I’m unfortunately a product of the 1990s, so whenever I hear about strikes, my brain automatically plays the Garbage Strike song from Rocko’s Modern Life. You know, the one that starts with “We’re on strike, we’re on strike, we can do anything that we like…” But in the case of the United Auto Workers’ ongoing, unprecedented strike against all three domestic automakers, “do anything that we like” means “wage a sophisticated, social media-savvy campaign against an industry that hasn’t been used to taking hard punches from its workforce since probably the last Wildcat Strike at Lordstown Assembly.”
Today, we continue to discuss the latest on this strike and what it means for consumers and the wider industry. And as an added bonus, we’ll be talking about what the electric vehicle tax credit means for used cars. The short answer: nobody is sure yet! Happy Monday to you all.
UAW Workers May Have The Edge, Unlike Other Labor Battles
You’ll probably read or hear some comparisons drawn to the UAW labor stoppage and the Hollywood writers’ and actors’ strike. That one is about to be in its 140th day. And while both strikes are driven in part by technological changes—AI for Hollywood and EVs for the auto industry—there are some fundamental differences that indicate the auto workers could score some wins long before the entertainment strike draws to a close.
After all, it takes years to put scripted TV shows and movies out; getting cars produced and onto dealer lots is a matter of days and weeks. The automakers, dealers and supply chain will feel the effects of this instantly. Consumers haven’t really felt the effects of the entertainment strike at all yet. (The lack of movies that aren’t Marvel sequels was the state of things before the strike started, mind you.)
And not to negate the importance or urgency of that strike, but they’re acting at a time when the movie and TV studios are in utter disarray in the post-pandemic streaming hellscape. The auto industry, on the other hand, is posting record profits. So the workers may have more of an edge on this one, reports Bloomberg:
The UAW’s aggressiveness in many ways reflects the more assertive mood of the American worker, who’s anxious about job security in the age of artificial intelligence and angry about an ever-growing wealth gap. In this summer of strikes that’s seen Hollywood writers and actors walk off their jobs, and workers at companies as varied as Starbucks, Amazon, Apple and Microsoft all vote to unionize in the last two years, the UAW drama has taken on broader significance.
Fain’s combative stance is risky. If workers sacrifice for months, throwing their lives and others’ into disarray, only to end up having to accept something much closer to what the companies have been offering, they could serve as just the sort of cautionary tale managers use to try to dissuade workers from unionizing in the first place.
The UAW strike also is perilous for President Joe Biden, who’s made building an EV and battery manufacturing industry a pillar of his economic agenda. Can he live up to his own billing as the most pro-union president in history, without compromising the competitiveness of the US auto industry against lower-cost rivals, led by China?
“If the union has taken a more militant turn and is punished for it successfully, that will intimidate workers across the board,” said University of Chicago historian Gabriel Winant. “If they win, it will augment the message that is already circulating with greater frequency: that now is the moment that workers have leverage.”
By the way, here’s how things used to work, and did the entire time I’ve covered this business:
The union failed to capitalize on the carmaker’s improving fortunes to the satisfaction of many workers. Labor talks were largely opaque affairs in which UAW leaders stashed themselves at the union’s headquarters — called Solidarity House — in downtown Detroit and negotiated with management behind closed doors. They would emerge after a couple of months with tentative agreements that in recent years included steady, single-digit pay raises, but also kept in place lower wages for new hires. “We don’t bargain in the media” was a common refrain from leaders on both sides.
Now they have a comms team full of Bernie Sanders campaign veterans and a president who doesn’t think twice about snubbing an invitation to meet with Bill Ford. So it goes. One analyst who spoke to Bloomberg said they do not expect the strike to end before Halloween, and while it’s rather likely more plants will shut down in the meantime, it’s unlikely to see this go on for half a year like in Hollywood.
Ripple Effects Already Being Felt
So how long until the rest of the American auto industry feels the heat from the strike? Yeah, that would be Friday, last week, according to Reuters:
By Friday afternoon a ripple effect was felt.
