National Assoc. of Manufacturers warns auto strike would wallop economy

The National Association of Manufacturers, the nation’s leading advocacy organization on behalf of the manufacturing sector, is warning policymakers and the Biden administration that a threatened strike by the United Auto Workers would harm the U.S. economy.

UAW’s current contract with automakers expires on September 14. 

“Manufacturers in America, especially in the automotive sector, operate in an integrated supply chain, which means that small and medium-sized manufacturers around the country—in union and non-union shops—would endure the consequences of a stoppage,” NAM President and CEO Jay Timmons said. “As we continue to emerge from the global pandemic and work to get our economy on a sustainable track, a strike would be devastating for working families across our country.” 

Consulting firm Anderson Economic Group (AEG) estimates that a strike on all three of the major U.S. automakers by the 143,000 UAW members could result in a total economic loss of more than $5 billion after 10 full days. 

A six-week strike in 2019 by more than 48,000 UAW workers against General Motors provides a small example of how devastating a strike would be. 

“When the UAW went on strike against GM in 2019, Michigan experienced a single quarter recession,” AEG Principal and CEO Patrick Anderson said. “If that happens, even a short strike would impact economies throughout Michigan and across the nation.” 

Arizona Manufacturers Council Executive Director Grace Appelbe says her organization is watching the situation closely. 

“A strike would have harmful downstream effects for the entire supply chain, including parts manufacturers in Arizona,” she said. “We’re hoping cooler heads prevail and that manufacturing will continue without interruption.” 

Timmons says the White House should engage more directly in negotiations. 

“President Biden has prioritized strengthening manufacturing in America, but that will be quickly undermined if a strike occurs,” he said. “The administration should be encouraging a swift resolution to avoid ripple effects throughout the broader manufacturing economy and in communities from coast to coast.” 

UAW demands would add an estimated $80 billion to companies’ labor costs. They include a 40% pay increase, a switch to a pension system for all workers rather than a 401(k) plan, improved retiree benefits, and a 32-hour workweek rather than 40. 

The union will provide eligible striking workers with $500 per week in strike pay, but only for as long as funds remain in its strike fund, which sits at $825 million. 

As the auto sector recovers from the pandemic-era supply chain disruptions, new car inventories at dealerships remain lower than pre-pandemic at 56 days of supply. The 2019 inventory could last 86 days.