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UAW strike price estimated at $5 billion in 10 days

United Auto Employees members on strike picket exterior Common Motors’ Detroit-Hamtramck Meeting plant in Detroit with Sen. Bernie Sanders, of Vermont, far left, Sept. 25, 2019.

Michael Wayland | CNBC

DETROIT – If the United Auto Employees union decides to strike against Detroit’s Big Three automakers when present labor contracts expire subsequent month, the financial impact would rapidly tally into the billions, in accordance with a report released Thursday.

A piece stoppage by almost 150,000 UAW staff at General Motors, Ford Motor and Stellantis would end in an financial lack of greater than $5 billion after 10 days, in accordance with Anderson Financial Group, a Michigan-based consulting agency that intently tracks such occasions.

AEG estimates the entire financial loss by calculating potential losses to UAW staff, the producers and to the auto trade extra broadly if the edges can not attain tentative agreements earlier than the present contracts expire at 11:59 p.m. ET on Sept. 14.

“Client and vendor losses are usually considerably insulated within the occasion of a really brief strike,” mentioned Tyler Theile, vp at AEG. “Nonetheless, with present inventories hovering round solely 55 days, the trade appears to be like totally different than it did over the last UAW strike.”

Over the past spherical of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a nationwide 40-day strike in opposition to GM. The automaker mentioned the strike price it about $3.6 billion that year in earnings.

In previous negotiating durations, the UAW has chosen a lead firm of the Large Three and focused preliminary collective bargaining efforts, together with the specter of hanging, there. However the brand new union management, already extra aggressive than in current historical past, hasn’t promised to restrict such efforts to 1 automaker, leaving all three extra weak.

“It is a totally different yr than 2019,” AEG CEO Patrick Anderson mentioned Thursday throughout a webinar with the Automotive Press Affiliation. “It is a totally different setting now.”

UAW President Shawn Fain throughout a Fb Stay occasion Tuesday reaffirmed that the expirations of the contracts are deadlines, not ideas. He mentioned the union has no plans to increase the present contracts to permit for bargaining to proceed with no strike, which was beforehand widespread observe.

Results for the businesses would differ primarily based on their U.S. operations and workers.

GM losses could be $380 million by a 10-day strike, in accordance with AEG. That compares to estimates of $325 million for Ford and $285 million influence on Stellantis.

AEG’s estimates don’t embody UAW strike pay or assessments for strike pay, unemployment advantages or unemployment taxes, earnings taxes on wages and different potential results akin to settlement bonuses.

The report from AEG comes a day after RBC Capital instructed the potential impact of a strike on the automakers could also be “overblown.” In an investor notice, analyst Tom Narayan argues GM’s “sharp snapback” after the 2019 work stoppage “suggests the same occasion may very well be manageable.”

Nonetheless, the strike 4 years in the past was solely in opposition to one automaker, not all three. A simultaneous strike would possible trigger ripple results extra rapidly, particularly for embattled suppliers which might be nonetheless making an attempt to recuperate from decrease manufacturing brought on by provide chain points.

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