“Our production system is highly interconnected, which means the UAW’s targeted strike strategy will have knock-on effects for facilities that are not directly targeted for a work stoppage,” Ford (F.N) said in a statement.
It told 600 workers who are not striking not come to work on Friday and GM (GM.N) told some 2,000 workers at a Kansas car plant that their factory likely would be shut down next week for lack of parts, stemming from a nearby plant being struck.
Damn. And a few other tidbits tacked on at the end of that one:
Nearly half the 12,700 striking workers are at the Stellantis plant, although management has been preparing: a parking lot of finished Jeeps is more than a mile long outside the factory.
GM said on Thursday the UAW wage and benefits proposals would cost the automaker $100 billion, but did not elaborate.
Fain has rejected the automakers’ assertions, saying the companies have spent billions on share buybacks and executive salaries.
While Biden is pouring billions in federal subsidies into expanding electric-vehicle sales, this shift could threaten combustion powertrain jobs. The UAW has not endorsed his re-election.
Biden’s likely opponent, former president Donald Trump, on Friday criticized the shift to EVs as a job-killer for the UAW.
What a wild thing to witness, all of it.
A Silver Lining For GM’s EVs? Maybe
We all know that GM’s bold new lineup of EVs is kinda made-up at this point. You have the Bolt and Bolt EUV, the Cadillac Lyriq that barely exists outside of the Detroit press car fleets, the equally low-volume Hummer EV, and uh (checks notes) not a lot else. The Blazer, Equinox, Silverado and Bolt replacement EVs are coming soon, but many of them have experienced numerous delays as GM works out kinks around batteries and software.
Could this strike buy GM some time to get that stuff figured out? One analyst I like, Sam Fiorani, says yes, but that opinion isn’t quite unanimous. One more from Reuters:
A longer strike could help GM address and potentially resolve some of those ongoing issues in its EV and battery operations, according to Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
“A production stoppage could allow GM to solve bottlenecks,” Fiorani said.
The automaker has not been able to roll out its most important EVs in a timely fashion, but could benefit if it used the labor stoppage to resolve some of its technical and operational issues, he said. “GM could ramp up output faster once the factories start running again,” said Fiorani.
[…]
Wedbush auto analyst Daniel Ives said the strike was “a potential nightmare situation” for GM given it comes exactly at a key period of ironing out EV issues.
“In this crucial period of EV execution, model roll-outs, distribution, marketing, with EV competition rising across the board, the timing could not be worse,” Ives said in a research note.
I tend to think any hit to quarterly returns won’t bode well for future R&D, but we’ll see.
EV Tax Credit Weirdness Moves To Used Cars Too
The longer this year goes on, the less highly I think of the new EV tax credit scheme. Sure, it’s great at incentivizing battery production here and not in China. But so far it’s been a massive gift to Tesla and nobody else, and the fine print is proving to be remarkably opaque for such a key part of President Biden’s signature legislative package.
Now there’s weirdness around the rules for tax breaks with used cars too, reports Automotive News:
As part of the Inflation Reduction Act, qualified buyers could get up to $4,000 for the purchase of an eligible used EV under Internal Revenue Code Section 25E. Vehicles must be at least two model years old and cost $25,000 or less, but they are not subject to the same stringent battery sourcing rules as the revamped tax credit for new sales of personal EVs, known as Section 30D.
The Treasury in December clarified what’s counted in the retail price for new EVs, specifying that “optional equipment physically attached to the vehicle at the time of delivery to the dealer” is included, while optional items added by the dealer as well as destination charges, taxes and fees are not. However, it did not specify what’s counted toward the sales price for used EVs.
“With the discussions I’ve had with dealers, they’re obviously having to make a judgment call as to what ‘sales price’ really means,” said Adam Neporadny, managing director in the national tax professional standards group at Forvis.
