UAW strike implications: Michigan hit hardest while car prices expected to rise

(FOX 2) - The implications of an autoworker union strike would span from the sandwich shops that workers shop at to the car prices people see when they go shopping.

But the ripples don't stop there, and some states would be affected differently by a freeze in manufacturing. Both local and state economies would suffer. While the repercussions are coming into focus, much still depends on the length of a potential strike - a possibility that looks ever more probable as the clock ticks closer to the 11:59 p.m. deadline Thursday.

"If there was a strike I don’t know if there’s actually going to be true winners out of this.," said Janell Townsend, a professor of marketing and international business at Oakland University. "It’s like any situation, there’s going to have to be some give and take."

Townsend said the fallout would be big from a strike. She also said it would get worse the longer it goes on.

"Going to a strike phase will be difficult on everyone and it’ll get progressively so the longer that it goes on," she said.

Under a strike scenario, Michigan would be hit the hardest by the freeze in manufacturing. That's because it houses the largest number of UAW employees for any of Detroit's Big Three. According to an analysis from the University of Michigan, tens of thousands would be out of work while there would be tens of millions in personal income losses. 

MORE: Here's GM's latest contract offer to the UAW

But it's not just Michigan that would suffer.

Local economy effects

The immediate effect of a strike would be the local businesses that operate near manufacturing plants. 

Since the UAW intends to target specific plants in a strike scenario, it's the shops that workers visit that would feel it first.

"Say they were to strike a plant in Warren," said Townsend. "You’re going to have less activity at that plant in that area, so the sandwich shops aren’t going to get the business."

Along with local shops, there would also be ripple effects for the car companies pretty quickly. The UAW president said Wednesday the idea behind their strategy would be to scale up freezes at plants based on if negotiations are going well or not.

Townsend said they would start small.

"So they’d probably be looking more at some components, the engine plants, transmission plants, things like that," she said. "And that could hit us pretty hard."

Michigan hit hardest

According to an economic analysis of potential strike scenarios, 67,000 UAW workers are employed at plants in Michigan. 

A strike that lasts two weeks could see tens of thousands of employees out of work. That would translate to more than a hundred million dollars in personal income loss across all three company's membership.

And the longer the effects, the greater the loss in employment and income. 

For instance, if Ford workers walk off the line, the greatest burden would be in Michigan since it houses 22,000 of the company's 55,000 workers. A one- or two-week strike would culminate in 28,000 lost jobs and $50 million in lost personal income. 

From there, the spillover effects would balloon to $150 million after four weeks and $610 million after eight weeks. That would also cause millions in lost state tax revenue

Other states also impacted

Ohio and Indiana would be the second- and third-hardest hit due to the manufacturing plants based in those states. Also affected would be Kentucky, Missouri, Illinois, and New York. 

UM's analysis said the effects would be proportional to the number of striking workers - which means if only certain plants see freezes in manufacturing, then the ripples could shake out differently.

There are other linkages to the auto manufacturing economy that may affect states in different ways. 

"Our simulations suggest that although Illinois has fewer potential striking Ford workers than Kentucky or Missouri, its industry profile combined with its proximity and economic linkages to other states with high impacts, such as Michigan, result in higher simulated job losses," it said.

How would car prices be affected

The cost of buying a car is already high due to a spillover from the COVID-19 pandemic on the supply chain. 

If workers strike and cars and trucks stop being made, it could send the cost of those vehicles up even more. However, prices may rise anyway as a result of higher negotiated wages says Townsend.

"It’s about 8-12 percent is the labor cost in a vehicle so based on that number we could estimate car prices going up anywhere between $800 to $1,200," she said.