The UAW and the auto makers are miles apart on a new contract. UAW president Shawn Fain has demands that would likely bankrupt the industry.
UAW Workers Overwhelmingly Vote to Authorize Strikes
CNMC reports UAW Workers Overwhelmingly Vote to Authorize Strikes
The UAW said 98% of hourly workers and 99% of salaried workers at Ford voted in favor of the strike authorization. GM passed by 96%, while the action was approved at Stellantis by 95%.
The UAW has more than $825 million in its strike fund, which it uses to pay eligible members who are on strike. The strike pay is $500 per week for each member — up from $275 per week last year.
Assuming 150,000 or so UAW members covered by the contracts, strike pay would cost the union about $75 million per week. A fund of $825 million, then, would cover about 11 weeks. One caveat: that doesn’t include health-care costs that the union would cover, such as temporary COBRA plans, that would likely drain the fund far more quickly.
What’s at Stake as US Autoworkers Threaten to Strike
Bloomberg comments on What’s at Stake as US Autoworkers Threaten to Strike
If talks with any one of the carmakers break down, the union may call a strike against it, as it did against GM in 2019. That 40-day walkout cost GM about $3.6 billion in earnings before interest and taxes, or about half a month’s worth of sales, according to RBC Capital Markets. While Fain has had particularly harsh words for Stellantis, he’s repeatedly said all three Detroit automakers are the target.
A halt in production caused by a strike would put pressure on vehicle inventories, already low due to pandemic-related parts shortages, and drive up near-record car prices. There would also be ripple effects up the auto supply chain, for example on steelmakers, who might be forced to idle production if car assembly plants go down. A strike by the 150,000 hourly workers at GM, Ford and Stellantis would cause an economic loss of more than $5 billion after just 10 days, according to a study by Anderson Economic Group, a Michigan based consulting firm.
On August 14, I noted UAW Declares War on Corporations, Seeks 46 Percent Wage Hike, September Strike Looms
UAW Demands
- 32-hour workweek
- 46 percent pay raise over 4 years
- Right to strike over plant closures
- Increased retiree benefits
- Defined pension plan for all workers
- Cost of living adjustments
Bloomberg estimates the UAW demands would add $80 billion to costs.
Car prices, already steep would have to rise that much, adding to inflation. But eventually, the demands would bankrupt GM again and Ford as well.
Repossessions Soaring
With EVs stacking up along with repossessions, this seems like a poor time to make biggest ever demands on the automakers.
Trucking Perspective
“Automotive and suppliers are estimated to be as much as 6% of trucking freight. If a UAW strike happens, it will have devastating consequences for truckload demand.”
Inflation causes depression. We have a long way to go, but this immutable fact will prevail.
double
The President of the UAW called Trump a dictator and a con man then went on to praise a list of Democrats who support the UAW. The same Democrats that are force feeding EVs which do not require as many workers…meh. I believe Mish posted a video a while back of a Tesla plant with less than 10 workers.
“Yet, the jobs market is strong.”
Man; The nonsense stupid people can be suckered into mindlessly regurgitating……
There is NO possible overlap between “strong” “job market”; and working people not being able to even afford a roof over their heads. Period.
No amount of ‘but ma, the made-up “measure” The Man on TeeVee yaps cluelessly about is like “Strong” and,like, stuff???’, nor any other mindless nonsense endlessly passed of as “insight” and regurgitated ad infinitum; can ever change that.
Any “strong” “job market”, per definition, drives wages up to where people can afford more and more stuff. Like they can in China year over year. And in America, in 1950.
Only weak job markets, result in increased homelessness, and people no longer being able to afford what their parents took for granted. And also and just as significantly: Only nonexistent economic literacy, results in this not being immediately, intuitively obvious to all.
The tech sector is global. Jolt in the US might be a negative Jolt in other R&D centers.
This Jolt might be a bull trap. Today’s headline Jolt might be corrected. The people who protect our democracy and freedom jolted SPX.
unions are going ask for some outlandish things as a starting point for negotiations, they know they won’t get half of what they ask for, I would also say that the internal combustion engine has about peaked with technology and that worries them.
Just about peaked? No car companies are opening ICE factories or investing in future ICE production.