Have you tried to buy a used EV this year? Let us know how that went for you.
Your Turn
When do you think the UAW strike will come to a close? And what plants will they target next as this continues?
However the strike turns out, the likely end result will be twofold:
It’s sad that so many car companies have built plants in Mexico instead of having that production in the US, it’s not just the Big3, but Honda, BMW, Merc, etc. This year vehicles produced in Mexico might hit 4M cars, and 75% of them are destined for the US. Mexico is the largest exporter of vehicles to the US, shocking when you think about it. Like you said, the new contracts will shift production outside of the US to some extent.
Does anybody remember when Volkswagen put an assembly plant in Pennsylvania and welcomed the UAW to represent their workers? And they went on strike six month after the plant opened? And were out of business in a decade? I believe the other “transplants” learned from this.
Good. Take them to the cleaners. The CEO:Average Salaried Worker ratio has gone off the rails. I don’t care how smarty Barra is, she is not worth 32 million dollars/year.
https://www.nytimes.com/2021/06/11/business/ceo-pay-compensation-stock.html
Maybe if they all start getting paid a LOT, other companies will start increasing their pay. The reality is wages have been stagnant for decades and cost of living has skyrocketed, so power to the people.
The big three have lost our business forever due to the questionable quality of their vehicles. I also disagree with organized labor, but that’s a different story. I have owned many American big three cars but the bailout in 2008 pissed me off. In my driveway now, one car from each of the German big three. When a BMW, Audi, and Mercedes are more reliable, well…
Its not just quality, but what you get for your money. Bought a new truck 15yrs ago, only cause it was 35% off after clunkers, unlikely to ever own a big 3 again. My friend’s new Jeeps, buddy’s new F250, parents new GM products, they all seem cheap and not impressive. Can only imagine how giving the UAW what it wants is going to make their products more competitive. When the boomers are all gone the big3 will be lucky to have 30% market share in the US.
They had me for life, I was happy to buy a car built by my ‘neighbor’, but poor quality (body by Fisher, interior by Fisher Price) and taxpayer funded bailout that screwed the investors sent me to other brands. The big 3 have their loyalty among the younger generations, but it will be an uphill battle soon for sure as Boomers age out.
The strike seems to have brought out a bunch of accounts that I don’t recognize. I’m sure they’ve been readers since the early day but who chose this random day to start giving feedback on this one particular article.
That sums it up for me
Honest question – how legit are the “record profits”? The big 3 have continued to lose market share and it seems that in this post pandemic era all carmakers were getting some sort of record profit only because of the trim of vehicles they were selling and low supply/high demand. Are these record profits actually sustainable and expected to continue? Especially as the big 3 continue to transition into their relatively uncompetitive EVs?
Why does that matter? If the c-suite is getting rewarded, the workers need to get rewarded.
The C suite is definitely overcompensated for the big 3, i’m not questioning that. I just don’t see how the big 3 will be sustainable by paying even more for labor. Also, I haven’t seen any math to indicate that even if C suite compensation was re-distributed that it would make a dent towards what the UAW is asking for.
https://www.theautopian.com/ford-and-gm-can-afford-to-give-its-workers-40-raises-analyst/
Analysts who follow the auto industry for decades say they can afford it. Worker compensation is not negligible on their budget sheet but it is small <10%.
I can point to management decisions that compounded probably cost a lot more and actively harm the product.
If they can tie cost of living to absenteeism and quality targets for the UAW to hit I think you can get to a fairly good agreement for both sides but I am just some random engineer.
Executive pay is always going to dwarf the workers, it’s been a popular big complaint for such a long time and never going to change. Lets say Mary gives $25m of her $29m pay to UAW GM workers, that’s less than $500 each, wow life changing.
That’s a huge improvement imho. Now do the same for all the other executives. Suddenly that’s a 3-5k increase per worker, per year.
