Members of the United Auto Workers picket outside General Motors’ Detroit-Hamtramck assembly plant in Detroit, with Sen. Bernie Sanders of Vermont, far left, Sept. 25, 2019.

Michael Wayland | cnbc

Detroit – If the United Auto Workers union decides Strike against Detroit’s three major automakers According to one, when existing labor contracts expire next month, the economic impact will rapidly reach into the billions. The report was released on Thursday,

Nearly 150,000 UAW workers walk off the job General Motors, ford motor And stellentis According to the Andersen Economic Group, a Michigan-based consulting firm that closely tracks such events, economic losses of more than $5 billion would occur after 10 days.

aeg Calculating the potential damages to UAW workers, manufacturers and the auto industry if the two sides cannot reach tentative agreements before the current contract expires on September 14 at 11:59 p.m. ET Is.

“The consumer and dealer losses are usually somewhat reduced in the event of a very short strike,” said Tyler Theile, vice president of AEG. “Although the current inventory is hovering around only 55 days, the industry looks different than it did during the last UAV strike.”

During the last round of bargaining in 2019, the breakdown of negotiations between Detroit automakers and the UAW resulted in a national 40-day strike against GM. The automaker said that due to the strike it had to pay the price about $3.6 billion that year in earning

In past negotiation periods, the UAW has selected a major Big Three company and targeted initial collective bargaining efforts, including strike threats, there. But the new union leadership, already more aggressive than in recent history, has promised not to limit such efforts to one automaker, leaving all three more vulnerable.

“It’s a different year than 2019,” AEG CEO Patrick Anderson said during a webinar with the Automotive Press Association on Thursday. “It’s a different environment now.”

UAW President Sean Fain reaffirmed during a Facebook Live event on Tuesday that the expiration of contracts are deadlines, not suggestions. He added that the union has no plans to extend existing contracts to allow them to continue without strikes, which was previously common practice.

The impact on companies will vary based on their US operations and employees.

According to AEG, the 10-day strike would cost GM $380 million in losses. This is compared to an impact estimate of $325 million for Ford and $285 million for Stellantis.

The AEG’s estimate does not include other potential impacts such as UAW strike pay or assessments of strike pay, unemployment benefits or unemployment taxes, income taxes on wages and settlement bonuses.

The AEG report comes a day after RBC Capital suggested that the potential impact of the strike on automakers could be “excessive”. In an investor note, analyst Tom Narain argues that GM’s “rapid snapback” after the work stoppage in 2019 “suggests that a similar event can be managed.”

However, the strike four years ago was against only one automaker, not all three. The impact from a simultaneous strike is likely to be more rapid, especially for beleaguered suppliers who are still trying to recover from lower production due to supply chain issues.

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