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Here in the heart of America’s car industry, car parts have nowhere to go.
Eighty-five tractor trailers full of hoods, bumpers and other assorted parts sat, unloaded, in Lansing, Michigan, this week -- more evidence of the cost of the General Motors strike that has shut down most of its North American plants and idled 46,000 workers.
Soon to enter its fourth week, the strike is rippling across the economy, from parts suppliers in Michigan and Canada to bars, restaurants and other businesses that serve employees who now find themselves tight on cash.
The layoffs have added to fears that a weakened manufacturing sector could tip the economy into recession -- potentially playing a role in next year’s election especially in a swing state like Michigan.
“It’s a necessary strike but everyone is feeling the hurt,” said Mike Luna, a warehouse worker and a chairman of United Auto Workers Local 652, which is made up of striking GM workers and many laid off supplier employees.
Luna works at a Ryder Integrated Logistics warehouse, where about 500 workers have been laid off, leaving the semi-trailers in the parking lot. They are chock full of auto parts destined for one of two nearby GM plants: Hoods and painted body panels for Chevrolet Camaros; and hinges, hubcaps and exhaust systems for Cadillac sedans, Buick SUVs and Chevys.
The automaker itself has already lost more than $1 billion in earnings before interest and taxes, according to one analyst estimate. GM’s bigger parts suppliers are losing as much as $2m a day by the same measurement. Workers at smaller parts makers across the US are sending employees home.
In Michigan, parts workers furloughed by the walkout do not get strike pay and just this week began receiving state unemployment benefits that max out at $342 a week -- not enough for most of his co-workers to live on, Luna said.
Striking workers at GM get even less from a UAW rainy day fund, just $250 a week.
In a letter to members dated Friday, Terry Dittes, the union’s vice president in charge of talks with GM, said “good progress” has been made negotiating issues such as healthcare and the treatment of temporary workers, but others like job security and wages remain sticking points.
“We will continue to work over the weekend in an attempt to reach a tentative agreement,” Dittes wrote.
Lost Profit
The strike is costing Axle and Lear Corp., another big supplier, $2m a day each while the toll on parts-maker Tenneco Inc. is $1m daily, said RBC Capital Markets analyst Joseph Spak.
GM and its suppliers can make up some production once the strike ends, but not all of it. So some profit will either be lost or shifted to next year.
“We are getting to the point where it will be difficult to recover the lost production this year,” Spak wrote in a research note. “In some respects, that makes the remainder of 2019 somewhat of a throwaway for the group and could shift the focus to 2020.”
From the union’s perspective, GM turned out record profits over the life of the expired four-year deal and CEO Mary Barra made more than $66m. It wants a pay raise, especially for newer employees who start at less than $20 an hour, and a clear path for temporary workers to become full-timers making $30 an hour.
GM is looking to hold costs down, arguing that its current total compensation package of $63 an hour is already more than that offered by Ford, Fiat Chrysler and the Japanese plants in the U.S.
While the two sides wrestle over those and a few other issues, furloughed parts workers struggle to make do. At Ryder and most of the smaller suppliers, workers make around $15 an hour.
Union leader Luna said he cautioned workers a year ago to save for the strike. But at that wage, which equates to $31,000 a year without overtime, many workers live check to check.
Some employees have gone to the United Way and other charities for help with buying food and other essentials, he said. A few have applied for new jobs, but that’s a tough sell.
“They are trying to get work,” Luna said, “but then you have to tell an employer that when the strike ends, you would go back.”
