Strike will hurt rank-and-file workers before GM, experts say

Ian Thibodeau
The Detroit News

Detroit — The strike by the United Auto Workers at General Motors Co. plants across the U.S. will financially pinch union rank-and-file members long before the nation's most profitable automaker feels any pain, according to industry watchers.

Workers will see strike pay of $250 per week after Sunday night when UAW membership at more than 30 GM assembly plants, stamping facilities and other factories across the country walked off the job to demand a better contract. By comparison, the top production wage at GM is about $30 per hour, or $1,200 per week.

Workers assemble the chassis for GM trucks at the assembly plant in Flint earlier this summer.

"Workers immediately feel this in their pocketbook," said Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research. "$250 is way less than they make, and it's going to be difficult to live on. It's a big sacrifice. Their pain is individual and immediate."

A strike would have to last longer than a week if UAW officials want to start denting GM's balance sheet. The largest automaker in the United States made $27.5 billion in profits over the last four years of the contract.

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GM could quickly make back any losses from a strike lasting only a few days, Dziczek said. The last general strike in 2007 against GM lasted less than two days. A two-day strike would do little to impact GM's year-end earnings, she said.

A single assembly plant strike costs automakers an estimated $1.3 million per hour as production grinds to a halt, according to the Center for Automotive Research.

But GM spent the last several months building up vehicle stock for such an eventuality. The Detroit automaker has more than 11 weeks' supply of its profit-heavy trucks and SUVs at dealerships, according to Cox Automotive. The automaker will likely dip into those stocks to continue to ship vehicles to dealers.

"Sales shouldn't be affected for a while," Dziczek said. "It hurts when revenue can't keep coming in, and it hurts when you can't keep supplying dealerships. And that's going to be a matter of a couple of weeks."

The UAW has a $721 million-plus strike fund. If all 46,000 workers received strike pay for putting in their picket time, the union would burn $11.5 million per week. That does not include health care benefits that would be paid after the first week of a strike.

"Workers are hit hardest," said Michelle Krebs, an analyst at Cox Automotive. "GM will make up losses. They'll make money back."

A strike traditionally brings the bargaining teams together, and pressures both sides to work toward a tentative contract agreement, said Dziczek and Krebs. But the GM and the UAW appear to be far apart on major issues.

GM said Sunday that its offer to the union promises more than $7 billion in investments. It would create more than 5,400 jobs, the automaker said, while boosting base wages, paying lump-sum bonuses and improve benefits. The Detroit News learned that the deal would save the Detroit-Hamtramck Assembly plant from closing and build a new battery plant in northeast Ohio.

UAW Vice President Terry Dittes said during a Sunday news conference announcing the strike that the union is trying to secure fair wages, affordable health care, job security and a path for temporary workers to get permanent seniority.

The UAW doesn't want to hurt members' finances, but it also wants to show strength amid issues that have come up during the 2019 negotiations. For one, members of the UAW's national leadership are under investigation by the federal government for alleged embezzlement and money laundering.

The atmosphere surrounding the current negotiations is unprecedented, says Dziczek. And that makes this year's strike especially unpredictable.

"The days of months-long work stoppages in conjunction with contract talks took place in a very different time," she said. "We're just in a very different place. We won't really have a good sense of how far apart they are. But they seem very far apart. A short couple of days strike doesn't seem likely."

Both sides know the costs of an extended walkout.

"A long strike doesn't benefit anyone," Krebs said. "Especially the workers who aren't getting a paycheck."

Twitter: @Ian_Thibodeau