“Severe delinquency for auto loans is highest since at least 2006. Yet, the jobs market is strong.”
Perhaps because people need to hold more than one job to be able to afford their $1,000+ per month car payment.
The delinquency/re-possession trend is an indication that even that is no longer enough.
I still see all the news as a recipe for Stagflation. Prices of things that people actually need are not coming down. Therefore wage pressures will continue and the government spending is supporting the economy and driving the meager growth that we will see.
The “administered” prices (pay raises) would not be the “asked” prices (market prices), were they not “validated” by money flows (volume X transaction’s velocity), i.e., “validated” by the world’s Central Banks.
There is no such thing as the “wage-price spiral”; the “price-wage spiral”; or the “cost-push spiral”; in the sense that increases in wages, prices, or costs are causes of inflation.
Unless effective demands (money times transactions’ velocity) are adequate to prevent a cutback in sales, or a diversion of purchasing power to the price raisers, any administered increase in prices will result in less sales, smaller outputs, less employment, lower payrolls and less demand for products—in other words, depression and deflation in due course.
Exactly, inflation is caused by the Easter bunny.
They’ll be coming to the taxpayers for another bailout, but in the companies’ defense, the government itself allowed unions to thrive and extort companies.
CEO is getting his share. Took the bailout and invested in China and Mexico. The reason they need a union seems more of an issue.
And the price of a car continues to rise… it’s almost as if the price is set by what the customer is willing to pay.
Nah. It’s just that the purchasing power of the dollar that is decreasing.
2.55M less job openings year over year. As expected at inflection points, downward revisions to the preceding series, and boom, we’re now 1.5M down over the past 3 months.
Down, down, down into a burning ring of fire…
Going to be one heckuva recession, when we finally get revised into it.
If u stay home, WFH, u are out of Meta and Amazon.
The high tech industry trims unprofitable projects and headcount. Mgt jolt the
unproductive arrogant tech elite ==> more Misery to report from SF.
Those arrogant tech workers won’t have a problem finding remote work.
From JOLTS report…
By contrast, job openings increased in information (+101,000) and in transportation, warehousing, and utilities (+75,000).
Tech workers are always in high demand, not just in the US but around the world. Amazon and Facebook will be begging for workers in a couple of years.
That’s correct. My Son hired some tech workers based in India for a project. Work looks to be very good and the price paid is way less than US based. I can’t see how this type of work stays in the US.
They’ve been trying to do this for 20 years. There are some people that do good work in India, but there are a lot more that will jerk you around endlessly and deliver a pile of crap.
Indians are just as capable as we are, but there’s something broken culturally over there.
Perhaps you should try hiring someone in India. It’s not like you pick up the phone and say “you’re hired” to someone that will work for 60% less.
In order to do business in India you need to have a legal presence (i.e. legal entity) there and you’ll need one of the many economic zones to get tax breaks otherwise you’re not saving any money.
The “we’ll just hire people in India (or other country)” meme is old and ignorant. It’s used by people that don’t have an understanding of local, national and international laws and that’s why all jobs haven’t been outsourced to India despite the rhetoric for the last 20 or more years.
And if you think I’m joking, have a look at this bureaucratic mess.
https://en.wikipedia.org/wiki/List_of_special_economic_zones_in_India
I managed a software development group in India over 20 years ago. They aren’t as good as US developers, but they do cost less. I was working for a fortune 500 company and they were trying to push work to India, but gave up after a while when they figured out it wasn’t saving money.
I’m still getting 3 or 4 recruiter hits every week. Talented people will stay remote, and the companies that cram people into the noisy, stinking, disease-ridden offices will get the dregs.
Out of the last 20 years, I’ve spent 2 in the office. This was at places with a masseuse, arcades, guitar rigs baristas, ice cream machines(one even had their own brewery), and chef cooked meals. Was fun for a while, but ultimately any office is just loud and nasty, and all that real estate and silly perks were just cutting into profits. It was fun, but it was more stupid and wasteful.
My company subleased its offices, and we meet 4 times year, to remind us of how bad the offices sucked.
Going to be fun watching it play out…. and it’s fun hearing the left behinds grind their teeth about arrogant tech workers while they simultaneously sh*t on the auto workers. Sounds like… managers.
