As Biden Visits Michigan, Suppliers Announce Possible Layoffs

As President Biden visited striking United Auto Workers members outside Detroit Tuesday, auto suppliers announced potential layoffs—and economists warned that a long strike could worsen inflation.

What’s going on: “The president traveled to the striking General Motors Redistribution Center outside Detroit at the invitation of UAW President Shawn Fain,” CNBC reports. “The facility is one of 38 parts and distribution centers across 20 states currently on strike.”

Among the demands of the UAW—which called for autoworkers to walk away from their posts at plants in Michigan, Ohio and Missouri nearly two weeks ago—are sizable pay increases, a 32-hour workweek, a return to traditional pensions and enhanced benefits.

Layoffs: Earlier this week, a Wixom, Michigan–based auto-parts supplier announced that it could “lay off a substantial portion of its 171 hourly workers” owing to financial hurdles brought about by the UAW strike, the Detroit Free Press (subscription) reports.

Layoffs and other downsizing “could become more common” if the strike continues, according to the Detroit Free Press.
What’s more, in the face of a lengthy, “broaden[ed] out” strike, “the economy could contract almost one full percentage point in the fourth quarter, according to Morgan Stanley economists, which would cut their full-year 2023 GDP growth call to 1.4% from 1.7%,” according to Reuters (subscription).