The True Cost Of Strikes And Strike Threats: Beyond Immediate Financial Fallout

by | Sep 11, 2023 | Auto Manufacturing, Bargaining/Negotiations, Industry, Labor Relations Ink, Manufacturing, Strikes, UAW, Union Leaders, Unionized Company, Unions

By now, you know that Big Labor wants everyone to know that this is the so-called “Summer Of Strikes.” That’s also not news to the healthcare industry, which has been enduring a plague of strikes since 2021 and recently saw the Kaiser Permanente saga come out of remission with 85,000 workers gearing up for a strike authorization vote.

Yet several other industries have endured the specter of strikes this summer. That includes the averted UPS strike, which was anticipated to cause $7.1 billion worth of damage in 10 days and be the most expensive in U.S. history.

Elsewhere, the twin WGA and SAG-AFTRA strikes, in a tale as old as time, have reportedly cost $5 billion in losses so far with no deals in sight. Warner Bros. Discovery alone anticipates having to swallow a $500 million loss in earnings, with the financial impact lasting beyond 2023.

That begs the question of the true cost of other high-profile strikes in history. During the 1969-1970 General Electric strike, the company suffered not only $79 million in immediate losses but also 20% of annual profits. In the case of the 2005 NYC transit strike, the city sustained over $1 billion in losses, yet businesses and workers also took hits.

Then there’s the SoCal grocery store strike, which could serve as a harbinger for the UAW’s current shenanigans. In 2003, four grocery store chains endured four months of chaos, with over 50,000 workers picketing in front of stores. That mess cost at least $1.5 billion for the grocery chains, and even though the stores found replacement workers, many customers found other places to shop and never returned. 

The UAW collective bargaining kerfuffle is destined for substantial consequences, no matter whether or not a strike happens. Let’s consider both possibilities. 

The Big Three automakers have been offering progressively sweetened deals to Shawn Fain, who is still trashing them with soap-operatic flair. The UAW strike fund was built to last twelve weeks, which would send vehicle output plummeting. A mere ten days of lost production would cost $5 billion for the Big Three, but there’s another long-term consequence on the way.

Strike or no strike: Get ready for higher auto prices, which are already higher than pre-pandemic levels but could skyrocket more due to a withering auto supply in the event of a strike. And even without a strike, Ford, GM, and Stallantis will need to add higher labor costs – and Fain demanded those 46% raises – to the price of autos.

Inflation-strapped consumers will turn away from those higher prices out of necessity. This could be a boon for foreign automakers (Toyota, Hyundai, Honda, and Volkswagen) with U.S. plants that are non-union and, therefore not subject to financial pressures from the UAW. 

All of this will likely circle back to UAW members in the form of job losses. Hindsight can be 20/20, but boy, unions sure do like to ignore history and cause a world of pain.

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