The Jock age is over… trump is the shark jumper for that whole bellicose, idiotic era. Nerds rule the world now, and nobody worth a damn is coming back to the office so you can physically intimidate them and secretly sniff their farts.
I work remote and won’t go back to the office, got 17 pings last week and I’m not even looking. I think I will start to charge recruiters just to speak to me. Better yet, I need to get an agent. It’s good to be elite 🙂
They’re soooo happy when you respond though. I do every now and then, just to inject my inflated salary expectations into their collective unconscious.
It’s great that you have remote work and it’s successful. Please remember all of those working that make that possible. Keeping the utilities running, updating and repairing things, growing the food, transporting items and people.
All of these people are required and deserve respect for the efforts that they put in. These were the people that were “essential” in the pandemic and are still essential.
Indeed they do, and the majority of them are underpaid for it.
It isn’t fair, but it’s the free market in action. I sit in a $1500 chair and push plastic buttons in an order that my employers find pleasing, and they deposit numbers into my account that I exchange for the food some Mexican dude making 7 bucks an hour cuts in the field or kills in the slaughter house.
This is an area were the free market stomps on generally accepted human values. From a human perspective, a job that sucks more should pay more…. but from a capitalist perspective, the human’s labor is a commodity, and the rarer the commodity, the higher the value.
When the people that can do a job are rare, employers make the job as pleasant as possible to attract them. When they aren’t rare, they get treated like the people in those meat packing plants during covid.
It’s a mess. We are insane.
That may be true but I think a lot of companies are looking at productivity in the office vs remote work. I suspect in office productivity is better and that is why employers are requiring in office work. Otherwise it makes no sense, why would they want to shoulder all the overhead of CRE. My son works at an investment bank and they are now requiring all employees to be office based. He worked in office as much as he could because he felt it was more efficient for him and he did note a lot of the at home employess were not as attentive and productive as well as inefficient.
Probably depends on the job. Software Engineering works really well.
JOLTS has a response rate of 30%. And the companies that do respond tend to have a lot of openings. The others either no longer exist or have more important things to worry about. The number is complete garbage and inflates the number of job openings.
Are we getting into the wage price inflation spiral stage? Very painful to break out of it.
JOLTS report out. Shows 8.8m jobs open and this after 525% increase in central bank rate. Hard to have a recession with millions of jobs open and millions leaving the labor force every year.
https://www.bls.gov/news.release/jolts.nr0.htm
I don’t think the labor force is shrinking, it has risen from 161m to 167m from July 2021 to July 2023. Some of that is a post covid recovery of course but the labor force was 164.6 million people in February of 2020.
There is short term thinking and then there is long term thinking.
https://fred.stlouisfed.org/series/CIVPART/
You only look at half an equation? https://fred.stlouisfed.org/series/LFWA64TTUSM647S
JOLTS is garbage.
I’ve stopped trusting the jobs reports. I hear people are applying for jobs and getting zero interests from employers. Are employers really looking for workers? I also see signs up for $14.50/hour. While that is exactly double the min wage…it is still less than $30K/year.
Their slogan for this looming strike is, “Record Profits Mean Record Contracts”. Not sure where they got the record profit data for the big three because I don’t see it other than short term spikes. Also, EV’s are easier and cheaper to produce but they want higher wages? Nonsense.
One thing I didn’t know is they make other stuff besides cars. One plant makes boxes for Amazon and another one makes forklift parts. Also nonsense.
The biggest nonsense however is they vote for the party wrecking their industry. I’m watching the President of UAW taking questions on a podcast right now. I would love to ask him this question but I know he would never put any blame on the Democrat Catherdral that condemns anyone driving gas cars to eternal damnation. He focuses on the big bad three headed monster eating all crumbs and leaving nothing for the peasant UAW folk….meh.
1) UAW wants to own GM and Ford. They hate EV, because EV have less parts
to assemble and the most expensive part, the battery, is made in China.
2) In 1882 Homestead steel mill tried to sign an Ironclad contract, but the union declared a strike. Carnegie bought the bk Homestead in Braddock PA mill (Senator Fetterman). The workers ability to control work conditions and their monopoly of knowledge were their greatest strength.
