The United Auto Workers union has taken the unprecedented action of going out on strike against all three of what used to be referred to as the “Big Three Automakers”. Phoebe Wall Howard, Eric D. Lawrence, and Lily Altavena report at The Detroit Free Press:
The UAW declared a strike against Detroit Three automakers Thursday as contract talks failed to secure new labor agreements before the current deals expired at 11:59 p.m.
UAW President Shawn Fain announced the first wave of plants the union would strike if a new labor agreement was not reached before midnight: Ford Michigan Assembly Plant (Final Assembly and Paint only) in Wayne, Stellantis Toledo Assembly Complex in Ohio and General Motors Wentzville Assembly in Missouri.
The graph at the top of the page illustrates how poor the timing is for this particular action. Auto loan delinquencies are at a ten year high and trending in the wrong direction. The manufacturers bear at least some of the costs of those delinquencies. Also consider this:
The Big Three aren’t the Big Three any more. That’s the distant past. At this point Tesla, Toyota, Honda, and Mercedes all have non-union manufacturing facilities in the U. S.
I have some sympathy with the argument the union is making: I think that auto company CEOs are overcompensated relative to performance and the workers deserve a bigger share of the pie. But that’s a determination for the companies’ stockholders to make and that they haven’t made it is an illustration of the perverse state of corporate governance.
Which of the following is most likely?
- The union will achieve its objectives and that will be a small first step in rectifying the increasing income inequality in the U. S.
- The union will succeed in driving more manufacturing to “right to work” states (mostly in the South).
I think B is the most likely.