Don’t look now, but the General Motors strike is threatening to become a significant drag on a U.S. manufacturing economy that really doesn’t need any more baggage right now.
By entering its third week with the two sides declaring they’re still far apart in settling key issues, the walkout by some 46,000 full-time United Auto Workers members at GM factories already has surprised many prognosticators by persisting this long. And the strike has moved into territory that could cause significant harm not only in terms of GM’s profits, and strikers’ pay, but also in retarding the economies of key manufacturing states in the Midwest and even the U.S. economy as a whole.
The first significant UAW walkout since its last strike at GM since 2007, and the longest strike at America’s largest automaker since 1998, the work stoppage already has cost the company more than $100 million in profits to date, according to estimates by Wall Street analysts. Ripple effects have been spreading in terms of shutdowns of GM plants in Canada and Mexico because of parts shortages, idling of some production at major GM suppliers, and swelling inventories of U.S. steel and aluminum.
Both sides say the unresolved major issues include UAW demands for wage increases and enhanced profit-sharing as well as the union’s complaint about GM’s increasing use of lower-paid temporary workers.
Meanwhile, the concerns of GM CEO Mary Barra include a leveling off of U.S. auto sales and her desire to keep costs in check not only as preparation for any true automotive recession but also to keep powder dry for future investment demands in the realms of electric and autonomous vehicles.
It’s also unclear what role the UAW’s crisis in top leadership is playing, with officials including President Gary Jones under a federal corruption investigation. Having the internal credibility and trust to “sell” any tentative agreement with GM to rank-and-file workers who must ratify the pact will be a major test of Jones’ young tenure.
The overall economies of Michigan, Indiana, Ohio and other major GM manufacturing strongholds are in much better shape to weather the temporary disruptions inherent in a strike of short duration than they have been at any time in the last decade or so. But strikes can have a way of taking on lives of their own that none of the principals can foresee, both in terms of the primary players as well as the economy as a whole. And perhaps that’s what’s already happened in this case.