The United Auto Workers strike—now in its third week—is reverberating throughout the economy, hitting steel producers particularly hard at a precarious time, according to The Wall Street Journal (subscription).
The big number: “The spot-market price for benchmark coiled sheet steel has fallen 40% since April.”
- The impact of the strike is especially acute because auto demand has buoyed the steel industry amid this tough economy. Increased auto production and new electric vehicle–related demand have been “a bright spot.”
The big producers: “Steelmakers Nucor and Steel Dynamics in September forecast third-quarter profit would decline from the same period last year and from the second quarter because of lower steel prices.”
- Meanwhile, “United States Steel in September said it would idle a blast furnace at its Granite City, Ill., mill and reallocate the steel produced there to other mills where steel production has dipped because of the auto workers’ strike.”
Vehicles unmade: As the strike enters another week, following an expansion this past Friday, “S&P estimates the strike so far has knocked out production of 6,030 vehicles a day that consumed about 5,982 tons of steel.”
A hard hit: Michigan consulting firm Anderson Economic Group estimates total losses from the first two weeks of the strike at $3.95 billion.
- That sum includes $325 million in lost wages; $1.12 billion in losses for Detroit’s “Big Three” carmakers; $1.29 billion in losses for suppliers; and $1.2 billion in dealer and customer losses.
Our take: “A prolonged strike will have severe and lasting consequences throughout our entire economy,” said NAM Vice President of Domestic Policy Brandon Farris.
- “Small and medium manufacturers may bear the brunt of the work stoppage, and it is those businesses that can least afford to stop working. The NAM urges a swift resolution to let manufacturers get back to making the products our country and the world rely on.”