Skip to main content

The strike, involving about 48,000 workers at the automotive giant, has entered its fourth week, with no end in sight.

ERIN KIRKLAND/The New York Times

The General Motors strike in the U.S. could start to cast a longer shadow on the already darkening data for North America’s manufacturing sector.

The strike, involving about 48,000 workers at the automotive giant, has entered its fourth week, with no end in sight. While the dispute almost immediately spilled over to Canada’s auto sector – where about 4,000 unionized workers at GM Canada and related suppliers have been laid off – the impact is expected to broaden the longer the work stoppage continues. Economists said that already weakening manufacturing indicators stand to take an additional hit, while the impact from the GM shutdowns may soon surface in Canadian labour data and could, eventually, weigh on overall fourth-quarter growth.

“It will build as time goes on,” said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce.

Story continues below advertisement

Last week, the Institute for Supply Management’s U.S. manufacturing Purchasing Manager’s Index (PMI) came in at 47.8, its lowest reading since mid-2009. Readings below 50 typically indicate a contraction in the sector. Economist Brian Bethune of Tufts University in Medford, Mass., estimated that the GM strike subtracted “about 2 points” from the PMI, piling onto the already deteriorating manufacturing conditions.

In Canada, the early signs of the strike’s ripple effects could surface this Friday, when Statistics Canada releases its September labour-force survey. Workers on temporary layoff are generally treated by the Statscan survey as unemployed, as long as they aren’t being paid while on layoff. That means that the workers sent home in Canada as a result of the U.S. strike could well add to the unemployment count.

Many of the key economic indicators for September won’t be released until November. Only then will we have a clearer sense of the impact of the strike, economists said.

Economists cautioned that the downward pressure from the strike on the economic data is a temporary factor that would largely be reversed once a settlement is reached. Nevertheless, they said the strike has compounded the uncertainties in the manufacturing sector – related mainly to global trade tensions – that have already stifled export demand and business investment in North America and globally.

“It’s exacerbating all the shocks that U.S. manufacturers have to deal with,” Mr. Bethune said.

Toronto-Dominion Bank senior economist Thomas Feltmate noted that GM built up about 70 days’ worth of supply in preparation for the strike, so the early impact on its sales was negligible. But he said that some more popular models are already feeling the supply strain.

“Depending on the model, we’re pretty much running on empty now,” he said.

Story continues below advertisement

He added that while GM Canada has managed to keep its Ingersoll, Ont., assembly plant running, that facility may be running low on parts itself – and the strike has all but shut down parts shipments from the United States. As a result, he said, the Ingersoll plant may not be able to maintain production much longer. That would also affect the St. Catharines, Ont., powertrain plant, part of which has remained open to supply the Ingersoll facility.

“It’s only a matter of time,” Mr. Feltmate said.

Economists said that the strike to date has probably had a minimal impact on the overall economy, shaving maybe 0.1 percentage point off annualized gross domestic product growth on both sides of the border. But they said that if the strike were to continue for much of the fourth quarter, the impact would deepen and spread, affecting consumption, business spending and trade.

“It will ripple into other industries,” CIBC’s Mr. Shenfeld said.

Mr. Feltmate of TD estimated that if the strike lasted most of the fourth quarter, it could slice about 0.4 percentage point off U.S. GDP growth, and about 0.3 percentage point from Canada’s growth. With fourth-quarter growth forecast at slightly more than 2 per cent annualized in the U.S. and about 1.5 per cent in Canada, that would be significant.

But for now, Mr. Shenfeld said, “it’s a minor impact that would be made up in future production. This is the kind of impact on the data that you add back and try to ignore.”

Story continues below advertisement

But Mr. Feltmate cautioned that a large chunk of the lost Canadian production won’t be replaced. GM had already planned to permanently shut down its Oshawa, Ont., assembly plant at the end of the year, so GM isn’t motivated to accelerate its operations there to make up for lost time.

“Any production lost there isn’t going to be recovered,” he said.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Related topics

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies