The EV revolution is on hold as the ‘Big Three’ autoworkers go on strike: The story of the GM and Tesla factories
Brandon Szcesniak, a union member who works at the Ford plant, told Labor Notes that people are angry. “It’s like a revolving door. it’s not a career anymore, it’s a job. They want us to buy Fords but how can we afford them?
Tesla operates its Fremont, California, factory with nonunion labor, as the UAW has struggled to find a toehold at the plant. The company has also been accused of violating labor law by the National Labor Relations Board for barring workers from discussing pay and working conditions. There have been many complaints filed against Tesla over the years.
The situation for both GM and Ford is quite worrying as they are in the early stages of a massive EV transformation path that will define their future success. He said that the winner was… Musk and Tesla with champagne now on ice.”
The UAW’s First Strike: GM, Ford, Stellantis, and the Big Three Automakers Aren’t Just As It Used to Be
Sam Fiorani, a production forecaster at AutoForecast Solutions, told reporters that the strike was symbolic. Not everyone was in agreement.
There’s a chance that the Big Three automakers will not be affected by a strike. The loss due to a 42-day strike against GM is not pocket change. But the damage might be most severe for smaller auto suppliers further down the supply chain who sell components that go into larger systems, like seating or heating, and their own suppliers of raw materials. Some 4.8 million Americans work in the auto parts manufacturing business, according to the Motor & Equipment Manufacturers Association, an industry group.
But the union notes that all three automakers have pulled in record profits in recent years — a combined $21 billion in just the first six months of 2023, according to UAW — and the workers now want their fair share.
It was a historic moment, the first time ever, that the workers at all three companies went on strike at the same time.
Those plans are now on hold, as Ford, General Motors, and Stellantis workers take to the streets to demand a share of the profits generated by combustion trucks and SUVs as well as stronger job security and better retirement plans.
The UAW has bristled at the idea that its walkouts will hurt the US or its workers. “It’s not going to wreck the economy, it’s going to wreck the billionaire economy,” UAW president Shawn Fain told Good Morning America earlier this week. The union has justified its demand for 36 percent raises for workers over the course of the contract in part by pointing out that executive pay has risen by even more over recent years. The billionaires are running away with everything. The working class is being left living paycheck to paycheck and feeding off the scraps,” Fain said.
The union counterproposal was received by Ford hours before the current contract expired, but it said there was little movement from the previous proposal.
The proposal would more than double Ford’s current UAW- related labor costs, which are already significantly higher than the labor costs of other foreign-owned automakers in the United States, Ford said in a statement.
What will the Big Three tell us about the auto sector? When will the automakers decide where to invest? A research note from GM CEO Mary Barra
GM CEO Mary Barra noted that the two sides were still far apart on key issues. “We still have a ways to go with the offer they put on the table last night,” Barra said on CBS This Morning on Friday.
Analysts note that the Big Three spend roughly $64–$67 an hour on total labor costs, including benefits, while their nonunion rivals only spend around $55 an hour and Tesla spends $45–$50 an hour.
If a 40% wage hike gets approved it will be a major headwind on the cost front and ultimately in some way be passed down to the consumer and EV prices, according to a research note by him. “The costs of EV vehicles out of Detroit is a major advantage going after mass adoption with any $3k, $5k, $7k, etc added to the slew of vehicles coming out would results in demand churn in our opinion.”
I worry if we have a substantially more intense strike, that drags on for a long time, could it lead the automakers to rethink where they invest? Ehrlich says.
In the automotive industry, strikes are never a good sign, but suppliers have been through a lot over the last few years. There was the pandemic, sure, but also a related microchip shortage that bit hard because vehicles now require more computing components; a commodity squeeze influenced by war in Ukraine; inflation; and interest rate hikes.
A domino run will start if the auto supply chain doesn’t get an agreement from the UAW in the next few weeks. The giants of Detroit will tell their largest suppliers to stop sending them new parts, and these companies will in turn tell their own suppliers to stop sending them components. They are not public companies, and may not have access to the cash they will need to hold themselves over in case suppliers stop sending them stuff.
The Covid-19 outbreak made everyone an epidemiologist, as well as showing the public about the world wide network of manufacturers, assemblers, and shippers behind consumer goods. Or driveway. Car prices soared as manufacturers struggled with a supply chain jammed up with worker shortages and chip shortages.
How the Auto Workers’ Strike Could Have Ripple Effects across the Economic: Why the UAW Streak could have ripple effects across the economy
The UAW has built up a strike fund of $835 million — enough to last about three months if all of the nearly 150,000 unionized autoworkers were on strike. The union will pay for the health benefits of striking workers.
More cars are on dealers’ lots now than there were a year ago, when supplies were still severely limited by the COVID-19 pandemic and a shortage of computer chips.
There are enough vehicles on hand at Ford to last about two months. There is a difference in the inventory sizes of GM and Stellantis. So there’s a cushion, but it won’t last indefinitely.
Four months of flat or falling new-car prices ended in August. Although nonunion companies such as Honda and Volkswagen will keep cranking out vehicles, if production is lost the price will go up.
“This is not a big deal, but it’s important to remember that the impact on GDP is only a small one, and it comes at a time when other hurdles to growth are increasing, like higher oil prices, mortgage rates, and a potential government shutdown,” said Zandi.
The auto industry is also relatively contained, unlike delivery giant UPS or freight railroads, where threatened strikes in the last year could have had much more far-reaching effects.
After a protracted machinists strike in 2008, for example, Boeing shifted some aircraft production to a new plant in South Carolina, a fiercely anti-union state.
Source: How the UAW strike could have ripple effects across the economy
Why should I go out to dinner if I’m a little too hungry to eat?” Gabe Ehrlich, an economist at the University of Michigan, explains Ehrlich
“Maybe you wouldn’t go out to dinner,” said University of Michigan economist Gabe Ehrlich. People tell me they have been prepared for a strike. There is only so much you can do to prepare for a strike. The $500 a week is helpful. Making up for a full paycheck isn’t what it’s making up for.