GM Strike Will Be Costly for Company and Workers

Allen Smith, J.D. By Allen Smith, J.D. September 19, 2019
GM Strike Will Be Costly for Company and Workers

​General Motors (GM) and labor unions have much at stake with approximately 46,000 workers on strike. Even a short strike is costly and the longer the strike runs, the greater its impact will be on the economy. We've gathered articles on the strike from SHRM Online and other trusted media outlets.

Strike Will Be Expensive for Company

Estimates of how costly the strike will be for GM per day range from $50 million in operating income—Credit Suisse's projection—to Citigroup's prediction of nearly $100 million. The strike, which is in more than 30 factories across 10 states, will reduce GM's expected third-quarter operating profit of approximately $3.5 billion. But it isn't as costly as previous ones since the company's union workforce has shrunk in recent years. A 1996 supplier strike forced GM to lay off 177,000 union members—nearly quadruple the size of its current union workforce.

(The Wall Street Journal)

National Economy Could Be Affected

Some industry experts think the strike will be short, perhaps even ending this week because it's so costly for both sides. The strikers are reportedly getting $250 per week in strike pay—a sixth of what they usually earn. But if the strike lasts more than a few weeks, it could damage the broader economy.


Local Economies Already Feeling the Effect

Each day of the strike deals a bigger blow to the local economies where the factories are located. One GM job is tied to approximately seven other spin-off jobs. Restaurants near the factories are cutting back employee hours. Strikers aren't shopping as much. Suppliers for the plants may shut down if the strike lasts longer than a week. Northwood University Professor Tim Nash said the strike could set up Michigan for a minor recession. Some analysts worry that the strike could tip the Midwest, where the bulk of companies that supply GM with products and services are located, into a recession.

(ABC12 WJRT) and (CNN)

Wages Are Key Issue

The strikers want higher wages. Al Tiller, a 22-year GM employee and shop chairman for the United Automobile Workers (UAW) Local 1005, said union workers merit more of the profits the company has made since the Great Recession, partly due to worker concessions then. "How can you make record profits and not give us back what we gave up to save your company?" he asked. In a statement on UAW negotiations, GM said, "Our goal remains to reach an agreement that builds a stronger future for our employees and our business."


Company Already Has Made Concessions

GM reportedly has already made concessions in negotiations. It wanted workers to pay 15 percent of their health-care costs but at the time of the deadline offer with the UAW reduced that to 4 percent. The strike went forward, however, partly due to differences between the company's and the union's positions on wages and the use of temporary workers. GM wanted to raise salaries 2 percent in two years of the contract and 2 percent lump-sum payments in the other two years. The union wanted more.


GM Downsized at End of Last Year

The strike follows last November's decision to close four U.S. GM factories. The plants are in Detroit; Warren, Mich.; White Marsh, Md.; and Warren, Ohio. Many of the factory workers transferred to other plants. The company is in negotiations to save one of the closed factories, its Detroit-Hamtramck plant, to eventually produce electric pickup trucks, according to The Wall Street Journal.

(SHRM Online)

Strikes Are Becoming More Common

Strikes are on the rise not only in the public sector, most notably among teachers, but also the private sector, including in the airline, hotel, grocery and ride-share industries. That trend might continue.

(The Washington Post)



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