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 $2 million a day by the same measurement. Workers at smaller parts makers across the U.S. 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.
The parties have moved closer to a deal but two sticking points remain. They are employee pension plans and shortening the length of time required for entry-level workers to earn top hourly pay of $28, according to people familiar with the matter on Saturday.
The GM strike isn’t helping. It’s chopped $400 million in direct wages out of the U.S. economy, with half of that loss coming in Michigan, Patrick Anderson, chief executive officer of Anderson Economic Group in Lansing, estimated. The U.S. Treasury has lost $154 million so far just in payroll and income taxes.
In the southeast Michigan economy, a factory-heavy region, the layoffs have shaved off 1.8% of earned income, he said. If that trend lasts for a quarter, “the chances of southeast Michigan going into a recession are pretty high,” Anderson said in an interview.
The impact stretches beyond Michigan. Canadian components maker Linamar Corp., which makes metal parts for drivetrains like camshafts and transmission cases, said Wednesday the sudden drop in GM orders is costing it up to one million Canadian dollars ($750,000) a day in lost revenue. Shares of the supplier slid as much as 13.8% Thursday to a six-year low.
The walkout has forced American Axle Manufacturing Holdings Inc. to lay off workers at its largest driveline plant in the U.S. The company, which was spun off from GM in 1994, still relies on the automaker for 39% of its revenue. CEO David Dauch told Bloomberg last week his company may adjust its full-year earnings outlook if the strike continues for “an extended period of time.” Its stock has fallen 18% since the labor action began on Sept. 16.
“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 $66 million. 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 Motor Co., 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.
“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.”