That’s still significantly less than the 20% they rejected…
That was a random guess bro. I work at a large corporation, and there is a lot of ‘fat’ on the higher levels. It’s honestly insane.
We’ll the avg GM production worker makes $34k and the avg BMW production worker makes $38k, maybe they should just move to SC and stop paying UAW dues.
This is always such a shit take. A lot of people can’t just up and move; split custody, older parents, childcare, etc.
lot of former Big Three Plants that have closed in the past 20 years. They will follow profit, and close more locals that lose enough off the bottom line
This might come as a surprise but Barra is not the only highly-paid executive at GM. Some more surprising news: $500 a month extra might not be life-changing for you but it will be for many…
As long as there is the UAW the Big 3 will always be looking to screw the workers now and forever. With so many non-union auto facilities in the country that make it work, I think the UAW only hurts the workers potential. Maybe the only benefit is keeping so much production in the Central North, but that keeps changing little by little. I swear the workers would be better off today without the UAW the past 30 years.
Preach on
I mean the amount of leadership serving prison sentences would seem to back that up
“I wouldn’t have to hurt you if you didn’t unionize.”
An alternative way to look at this is how these non UAW facilities make it sustainable?
Don’t give workers a reason to unionize…. compensate them fairly & humanely… make their benefits package so good, there’d be nothing to gain from joining a union.
You can argue that the UAW or unions aren’t as useful as they were initially (I’ll argue against this, but that’s for another time) but these unions exist (as well as labor laws, OSHA, etc) because conditions & compensation is so freaking bad.
I’m just here for the Rocko’s Modern Life references.
Whenever someone here says their kid is about to take their driver’s test, I always say “don’t get the fat guy“.
What a wild show that was.
Rocko was the best cartoon ever 😀
There was a movie made a few years ago. I think it was called static cling. It’s on Netflix
I loved it then and still love it now. I still say “laundry day is a very dangerous day” when I do laundry
I still call most fried chicken places “The Chokey Chicken” (lol, who greenlit that one).
That episode has it all. A main plot where Heffer chokes on a ribcage and goes to hell, where Satan is named Peaches, and has an udder for a head. A subplot where a chicken is nervously interviewing with a manager chicken to be slaughtered and packaged for consumption.
I probably haven’t seen it in 20+ years though a lot of that show is vividly burned into my memory.
The B52s did the theme song too!
Absolutely a classic theme song.
I think about the episode where they fly coach and it’s a dirt floor with chickens running around basically every time I fly
The UAW gives unions a bad name. Even other unions don’t like them.
They need to demand that GM/Ford/Chrysler make better cars. Make better cars, and let engineers run the company. Half the board should be engineers, and the other half labor. They should also drop the stupid childish parking policy.
It really looks like the UAW is changing for the better. Fain is fighting for the UAW, not going and negotiating a sweetheart deal in secret. And the Teamsters are supporting this strike, so I think that other unions are seeing the new leadership as a positive.
Let’s hope.
But, as an old timer I know always said (and he was almost always right)… a leopard can’t change its spots.
Mary Barra and Carlos Tavares are both engineers.
Well they don’t make it obvious enough.
The best part is that Toyota taught GM everything, yet they learned absolutely nothing from NUMMI.
Toyota’s methods are not secrets; in fact it was Americans who taught them about lean manufacturing after the war.
The real issue I see, is that you don’t get to CEO/President levels by being a nice guy/gal. You have to be aggressive, grey morally and willing to “do what it takes”.
Sure we need people like this for some things, but I don’t expect them to put me first over shareholders or their families wealth.
There isn’t a politician, billionaire or CEO out there on there high levels that actually cares about you. Not a single one. Family business? Local politician, sure. But not the big guns.
I’ve never argued otherwise.
I will say that given what I’ve seen up close and personal inside union politics, Fain is likely just as gray morally as any of the CEOs.
Oh I agree, I should have include those big union bosses in my prior statement.