3) Between 1882 and 1885 the union struck the steel mill industry eleven times.
Homestead was the only strike that they won.
4) In 1888 Carnegie broke the union, locking out the workers, bringing private police,
and taking back workers after they agreed to wage reductions, a twelve hours/day and
an Ironclad contract. Hungarians, who were not members of the union, returned first.
5) In 1890…Prof Richard White : The Republic For Which It Stand, the Gilded Age. pg 661/675.
Well, the market place is the only place to determine what somebody “should” get paid. Unions distort that, especially public unions, because they restrict competition and there is a single captive entity to shut down, which is usually considered “essential”. But in this case there are 3, more if you count foreign cars, so I say let them strike. Let the government not bail them out. Let the companies finally enter chapter 11 and be restructured. Let Toyota, Honda, etc. take over the auto industry. They make better cars anyway. Let Tesla have the electric car market, because they are the only ones that seem to understand it and have the marketing thing figured out. Let’s face it, if you are buying an electric car and you have the choice between a Tesla or a Ford at about the same price, you are going to buy a Tesla.
Toyota and Honda are in big trouble too. The ones who will take over are Tesla and Chinese EV makers. Would probably happen any way. Will just happen quicker now.
Entering chapter 11 and being restructured would be the best thing possible for those companies.
They’d shed all the union contracts and more importantly the pension benefits. It’s also quite likely all union seniority would be wiped out too.
The union workers of course would lose huge in this and I wonder how many of them are aware of that or made aware of that by the unions.
Car companies, airlines, Wall Street banks – heads I win, tails you lose. Bailouts always available.
Unions were necessary now they are a nuisance…to put it mildly.
Elections have consequences.
UPS and pilots for American and United won huge raises so everyone is piling on with the demands. Will UAW succeed? Who knows but if Ford and GM go bankrupt they’ll likely get bailouts, again.
I don’t blame anyone for wanting higher pay, it is clear that inflation is here to stay for a lot longer than anyone anticipated and with 12,000 boomers retiring every day and many getting on social security (free money) and subsidized healthcare (medicare/medicaid) the labor problem and demand-side will only get worse not better.
There are some industries that won’t survive the new higher wage paradigm though because people are willing to pay only so much. The WSJ had an article on how people are choosing to forego homeowners insurance because they can’t afford the premiums anymore. More of that will come.
https://www.wsj.com/personal-finance/americans-are-bailing-on-their-home-insurance-e3395515
Look for the $38,000 car to become the $42,000 car, almost overnight.
Its getting hard to even find a 38K car now given the average price is something like 42K for a new car. So 38K is less than an average car by quite a bit (think economy model cars with cloth seats and no horsepower).
MPO45v2,
No can do if you have a mortgage ! No ins puts you in default … bye bye 3% mortgage hello cheese line!
I have no respect for Auto-workers, they voted for Biden, and everyone was warned, in 2020. “If you like high prices of Food, Rent, Gas, Utilities, insurance, cost of car repair bills, etc.. Then keep voting Democrat”
Toot toot!
Bro the reason they vote democrat is because the unions tell the workers if they want better work life and pay vote democrats. The unions work with the democrats bro
Now they (union workers) should know. The union reports strike votes were north of 95%. That is a lie or the workers DON”T know and are slow learners.
Rex, while I agree that is exactly what Democrat politicians do, I feel they work right along side the Republicans. Dem vs. Rep are just one of the ways we are divided.
The real enemy is the government. I feel it’s a necessary evil for a country to survive and thrive. I just feel that it’s our duty to keep government small. So small that the citizens tell the government what to do and not the other way around.
I just spoke to a friend to moved to TN a while ago from Cali. She said her car registration is $42/year. She also said they have immaculate roads even though they have far worse weather than Cali. My registration is $600 and my sister in law is now paying $800 on a F150.
That is just 1 simple way to measure the amount of corruption(not waste)
“If you like high prices of Food, Rent, Gas, Utilities, insurance, cost of car repair bills, etc.. Then keep voting Democrat”
Or Republican. Makes not one iota of difference whatsoever. And neither will it, until the latter reanimates Ron Paul and suddenly brains up enough to realise this.