total $1.5 billion, according to the most recent analysis released by Anderson Economic Group on Wednesday as news of the tentative agreement broke.

    With as many as 150,000 jobs estimated to be negatively impacted by the strike, the federal government has lost out on $313 million in income and payroll tax revenue and the state of Michigan has lost $18.5 million in income tax revenue, according to the analysis.

    Of the nearly 150,000 total jobs impacted, Anderson estimated last week that 75,000 supplier workers have been laid off or had hours or wages reduced since the strike began along with 25,000 GM salaried workers who have seen reduced wages.

    In its third quarter earnings released Oct. 17, French auto supplier Faurecia said it expected negative impacts of 23 million euros ($25.5 million) as a result of the GM strike, which started Sept. 16. That equals 0.6 percent of sales from 2018.

    Patrick Anderson, principal and CEO of Anderson, sent a letter before the tentative agreement was announced to U.S. Reps. Debbie Dingell, D-Mich., and Fred Upton, R-Mich., urging them to pressure President Donald Trump to invoke the Taft-Hartley Act. The labor relations laws allow the president to intervene in a strike if it creates a national emergency.

    "The Taft-Hartley Act was intended to apply only when a strike or work stoppage would 'imperil the national health or safety,' and it appropriately sets a high bar for such extraordinary intervention into the bargaining of private parties." Anderson wrote in the letter to the representatives. "Given this high bar, I am writing to ask you to consider whether an appeal to the President may be warranted in the next several days."

    President George W. Bush last invoked the act, in 2002, to end the 11-day shutdown of 29 West Coast ports.

    The tentative agreement between the automaker and union likely makes the act moot in this case, but the UAW's members still have to ratify the agreement, which is expected to take more than a week. The UAW's GM Council of union leaders is set to meet on Oct. 17. They will be deciding whether to call off the strike or continue the walkout until an agreement is ratified.

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