Why is it the union’s responsibility to ask management to a.) hire engineers for c-suite jobs and b.) build a better car. Their responsibility is to the labor involved in building whatever that team sends them. If they need “person-who-puts-wheel-on-car” to advise them on run day to day operations, they should pay that person more,
We’re loosing the plot on what a union does. They’re asking a profitable corporations to pay and provide benefits to their employees. Which hasn’t always been the case with the UAW. Maybe Shawn Fain is enjoying his time in the spotlight, but he’s doing what he was democratically elected to do. Which in America, is a pleasant surprise.
It’s their responsibility to demand better cars because making good cars is how they stay in business. Recalls are expensive.
Also, the better a car is, the better it will sell, and the more they sell, the more demand there is for the labor to make them. That would be a big benefit to employees.
Does management really need low level employees to tell them to build something people want to buy? These multi-billion dollars cooperations have teams of people who do exactly that. If “dude who puts on dashboard”, has a dashboard related criticism, sure. But macro-level manufacturing decisions are only role of C-Suites. The responsibility to demand a better product is on the consumer.
Also production and pay aren’t mutual at this level. If Ford doubled the profits on the F-150s, the line would see no benefit. The share-holders however will be doing great.
Labor on the board isn’t a far-out concept. It is common where they make German cars that some perceive to better than GM shit.
The line would see a benefit from more production, in the form of overtime, more shifts, and more employees, more jobs.
It’s management who controls how good the cars are. When the cars aren’t good, it’s a management failure not to have good designs, not to have the grunts on the line care. For the C-suite and for Wall Street, it’s the quarter’s profit that counts. That’s where the bonus is. And the market mostly isn’t people like Warren Buffet who buy and hold, it’s computerized and buys & sells in milliseconds. It doesn’t care about horizons measured in years.
Who is forcing them to work there? If you don’t like your wages move on to better somewhere else.
Hell yeah! There’s a real abundance of high paying jobs in this late capitalist hellscape. You can totally just go over to the job store and choose between countless well compensated opportunities!
I went next door to the Retirement Store, but I couldn’t afford anything.
Username checks out.
It’s fine to fight for something, they can eventually decide if they want to move on or not once the deal is done.
It’s contract negotiation time. If you’re working under a contract that offers X and it comes up for negotiation, you absolutely need to push for X+Y. Never just wait and hope for charity from the people who will make more money by paying you less.
What’s up, Jim? Rather comment here instead of paying your people?
In all seriousness, I’ve only seen you comment drivel on the UAW posts.. something’s fishy
Don’t worry, I work for my paycheck. I owned my own small shop for 10 years and now a service writer at a larger shop. I have never asked/demanded a pay raise. The main employees I had over the years that tried demanding one were not worth their current wage. I get tired of people thinking they are entitled instead of trying to better the company. Yes, I say that as an employee that I am now
think that went over your head, bub. but we’re all very proud of the chilidsh stance of “its unfair because it’s not what I got”.
I will never, for the life of me, understand the conservative “I GOT MINE SO I DON’T WANT ANYONE ELSE GETTING THEIRS” mindset. It’s so childish and selfish.
Who is forcing them to pay such low wages? If you don’t like the workforce reaction to those wages, move on and pay better wages.
Everything I’ve ever gotten at work was something I had to lobby for. My boss and I were on good terms and I worked hard for him, but he never voluntarily gave anything up for me besides a COLA every couple years. When I wanted a big raise to get where I thought I should be, I made the case justifying it to him, told him I’d consider employment elsewhere otherwise (but preferred to stay), and drew my line in the sand. He gave it consideration and granted me that raise. But he never would’ve given that to me because he’s a nice guy and he liked me.
That’s how it works in the real world. You have to fight for what you deserve and that’s what the UAW is doing.
You don’t get what you deserve. You get what you negotiate.
