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).
- Both
- Neither
I think B is the most likely.
BTW Ford has almost 30% fewer hourly employees than it had 40 years ago. I presume that’s true of GM and Stellantis (Chrysler) as well.
The decline in the number of salaried employees at Ford over that period is even greater.
(D) ish.
The main alternatives, the Asian car makers don’t have spare inventory or capacity, so they can’t take advantage of extra demand.
More likely in an extended strike the main effect is it will raise car price as dealers engage in markups.
I think the UAW will get a substantial amount of what they are asking. Airline pilots and UPS delivery drivers got favorable deals this year. To put it in perspective, inflation was 7% in 2021, 6.5% in 2022, and already 3.2% with 4 months to go in 2023; that’s a 20% decline in nominal wages during the current contract (which didn’t have a COLA!). I think of the other demands, the union will get a COLA, and eliminating differences between new and long time workers (something that was granted to UPS drivers).
As to the long term — like the actors/writers with “AI”, its a bit grim. EV’s require less workers to assemble.
The automakers have offered a 20% raise rather than the 40% the union is asking for. It’s possible they could meet somewhere in the middle.
I agree with the analogy to the Writer’s Guild/SAG-AFTRA strike although possibly not in the interpretation. I think if it goes on long enough Hollywood is toast. Similarly with the formerly Big Three automakers. That may be true regardless of the outcome. The problem in both cases is that they both have competition.
“GM posted a 2022 net profit of $11.04 billion, up from $10.38 billion in 2021, while Ford recorded a 2022 net profit of $7.62 billion, up from $6.43 billion in the prior year. For Stellantis, the parent company for brands such as Chrysler, Dodge and Jeep, last year’s net profit was $17.83 billion, up from $15.12 billion.”
“Maximum average hourly wages are $31.77 at Stellantis, $32 at Ford and $32.32 at GM.” Average overall about $28.
AFAICT, salaries at the non-union plants is about the same as union places but the benefits are far more costly at union plants. A lot fo that is retirement costs since they had defined benefit programs. I dont think those go away if they move to non-union states. I think they are now defined contribution like everyone else though by some accounts the union wants the older plans back. In that case probably worth it to go south. I think C. Sounds like the auto companies dont want to give what amounts to cost of living pay increases. What’s the point of having those “high paying” manufacturing jobs if they are in a continuous downward spiral?
Steve