The clock is ticking toward a possible strike as the United Auto Workers contracts with Detroit’s Big Three automakers are set to expire Thursday potentially idling hundreds of thousands of workers and resulting in repercussions felt well beyond, said Gregory D. DeYong, a Southern Illinois University Carbondale associate professor of operations management.
The UAW’s pacts with General Motors, Ford Motor Company and Stellantis represent about 146,000 union autoworkers. UAW President Shawn Fain has threatened a strike against any or all if a deal isn’t made by the 11:59 p.m. contract expiration deadline Thursday night.
A 40-day UAW strike in 2019 cost GM alone $3.6 billion and the Anderson Economic Group recently estimated that a 10-day strike against the Big Three could cost at least $5 billion.
“The auto makers work on very limited inventory, as do most of their suppliers,” DeYong said, noting that those numbers don’t take into account the ripple effects and economic impact of the shutdown on related industry and the economies of the surrounding areas in places like Michigan, where many plants are located.
“A strike at the assembly plants will lead to shutdowns at suppliers very quickly as the system is not built to carry inventory that would be generated if suppliers continue to produce while the assembly plants are shut down,” DeYong said.
He said that means potentially thousands upon thousands of workers in other related industries could be idled if auto plants shut down. In part, the effect will depend on whether the strike is general, against all three automakers, or focused on just one or two.
“A more general strike would be felt much more deeply and widely as many firms are suppliers to more than one of the Big Three,” DeYong said. Losing the business from one automaker would hurt those suppliers, but losing business from all three would be devastating.”
The UAW has asked for a 40% wage increase, an end to tiered wages, a 32-hour week with 40 hours of pay, cost of living adjustments, the reinstatement of pensions and other concessions. Union officials say the Big Three made a combined profit of $21 billion in the first half of 2023 while vehicle prices climbed 30% during the last four years while CEOs made millions annually in compensation.
Top assembly workers currently earn more than $32 per hour and full-time workers receive profit-sharing checks ranging from a little more than $9,700 at Ford to more than $14,700 at Stellantis. Temporary workers, however, start at under $17 and for years the union gave up general pay raises and cost-of-living wage increases to help companies control costs.
“The UAW relationships with the automakers is traditionally quite confrontational, and recent statements by the union don’t do much to raise hopes of a more congenial relationship this time around,” DeYong said. “Recent union contract agreements have, in general, led to significant salary increases for union members at UPS, the rail workers and so forth, in response to several years of high inflation. Of course, the climate of wage increases has been contributing to inflation as well, so this is a bit of a self-perpetuating cycle.”
He notes that in recent days, the Big 3 have been making incremental improvements to their offers, but union representatives are calling for much more radical changes.
“With only a couple of days remaining before the strike deadline, it is hard to see how an agreement will be reached in time,” he said.
DeYong has personal experience as well as professional knowledge in supply chain management. Before becoming a faculty member, he worked as an import/export manager where he was responsible for about $100 million in products annually. DeYong is currently working to establish a Center for Supply Chain Management and Logistics within the College of Business and Analytics.