Hopefully, the auto workers' strike against three of the Big Three auto plants will yield fair and generous results for the workers, given the enormous profits the companies are enjoying, the generous salaries the industry's execs are reaping, and the sacrifices labor made to keep the lights on when the industry was on life support back in 2008. However, labor's leverage to bargain may have a future about as bright as that of the internal combustion engine.
Given the changes descending on the automotive industry, this may be the last opportunity the UAW will have to bargain for wages and benefits anywhere near what they are asking. That's why they are demanding a 40 percent pay boost along with a return to defined benefit pensions and 40 hours of pay for 32 hours of work, all guaranteed whether or not the plant in which the UAW members are working remains open. According to Wells Fargo analyst Colin Langan, the value of the "all-in" current UAW contract demands is about $130 an hour compared to an estimated all-in of $64 an hour.
The Times They Are A-Changin'
"The order is rapidly fadin'
And the first one now will later be last
For the times they are a-changin."
Minstrel-philosopher Bob Dylan's words may as well have been penned as a message to the auto workers fighting for their share of industry profits. The auto industry worldwide is, indeed, a-changin by going electric and fast. Less than a year ago, Ford CEO James Farley spoke of the sea-change reality for auto labor when he advised that conversion to electric vehicles will result in a 40% reduction in the labor required to build the new engineless cars. Electric motors are much simpler than internal combustion engines. It is estimated by some industry observers (including the President of the United States) that in less than ten years, two-thirds of all new cars will be electric. And, sure enough, General Motors says they will have eliminated the manufacture of all internal combustion engines by 2035. The ramifications for labor are enormous, not just in manufacturing new cars but also in the maintenance of the electric autos thereafter. The impact on labor throughout the supply chain will also be dramatic. However, there will be enough internal combustion engines in use, even if not in production, to provide stability for these maintenance and repair workers for years to come. Nonetheless, the writing is on the wall. Sam Cicinelli, an official with the International Association of Machinists and Aerospace Workers, acknowledges that electric vehicles "are going to starve a lot of people out of this industry.
Also, while many drivers may be suspicious of semi-autonomous autos (let alone the completely autonomous automobiles that are certain to follow), there is no doubt that self-driving cars will be far safer than automobiles that rely on human judgment to avoid collisions or other accidents. The auto body repair industry, which employs over 300,000 workers, will also diminish substantially in the years ahead.
Workers with computer skills and AI capability will, sooner than many may realize, replace many traditional lunch-pail workers at plants turning out automobiles. Not so long ago, the thought of a UAW strike was traumatizing because of the enormous workforce the union represented. But, again, “the times they are a-changin.” A half-century ago, the UAW represented 1.5 million auto workers out of a total American workforce of just under 100 million workers. But that's changed dramatically. Today, UAW membership at GM, Ford, and Chrysler (Stellantis) clock in with approximately 150,000 employees out of a total American workforce of an estimated 160 million workers.
The UAW and the auto manufacturers both understand that the industry may be at the apogee of wage-and-benefit demands for the indefinite future. Times are not likely to appear so favorable for union demands for a long time, if ever again. Massive changes are descending on the industry, and it is hard to imagine UAW's bargaining power remaining as strong as it is now, given the mandate for manufacturing far less labor-intensive electric vehicles.
The union wants that 40 percent base-pay hike and a litany of other changes. These include a restoration of defined-benefit pensions, which had been phased out for new workers in 2007; a 32-hour work week compensated at 40 hours of pay; and a guarantee that workers will continue to be paid even if the plant employing them permanently closes.
According to press reports last week before the walkout, the average compensation under Ford's proposal for first-year employees was $132,000 all in, including $92,000 in cash and $17,500 in health care coverage and a commitment to keep their plants open.
GM reportedly offered wage increases of 20% over the four-year term of the contract, including a 10% raise in the first year. The UAW reportedly has demanded 40% over the four years.
GM, like Ford, has also promised not to shut down any U.S. manufacturing or warehousing facilities over the contract's life.
There was a time when you worked in an automobile manufacturing plant; you were likely paid by either General Motors, Ford, or Chrysler.
But times, they are a-changin'
According to Chris Isidore, senior writer for CNN Business, foreign automakers produce nearly half of all the cars built in the United States in 31 foreign-owned plants. None of these facilities are unionized, and the workers are generally paid less than those at union plants.
Today, foreign cars manufactured or assembled in the United States include the Toyota Avalon, Camry, Corolla, Sequoia, Highlander, Tacoma, and Tundra are now also manufactured or assembled in the United States, as is the Honda Accord, Honda CR-V and the Honda Odyssey, the Honda Passport, the Acura ILX, Acura RDX and the Acura TLX, the Nissan Maxima, Nissan Pathfinder, Nissan Altima, Subaru Outback, Subaru Legacy, Impreza and Ascent, The Hyundai Elantra, Hyundai Santa Fe, the Kia Sorento, Kia K5, and the Kia Telluride, the Volkswagen Atlas and the Volkswagen Passat, the Mercedes GLS and C-Class cars.
Tesla, which currently produces ten times the number of electric vehicles as GM, is reported to pay its workers between $40 and $50 an hour.
While no one knows what the final UAW contract with the Big Three auto manufacturers will include, it is a safe bet that it will be the best contract the union will secure for many years.
While my weekly column is emailed every Sunday morning to our subscribers at no charge, my podcasts and my annual ebook, “Essays For Our Time,” are also distributed to our premium subscribers for just $5/month.
Please consider becoming a Premium subscriber here — https://oftheeising1776.substack.com/subscribe.
Recent podcasts have featured my commentary on Brian Kemp and Those Republicans of Georga, the Trump Indictments, the Fox Corp Settlement, The CNN Trump Town Hall, the Hunter Biden plea deal, The New American Cult of Personality, and my interviews with:
William Bratton, Retired Chief of Police, New York City, Los Angeles, and Boston
Rikki Klieman, Attorney, Network News Analyst, and best-selling author
John Thoresen, Executive Director, Barbara Sinatra Children’s Center
Katherine Gehl, co-author of The Politics Industry and founder of the Institute for Political Innovation
Jazz artist Ann Hampton Callaway
Outlander author Diana Gabaldon
AI Data Scientist Lawrence Kite
Ryan Clancy, Chief Strategist of No Labels
Senator Barbara Boxer
Senator Joe Lieberman
Maryland Governor Larry Hogan
Become a Premium subscriber here: https://oftheeising1776.substack.com/subscribe.
I appreciate your comments on the automakers profitability - but overall, not too much compared to other American firms. I assume (and hope) that the majority of UAW members are also shareowners of their employer - and share in whatever share price appreciation and dividends earned and distributed out of the company profit. If they are not owners, they have gotten bad financial advice.