Detroit, Michigan (CNN Business)The United Auto Workers union strike at General Motors started its fourth week Monday. With no immediate end in sight, losses are mounting for the the automaker, its workers, and the company’s suppliers.
GM (GM) has dropped $660 million up to now since the start of the strike, according to Anderson Economic Group, a Michigan research firm specializing in the auto industry. But those losses are getting worse daily.
“Daily losses started off slow under $10 million each day,” said Patrick Anderson, the firm’s CEO. “However we’re considering GM losses spiraling around $90 million every day as the strike continues into its fourth week.”
Losses are escalating as GM burns throughout the inventory of trucks and cars which it had available for sale.
The continuing idling of expensive plants and equipment is also hurting GM, especially as non-UAW plants in Mexico, Canada and elsewhere in the united states are also made to halt operations because of the strike.
The two sides continued to talk Monday for the 22nd straight day because the strike began on September 16. The UAW’s chief negotiator said Sunday that the talks had taken a”turn for the worse” after management refused the union’s latest contract proposal. The business said it is dedicated to reaching a deal which”benefits employees today and builds a stronger future for all of us.”
With no settlement, the company’s losses will likely top $1 billion by the end of this week. GM will not get that money back after the strike ends, which makes it much more difficult to spend resources on the expensive research and development efforts to design and construct new electrical and self-driving vehicles that business executives say are a key to its potential.
Credit rating agency Moody’s had already warned that when the attack reached two weeks, the labor stoppage will probably have a material impact on GM’s finances. With GM’s credit score just one step above junk bond status, a downgrade would make it problems and increase its cost of borrowing ahead.
A GM spokesman said the company couldn’t comment on the cost of the strike in advance of its earnings report after this month.
The fiscal pain will be shared by each side of the dispute
Nearly 50,000 UAW members are off the project during the attack, and they are getting just $250 a week in strike benefits as opposed to their normal pay of more than $30 an hour. Cumulative wage declines for those employees comes to approximately $15 million a day.
One of the strikers is Jessie Kelly, a single mom with a 6-year old son who had been prepared to move into her”dream house,” prior to the strike started. Now she is staying with her mom, hoping the strike will end soon so that she is able to complete the purchase.
“It is devastating. It is very difficult,” she told CNN. “You simply see your savings depleting, every single day just a little bit more and more”
And its not just the UAW members that are off the job. GM has about 10,000 US providers , many of which are forced to cut back on their operations and jobs during the strike. Estimates are that hundreds of thousands of non-GM employees are off the job due to the work stoppage. Anderson estimates that lost wages for those employees came to about $18 million per day last week and will probably be up to about $25 million a day this week.
The prices aren’t confined to GM suppliers. Businesses in the communities using GM plants are made to cut back. John Grossi, owner of Amicci’s Pizza, situated near GM’s Hamtramck assembly plant, limited his staff’s hours because his sales are down about 25% throughout the attack.
“We don’t like to give drivers and employees bad news they can’t work because we don’t have sufficient business to encourage the pay check,” he told CNN Business. “I’m hopeful they will find a solution to the issue until it becomes a bigger problem for us than it already is.”