The State of the GM Strike

The editors of the Wall Street Journal aptly summarize the conundrum the UAW faces:

If you no longer have a monopoly, trying to extract monopoly rents is obviously a formula for going out of business. The UAW leadership understands this. And the union long ago lost its monopoly over auto labor thanks to foreign-owned auto factories mostly in the South.

As I’ve said before I simply do not understand why the UAW did not go to the mat on this issue 45 years ago when they still had that “monopoly power”. That was checkmate. Since then they’ve just been playing out the moves.

11 comments… add one
  • Guarneri Link

    I think the die was cast more than 45 years ago. The history of the steel industry and its labor relations I know more intimately, although the auto industry has many parallels. The Steelworkers were done in about 1960, despite outward appearances.

    It was not all their fault. Consider the Kennedy Administration threats and the ensuing round of investment in open heart technology. You don’t need to be a chemical or process engineer to simply watch an OH vs BOF operation for about two hours and know it’s game over.

  • Grey Shambler Link

    Workers are going to regret this strike.
    I guess the UAW just had to prove that they are still relevant.

  • Guarneri Link

    I don’t have the same degree of intimacy with the USW’s history as I do the USWA. However, when in the steel business I made product for, supplied and visited almost exclusively automakers. I have a pretty good sense.

    45 years may seem like a long time ago, but I’d venture that by 1960 the die had been cast. In steel, the Kennedy admin, fearing inflationary product pricing and strikes, jawboned the industry into a tremendous round of investment in open hearth and related ingot technology vs the emerging BOF and caster technology. Talk about going to the mat, the steel companies should have. With the looming onset of foreign steel imports, they were doomed. Funny thing, catchy bumper stickers like “Foreign Steel Steals Jobs” didn’t quite do the trick.

    The UAW was right behind them. Not all their fault. Crappy design and quality, and poor reliability all contributed. File it under arrogance for both management and labor.

    Its been somewhere between a holding action and orderly withdrawal ever since.

  • TarsTarkas Link

    Yeah, it’s easy to get fat and lazy when there’s no competition or when competition is barred by law. It usually takes a government to enforce a monopoly (Standard Oil is the exception that proves the rule), and that rule still holds.
    I remember a situation in suburban Philadelphia that is a good example of the decline of traditional steel manufacturing in the USA. A local foundry who saw the writing on the wall due to imports and competition told the local that if they didn’t accept a pay cut they would shut the plant down. The head of the local figured that it was a bluff and said no. The plant was shut down.

  • steve Link

    Dont follow this that closely, but I am off work today and the wife has the news on. Some minor concession was made to the union, but in return GM said it is not moving anything out of Mexico.

    In light of the USMCA this makes for interesting bedfellows doesn’t it? Conservatives reflexively oppose the union and support GM, but they also claim that the USMCA was the greatest trade deal ever and will bring jobs back from Mexico. Aint happening.

    Steve

  • GreyShambler Link

    But what did they lose? 4-5 weeks pay.
    Should have bussed in some antifa thugs.

  • walt moffett Link

    The unions did go to the mat in the South (a UAW office was 8 miles away as the crow flies) but ran into a problem. The auto plants were the sole source for high school graduates to get jobs that started at least double the minimum wage and workers weren’t interested in paying union dues when they felt the boss man was offering a fair deal. Of course, race played a role (the organizers I saw were all white), at will employment laws and unfriendly local governments didn’t help either.

    Eventually, they all left

  • PD Shaw Link

    UAW’s longest strike was the 1983 Caterpillar strike, lasting 205 days. The major issue was UAW wanting to force pattern bargaining with John Deere, but another issue was CAT’s desire to control its healthcare insurance costs by requiring higher contributions for out-of-network expenditures.

    UAW got nothing (that management wasn’t willing to offer before the strike) because CAT started advertising for scabs and in the early 1980s economy people lined up. Having lived through a few of those strikes (with family on both sides), there seems to be a large disconnect with the public. When grocery store employees go on strike, the workers can picket and encourage customers to go elsewhere. As an owner of two general motors vehicles, I have no intention to buy another for at least five years.

  • Guarneri Link

    I remember that strike, PD. Ugly and unproductive.

    I’ve told this story before. When at the mill I and some other youg’ns were discussing the pros and cons like college professors. An old hand, who had been sitting silently, simply asked at one point, “have you ever considered they simply hate each other?”

    Game over.

  • Grey Shambler Link

    I’ve mentioned before I was a Teamster and went one strike for one day before the company caved. Very time sensitive, customer oriented business. Autos passed by and yelled at us. “If you don’t like your job, why don’t you quit?” Nebraska is not very union friendly. But the answer to that question is, PENSIONS. At that time, I had about 29 years in, I retired at 65 with 39 years in. You’ve all heard of vested interest. The unions term our years in as vested time. Half or more of your working life, of course you fight for it.

  • Guarneri Link

    I don’t know what your vesting scheme was, Grey. But they are usually are a combination of a cliff vesting at a minimum time served plus a time based addition. I doubt the USW have an all or nothing vesting. Their action may serve to truncate some employees at less than 100%.

    As an aside. Hunter Biden’s PR people are touting how he is leaving his post and “hasn’t received a dime.” What crap. He may have resigned his management fee, but not his carry. Of course he hasn’t seen a dime, people rarely do early in a funds life. But I’ll bet he is vested in at least half his interest. Some math: the Fund does a pedestrian doubling. That’s a $2.8B gain. Standard terms would be 20% to the GP. That’s roughly $550MM. If he had just a third of the carry, 50% vested that’s worth something like $90MM. Not bad for a guy who doesn’t know jack about PE or their investment profile. Of course, his last name is Biden.

    I know more than he does; I’d split it with him as an advisory fee……..

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