AEG report shows a union strike could cost the U.S. auto industry $5.5B

investing.com:

Anderson Economic Group (AEG) released a report late last week highlighting the potential economic impact of a 10-day auto union strike. According to the report, AEG estimates “a strike on all three automakers by 143,000 United Auto Workers (UAW) members could result in a total economic loss of more than $5 billion after 10 full days.”

The assessment adopts a holistic perspective, considering not only the impacts on workers and manufacturers, but also the potential repercussions on car dealers and parts suppliers that could result from a strike.

Talks are still underway. However, the current labor agreement is set to expire on Sept. 14, and the UAW has already said it will not extend the current deal.

According to AEG, the strike would result in lost wages of $859 million, and $989 million in manufacturer losses. This implies that both the union and automakers would collectively face a loss of $1.8B due to the strike's direct consequences. AEG then roughly doubled this amount to determine what it perceives as the actual impact of these losses on the companies, resulting in a total estimated loss of $3.5B. Furthermore, the analysis takes into account an additional $2.1B in losses that suppliers and car dealerships would endure due to the halt in work.

“Consumer and dealer losses are typically somewhat insulated in the event of a very short strike,” AEG vice president Tyler Theile said in a statement.

Given that inventories currently stand at approximately one-fifth of their 2019 levels, which was the last instance of a UAW strike, dealers and customers might experience impacts «much sooner,» added Theile.

Right now, the union and the Big Three are pretty far from agreeing on important issues in this round. The union's