NEW YORK, Oct 10, 2019 (BSS/AFP) – As the General Motors strike grinds on,
more auto suppliers and contractors are sending workers home, adding to the
economic drag on Michigan and other US midwestern car manufacturing hubs.
The idling affects companies that supply parts, computer systems and raw
materials to GM at the 31 striking plants in the United States, as well as
trucking and logistics companies that move items in and out of factories.
The furloughs have come gradually since the strike began on September 16
for members of the United Auto Workers Local 659 in Flint, Michigan, said
local president Steve Gruener.
In addition to the 1,800 GM employees on strike, another 1,200 workers
from supply and trucking firms have been laid off, he told AFP in a phone
interview.
“The hit to the economy is already huge,” said Gruener, a die maker, who
said support from local community groups and charities was helping people get
through.
“We’re committed to bargaining for a fair and equitable contract for our
members,” Gruener told AFP. “We’ll stay out as long as it takes.”
Talks resumed Wednesday between GM and the UAW. A strike update from the
UAW posted Tuesday night emphasized job security. Other key elements of the
negotiations have focused on health care benefits and the status of temporary
workers.
– Impact has ‘ballooned’ –
The strike directly affects nearly 50,000 GM hourly employees, but the
ripple effects have grown as the stoppage has persisted.
“What started as a concentrated event affecting a select group of workers
has now ballooned in scope,” said Brian Peterson, director of public policy
and economic analysis at Anderson Economic Group, a research consultancy.
Anderson said in a report this week that nearly 150,000 workers throughout
the auto industry have been affected by the strike, including 25,000 salaried
GM workers whose pay level is tied to plant work and some 75,000 employees of
auto supply companies.
As of September 30, the Michigan Unemployment Insurance Agency had
processed claims from about 5,000 workers at auto suppliers believed to be
due to the strike, according to a Michigan government spokeswoman.
Leading supply companies also have significant operations in other states
in the industrial Midwest, including Ohio, Indiana and Illinois. The region
contains a number of swing states expected to be critical in the 2020 US
presidential election.
Paul Traub, a senior business economist with the Federal Reserve in
Detroit, said a rough calculation of the economic hit in Michigan would be
around $42 million per week based on lost wages for GM’s 14,000 hourly
workers in the state plus another 28,000 or so contract workers.
GM normally produces 8,400 vehicles per day in the United States,
representing roughly $100 million in lost gross domestic product per day
based on rough calculations.
“The economic impact is starting to be noticeable,” Traub told AFP, adding
that the loss of some $2 billion in output will have an incremental impact on
gross domestic product estimates.
Some of that lost output is not expected to be made back because GM
factories that make top-selling models such as the Chevrolet Silverado were
already working flat-out before the strike.
They have no excess production capacity to offset the hit when the strike
ends, said Kristin Dziczek, a vice president for industry, labor and
economics at the Center for Economic Research in Michigan.
“That’s a permanent hit to GM’s output,” she said.
– Earnings dented –
The strike is also expected to weigh on results at auto supply companies,
prompting Wall Street analysts to slash profit forecasts for leading
companies such as Magna, a Canadian company that lists General Motors as its
biggest customer, accounting for 15 percent of sales.
“We remain encouraged that both sides are continuing to work towards an
agreement,” said a Magna spokesman.
“While we attempted to keep our employees at these impacted plants working
as long as possible through training, maintenance and inventory, a few of our
GM-dedicated plants are now idle,” he said.
“We are continuing to monitor the situation and we remain hopeful for an
amicable resolution.”
Other companies expected to see a big hit include American Axle &
Manufacturing, which relied on GM last year for 41 percent of company
revenues, and Lear, which garnered 18 percent of its revenues from GM.
Lear is monitoring the talks and “hopeful an amenable solution is soon
reached that is beneficial to all parties,” a spokeswoman said.
“Our UAW employees at impacted facilities are unable to work due to lack
of production volume.”
American Axle did not respond to requests for comment.