At Financial Times Rana Foroohar ruminates on the broader implications of the ongoing UAW strike:
The unions are not just fighting for a few more bucks. This battle may determine not only the future of the clean energy transition in the US, but potentially the outcome of the 2024 presidential election, and the future of the Democratic party. It’s a worthy battle, but also a very, very risky one.Â
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This is in some ways a life-or-death battle for the union. The EV transition is already predicted to significantly lower the number of jobs in the automotive sector in the short term, since you simply don’t need the same number of components and thus workers on an assembly line as you do to manufacture cars with internal combustion engines. Ford chief executive Jim Farley told the Financial Times back in 2022 that the EV transition might require 40 per cent fewer workers.Â
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While some would argue that China flooding Europe with EVs in violation of World Trade Organization rules matters less than getting more cheap EVs on the road, the tough political truth is that if western countries are perceived as selling out their own workers, we’ll see a harder and broader swing towards Trump-style autocratic populism.
A better idea would be for the US and Europe to come together and set joint labour and environmental standards on how EVs are made. This would help avoid a race to the bottom with either China, or each other, and put tariffs on vehicles that don’t adhere to them.
Briefly stated the implications are not just economic but environmental and political. The economic implications are pretty obvious. Will the union succeed in wresting concessions not only on pay but on benefits and the present tiered workforce from the companies? I sympathize with the union in its argument that CEOs compensation has grown enormously while theirs has declined cf. here:
Furthermore, how much of the increase in CEOs’ compensation is actually warranted? Are they doing good jobs or just benefiting from a general bull market?
The sad reality is that if the CEOs’ compensation were reduced to zero, it would provide just about $500 per worker. Not only wouldn’t that offset the pay increase the UAW is demanding, it wouldn’t pay for retirees’ healthcare insurance, another demand. Where is the money supposed to come from? It won’t come from raising prices. That would just drive more market share to non-union competitors.
In this day of activist media I can’t tell whether we’re comparing apples with apples. What I can tell you is that the market shares of the formerly Big Three have declined, the number of workers they employ, both hourly and salaried has declined, and Toyota and Honda employ non-UAW hourly workers.
The environmental implications extend beyond whether EVs will be built to where they were built. Building EVs in Germany (or the United States) produces fewer carbon emissions than building them in China so it makes a difference.
And the political implications for President Biden are serious, too. This strike will be a test of his bona fides as a defender of workers. If the strike is resolved in the union’s favor, it will help him. If the opposite is true it will be another nail in his political coffin.
Building EVs in Germany…. produces fewer carbon emissions than building them in China
Are we sure about that? Germany decommissioned their nuclear plants, stopped buy natural gas from Russia, using coal to power industry and is burning wood pellets. I have heard wood pellets are even more “ungreen” then coal.
On the subject, I don’t see how the strike has much relevance politically. This isn’t 1953, with the misquote “What’s good for GM is good for America”. If it turns out well or badly, it won’t help or hurt Biden.
Yes. China gets 2/3s of its electricity from fossil fuels, Germany less than half.
Iam not sure how the public will perceive the outcome. If it turns out well for the workers the opposition will portray Biden as anti-business and why the US has lost jobs. If it goes poorly for the workers they portray Biden as anti-worker. I think the larger issue is that while we claim we want these higher paying manufacturing jobs to come back to the US they are still competing globally so it turns out they cant really be very high paying or the car companies need to raise prices and cant compete.
Steve
I tend to think strikes should be a last resort, and hopefully the stakes are high enough for the risks involved.
Detroit-based Rivian bought a former (unionized) Mitsubishi plant in downstate Illinois to manufacture EVs. Mostly these seem to be on contract with Amazon. So far no news on the attempts to unionize Rivian; some seem to feel confident this will happen because Illinois is a pro-union state, but I’m not sure that’s the case in Bloomington/Normal, headquarters of State Farm.
Also, the Illinois Governor announced Gotion will be getting subsidies to build a lithium battery plant in what Dave might refer to as downstate Illinois and I would refer to Chicagoland. There don’t appear to be any expectations in the subsidy agreements that it will necessarily unionize.
These seem to be the kind of places that the future of traditional unions within the context of technological change.
Strikes should be last resort but unions and management in the US seem to have adversarial positions than in the rest fo the world. When profits are bad (losses) they can ask workers for concessions and often get them. When profits are good they hand out bonuses to the CEO and other management but workers dont seem to benefit so much. Workers respond by getting greedy and asking for too much. Seems like if they were working together workers would also benefit when times are good and workers would also be interested int he long term health of the business.
Steve
I don’t really have enough info to comment specifically on this strike.
But a few general points:
– Our laws and norms around unions are still stuck in a 1930’s context as a binary between “workers” and “management” that only works well in a few industries.
– Globalization and mass immigration will constantly put negative pressure on unions, especially the ones we have in the US. It’s not a coincidence that the heyday for US unions was during the period of US history with very little immigration and not much globalization.