The EV revolution is on hold as the autoworkers go on strike
Autoworker contracts EV on gm–stellantis: The EV revolution is on hold as the ‘Big Three’ autoworkers go on strike
Brandon Szcesniak, a union member who works at Ford’s Wayne plant, told Labor Notes that people are angry. “It’s like a revolving door. It is not a career anymore, it is a job. They want us to buy Fords, but how can we buy a Ford on this pay?”
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 the company over the years.
This is a potentially nightmare situation for GM and Ford, as both of them are in the early stages of a massive EV transformation path that will define future success. He said that it was the clear winner. Musk and Tesla with champagne now on ice.”
Why the Big Three can’t afford a long strike: Ford, General Motors, Stellantis and other automakers are on the lookout
“This is more of a symbolic strike than an actual damaging one, says an auto forecaster.” Not everyone was in agreement.
There’s a chance the Big Three wouldn’t have much to fear from a long strike. A 42-day walkout against General Motors in 2019 cost the automaker $3.6 billion in losses, which 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. The Motor and Equipment Manufacturers Association says more than four million Americans work in the auto parts manufacturing business.
The three automotive companies earned a combined $21 billion in the first six months of this year, making them the most profitable in the history of the industry according to the UAW.
The UAW went on strike at midnight on Friday, which has jeopardized the Big Three plans to invest billions of dollars on electric vehicles.
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 stuck to its plans for a targeted walkout to start. Workers at three plants — GM’s Wentzville, Missouri, assembly, Stellantis’ Toledo, Ohio, assembly complex, and Ford’s Wayne, Michigan, assembly plant — were the first to go on strike. UAW president Shawn Fain said the union would hold off on a more costly national walkout for now, but it’s still on the table if contract negotiations don’t progress.
Ford said it got a counter proposal hours before the current contract was to end, but there was little movement from the previous proposal.
“If implemented, the proposal would more than double Ford’s current UAW-related labor costs, which are already significantly higher than the labor costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilize non-union-represented labor,” Ford said in a statement.
What Do Automakers Really Need to Know Before Moving Forward? The Covid-19 Autonomous Slepton Strikes on the Detroit Auto Supply Chain
The two sides were still far apart on certain issues, according to the GM CEO. “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 say the Big Three spend around $65 an hour on total labor costs, which includes benefits, while their non union rivals only spend around $55 an hour.
“The big issue for GM and Ford as well as investors is around if anywhere near a ~40% wage increase gets approved/agreed this will be a major headwind on the cost front and ultimately in some way be passed down to the consumer and thru EV prices,” he wrote in a research note. “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.”
The strike may force the Big Three automakers to agree to major increases in labor costs, which could then be passed along to the consumer, according to Ives, who is bullish onTesla.
Mike Wall, an automotive analyst with S&P Global Mobility, says suppliers have been through a lot over the last three and a half 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.
If automakers fail to reach an agreement with the UAW, a nasty domino run will begin inside the auto supply chain over the next few weeks and months. 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. A professor at the University of Michigan’s Ross School of Business said that they are not public companies and may not be able to hold onto their cash if suppliers stop sending them stuff.
In addition to making everyone an epidemiologist, the Covid-19 pandemic schooled the public on the world-spanning network of manufacturers, assemblers, and shippers behind just about every consumer good that arrives on your doorstep. Or a driveway. Car prices soared as automakers struggled with a supply chain jammed up by worker shortages, chip shortages, and shipping delays.
How the Union Auto Workers’ Strike Could Have Ripple Effects across the Economy: The Case of the GM and Stellantis
If the UAW’s nearly 150,000 unionized autoworkers went on strike, the strike fund would last for about three months. The union will help pay for health insurance for striking workers.
More cars are on dealers’ lots now than a year ago, when there was a severe shortage of computer chips and supplies were severely limited due to the COVID-19 swine flu.
Ford has enough vehicles on hand to last about two months. The inventory of GM is a little bit smaller and that of Stellantis is a bit larger. So there’s a cushion, but it won’t last indefinitely.
The new-car prices went up in August after being flat or declining for four months. Honda and Volkswagen will keep cranking out vehicles during the strike, which could lead to more upward pressure on prices.
This is a small impact, but important, especially in the context of other effects on growth like higher oil prices, higher mortgage rates, and a potential government shutdown.
The auto industry is less affected by strikes than other industries, which would have had a far greater effect.
Boeing shifted some production to a new plant in South Carolina after the machinists strike, which was fiercely anti-union.
Source: How the UAW strike could have ripple effects across the economy
“Measures aren’t always that good,” Ehrlich says of a student strike risk reduction program in the U.S.
“Maybe you skip going out to dinner,” says University of Michigan economist Gabe Ehrlich. “People say, ‘Oh, I’ve prepared for a strike. But there’s only so much you can do to save up for a strike. Obviously, the $500 a week helps. But it’s not making up for a full paycheck.”
