On Thursday, Sept. 21, automotive industry experts Glenn Stevens Jr., Executive Director of MICHauto and Vice President of Automotive and Mobility Initiatives at the Detroit Regional Chamber, John McElroy, Host of Autoline, and Marick Masters, Professor of Business at Wayne State University, joined Chamber President and Chief Executive Officer Sandy K. Baruah for a virtual discussion on the status of the United Auto Workers Union (UAW) strike and its impact on Michigan’s economy.
Watch the full webinar below.
Supplier Impact Cannot Be Understated
A common theme among the discussion centered around the strike’s rippling effects into the supplier companies who are facing layoffs and revenue loss. When asked about the impact downstream, Stevens mentioned suppliers “have all the stakes in the game” and are “innocent bystanders.”
McElroy further stressed that many suppliers are in “desperate trouble,” citing their small size and customer base and their inability to receive a loan from banks to keep operations going.
“It’s entirely possible we see a strike get settled, and weeks down the road, the industry can’t get going again because these suppliers are out of business,” said McElory.
What’s at Stake for the Detroit Three Automakers?
If the Detroit Three Automakers were to agree to the UAW’s demands completely, there would be various implications, including the potential for an increase in vehicle cost for customers, acquisition by another company, or bankruptcy.
“It’s estimated that labor is about 5-10% of the cost of operating the companies and their demands would more than double the hourly costs of the workforce. They would be forced to pass that increase onto customers, cut expenses, or absorb it, which would reduce their profitability,” said Masters.
Another item at stake includes Michigan’s high-tech talent future, which would suffer if the Detroit Three cut expenses by outsourcing labor to remain competitive.
“I worry about the long-term situation in Michigan. I’m not just talking about manufacturing…We already know they have outsourced engineering and software development to Mexico and other countries…I don’t want to even picture or imagine the Detroit Three having less of an engineering presence and research and testing development presence in Michigan because that would be a real disaster,” said Stevens.
Facing the Global Competition
Today, General Motors is only the fifth largest automaker in the world. The discussion came to a consensus for the need to look at the situation with a global perspective to ensure that manufacturing in the United States – and especially Michigan – holds strong, especially with the race to transition to electric vehicles.
“We can’t shoot ourselves in the foot by a disagreement or battle that takes us off our ability to capitalize on this moment in global history,” said Stevens.
The conversation concluded with the hope for resolution and that all parties involved will see the bigger picture.
“I think there is a lot that could be done on a daily basis to make the lives of these workers better and make them feel better. I think that if both sides would put aside the past and the ideology that is driving the behavior right now, they could put a lot more money in worker’s pockets,” said Masters.