I’m going to confess that I do not have the time, ambition, or patience to read the annual reports of General Motors, Ford, and Stellantis. The profits of those three companies are being reported as having been $250 billion. When you dig a little deeper, as here at the Economic Policy Institute, that turns out to have been the profits over 10 years or $25 billion/year. When you take into count the capitalization of the three companies (Ford $50 billion, GM $45 billion, Stellantis $57 billion) which is $152 billion, that doesn’t seem quite so outrageous.
I’m not sure how they’re defining profits but let’s take them at face value. Ford’s cash on hand is $43 billion, GM’s $33 billion, Stellantis’s $54 billion. Where did the rest of the money go? It wasn’t paid out in dividends, especially not at GM. Executive compensation?
I sympathize with the hourly workers. I can understand how they think they’ve been screwed. And I think that top management is being paid too much. The Big Three are not thriving companies as their declining market shares illustrate. But I really don’t see how the companies can afford to spend twice as much to their hourly employees as they’re paying now. That’s how much the union’s demands come to. Perhaps someone can explain it to me.
Are they just preparing for a greatly reduced membership?
Do the numbers. UAW has IIRC 150,000 workers. Top salary is $32/hour, roughly $64 k/year. If you wanted to raise their pay by $20,000 then you would need to decrease that $25 billion in profit per year to $22 billion. Lop off another billion and the UAW has a raise over 40%. (Pay actually runs from about $18/hr to a top of $32. Not sure what percentage earn the top pay so it could be less than $3 billion by a bit.)
https://www.usatoday.com/story/money/cars/2023/09/20/uaw-ceo-salary-levels-strike-issue/70915285007/
Steve
In addition to the 40% increase in baseline pay they’re demanding, there’s also the elimination of the two-tier pay system, decrease of the fulltime work week to 32 hours (presumably the balance would be made up through new hires or overtime), COLAs, and some pretty expensive benefits.
I get the present payroll as $32 X 2000 X 150,000 = $12 billion. The total package above roughly doubles that. My calculation suggests that puts GM out of business. Maybe my math is off.
I’m not sure, or motivated to pull apart their financial statements. But i would suggest a sizable chunk of the profit went to capex. Perhaps to fund the EV unit’s losses as well?
Let’s stipulate that executive compensation is too high. By objective standards that seems to be the case. That’s a failure of board oversight. The shareholders ought to be weighing in. Where’s Black Rock when they aren’t virtue signaling?
The UAW should be free to bargain, but they are on a suicide mission. The UAW leaders will do fine. The rank and file is going to get hurt. I watched this in the steel industry. When the competitive environment changed and the union pressed their luck USW employment fell by 80%.
I think your last point has more truth than people want to admit. Labor intensity is much lighter in EV’s. If EVs are forced on or subsidized into more prominence then UAW employment will fall. Get while the gettin’ is good.
I just read Steve’s comment. Trying to apportion economic benefits like an accountant is silly. Think like an investor.
The UAW is on a suicide mission. Examples in real life are plenty.
Yeah, that’s my take, too. All I could do is WAG.
Getting paid more than the CEO of Apple?
My guess the boards point of comparison isn’t Apple, but Tesla and Elon Musk. Which had even more outrageous exec comp… not to defend it, since Tesla is under SEC investigation.
A substantial chunk of net profits was reinvested into their respective autonomous driving venture.
A difference that might be considered is that Tesla is growing while Ford, GM, and Stellantis are shrinking.
https://www.statista.com/statistics/272120/revenue-of-tesla/
My point is not that Elon Musk is worth it but that Tesla and the Big Three aren’t really comparable.
32 x 2000 = 64,000
64,000 x 150,000 = 9,600,000,000. I think your math is wrong. So just looking at wages taking 3 billion of the profits gives them a bit over a 30% raise. yes, they asked for a bunch of other stuff but I think the chance of getting stuff like a 32 hour work week is zero.
Yes, an investor will want to know other numbers but as you noted elsewhere, where is the money going? I also think you ought to be able to explain to your workers who made income concessions in the past why they should not have a share of profits when they are better.
Steve