Apparently then I don’t work for a normal boss. I have gotten several pay raises I wasn’t expecting
I think it depends on the type of work/industry, company culture, the nature of the job itself and what it is. That’s great that you got unanticipated pay raises, but some folks have to go to bat for theirs.
Step outside of your own shoes & consider:
Is your situation the exception or the rule?
They go hand in hand – at least in my experience. My boss was a good guy and his business was a good place to work, but they would happily pay whatever you let them pay you. I worked hard and deserved what I negotiated with him to receive.
You’ve licked the boot so much you now love the taste.
I bought a 2019 e-Golf in June w 21K miles. Sales price was below 25k, and I expect to get the $4000 tax credit. The sales price alone was far lower than comparable ICE models like GTI and Golf Sport wagons. Throw in the $4k I’ll get back in my taxes and it was about $10k cheaper than comps. I actually convinced a friend to buy an e-Golf, and he just picked it up this weekend. This tax credit for used EVs has really opened things up IMO in price discrepancy between used ICE. I will caution however that used EVs, especially with lower ranges (e-Golf is 125 miles) should be purchased by 2 car families that still retain an ICE vehicle. Lots of people are talking about Hybriding all the cars, which isn’t a bad idea, but for a much lower investment you can hybrid your fleet instead.
I hope you got it in a cool color like Traffic Purple 😀
Unfortunately not, most e-Golf came in appliance gray scale, and our is gray. There were 2 blue options available but they are harder to find. Also when shopping for used EVs on the east coast its best not to get hung up on color, otherwise you’ll never something to buy.
NOOOOOOOOOOOO 🙁
Also, I missed the fact that you bought yours used, sorry 😐
Time for a consumer strike on everything, too. That will gore everybody’s oxen and help reduce inflation by drastically bottoming out demand.
“gore everybody’s oxen” wtf?
Don’t get me started on EV tax credits, we ended up with a Hybrid because we didn’t want to be forced to by American, Ford/GM/The other one don’t offer anything really compelling, so we went with a Niro HEV.
If they had their head out of their asses (looking at you Manchin) we would have bought the Plugin!
Then you have the Used credit, there are strict income caps that are ridiculous. 95k dollars, while that seems like a lot, live in the Tri-State area and tell me that I’m rich!
Yeah it’s almost like a coal baron wrote the legislation for this one. Weird how it didn’t turn out to be a massive pro-EV push.
Right? The income caps are straight out of 2004. If you live in a major metropolitan area 100 is the new 60.
this exactly!
Reading the exact same musings about this strike every day makes me long for the times when this column was full of the latest Elon Musk gossip.
How good we truly had it.
The union wants a lot of things, some reasonable, some not, the companies will eventually give them most of it, cars will become more expensive, executive pay will not change, and we’ll move on.
Did you hear Elon/ Twitter/XYZXXXX pulled the blue check mark from the UAW even though they paid for it?
Seems like exactly the type of annoying but meaningless troll job I’d expect.
If you want to really make the strikes hurt, you go after the plants that make the half-ton trucks, if you just want to make them bleed, go after the HD truck plants.
Yep, seems like it was tactical to go after the Ranger/Colorado/Jeep plants rather than the F-150/Silverado/Ram 1500 plants. This could hurt, but they didn’t throw their best punch as their first punch. Maybe that’s saving it for later, maybe that’s saying they want to find a compromise sooner rather than later.
Exactly. This was a completely strategic move.
But,but,but…what happens to to poor ceo’s and their boards when things get tough and costs increase?
Nothing, that’s what.
The imbalance between corporate executive pay and EVERYONE ELSE is comical and shows that America is not a democracy but a kleptocracy.
but Mary Barra needs $29 million in annual compensation, anything less and she won’t be able to care for her family
Good point. Wouldn’t want that to happen.
Nothing??? You think they aren’t getting a massive raise after this too???? Of course they will, probably even larger percentage-wise.
“she needs a raise otherwise we won’t have her to lead us through this rough patch (that she drove us into)”