Keep ’em guessing said UAW leader Shawn Fain. But what’s happened is no surprise, at least to me. Some see it otherwise.
The Alleged Surprise-Attack Strike Strategy
The Wall Street Journal comments How UAW Tossed Its Old Playbook and Pursued a Surprise-Attack Strike Strategy
Over the summer, top officials at the United Auto Workers gathered for frequent strike-strategy meetings around a 30-foot table in a boardroom at union headquarters, overlooking the Detroit River.
Their plan: craft an approach that would throw the auto companies into disarray.
“This strategy will keep the companies guessing,” Fain said late Thursday, on the eve of the UAW’s walkout at General Motors, Ford Motor and Chrysler-parent Stellantis. The action was called after two months of negotiations failed to yield new labor deals for the union’s roughly 146,000 auto members.
The strike—which targets three assembly plants in three different states—was the first time the 88-year-old union had staged simultaneous walkouts at all three automakers. Fain has threatened walkouts at additional plants could come, and with little notice, the longer negotiations drag on.
Unusual Yes, Surprise No
Fain telegraphed all of this in advance by openly discussing options. No one should have been surprised.
It was pretty clear Fain would want to preserve the unions strike fund so a total shutdown of all the plants at once would have been a surprise.
Where’s the Leverage?
I fail to see any UAW leverage in any of this. How are GM, Ford, and Stellantis any worse off over this piecemeal attack than a full shutdown?
The big three responded with layoffs. Laid off workers receive no strike benefits. If anything, the automakers’ response seemed to surprise Fain. What’s he going to do about this?
Fain go right at the heart of the big three profit machines, trucks and large SUVs. He holds that for leverage and more surprises. But if he does, the automakers may well announce across the board layoffs at all plants.
Again, laid off workers receive no benefits.
A month ago I commented that I expected a long, nasty strike. Perhaps I am wrong, but if the big three give into absurd unions demands they will soon be bankrupt.
Lie of the Day
“They could double every autoworker’s pay, not raise car prices, and still rake in billions of dollars.“
That’s one hell of a hoot, lie if you prefer, and both are true.
“Go the distance to win economic and social justice” is another big hoot. The UAW wants to be paid to do nothing.
Seriously, the UAW wants the right to strike over plant closures whether anyone needs or buys the vehicles poduced. How the hell is that justice of any kind?
Profit Sharing
Who’s Afraid?
Of course Biden is afraid, so are the automakers, and so is the UAW. They are all afraid, except the media, which revels in fear.
BS of the Day
I was accused of supporting huge salaries for the big three CEOs. I don’t. They are all overpaid.
Since when do two wrongs make a right? Nonetheless, I propose the perfect solution.
Cut CEO pay to $2 million and give all of the rest to the unions. Wages will go up 50 cents an hour of so. That’s a good staring point for discussion.
And yes, it is Biden’s fault. His absurd EV push, absurd regulations, rent deferrals, student loan forgiveness, and the third round of fiscal stimulus are precisely what’s triggering inflation.
Place the blame for the greed aspect of CEOs on the Fed.
Inflation Sucks
Inflation is what sucks and there is plenty of blame to spread including the Fed, Congress, and three stimulus packages.
But Biden’s Big EV push is behind much of this recent angst.
It takes fewer hours to build an EV. Biden is pushing them like mad despite the fact that consumers do not want them because the infrastructure isn’t in place. Ironically, increased mileage standards have negative benefits according to a government study (at long last getting something right).
So now the union wants a 32-hour workweek with a 36 percent raise (down from 40 percent) more benefits, and ability to strike over plant closures despite the fact it takes fewer workers to produce an EV.
There is no one other than Biden to blame for this latest round of economic and environmental madness.
This union battle was created by Biden, the EPA, the Labor Relations Board and other administration regulatory clowns.
Total UAW Unit Labor Costs vs Tesla
- Big Three: Analysts estimate $66 an hour
- Tesla: Roughly $45 at Tesla
- UAW Demands: Meeting Fain’s initial demands would boost costs to $136 according to Wells Fargo analysts.
Elon Musk Taunts the UAW, “Tesla Pays Workers More and We Have Fun”
Yesterday, I commented Elon Musk Taunts the UAW, “Tesla Pays Workers More and We Have Fun”
With perfect timing, Musk made a couple of taunts at striking UAW workers. His goal is obvious.
“Any wage increase further advances Tesla’s already tremendous cost advantage in EVs over its older U.S. peers, which are contending with generations of legacy expenses while trying to steer a costly transition to electric from gas-powered vehicles.”
Want More Inflation?
If you want the price of cars to double, by all means, please support union demands.
We are in an inflation death spiral now. These demands are highly inflationary.
Ask people if they support the unions. You will get one set of answers. Then ask them if they want car prices to jump 50 to 100 percent and you will get another set of answers.
Interest on the National Debt
If inflation rises, so will interest on the national debt.
The CBO projects net interest will rise from 10 percent to 23 percent of total outlays.
Major Health Care programs, of which Medicare will comprise about 80 percent, will increase from 27 percent to 38 percent.
The total of Major Health Care and Interest is 23 percent + (38 percent * .77) = 52 percent.
Social Security is another 28 percent * .77 = 22 percent.
That makes the total of Major Health Care + Interest + Social Security 74 percent of total outlays, leaving 26 percent for everything else. Good luck with that.
Debt to GDP Alarm Bells Ring, Neither Party Will Solve This
I discussed the above CBO projections in Debt to GDP Alarm Bells Ring, Neither Party Will Solve This
No One Will Fix This
Compromise is always more spending for this in return for more spending on that.
Bnd both parties want to spend more on the military.
“Neither party will fix the deficits. Neither party will do anything about mounting debt. No one will do anything about anything because the political system is totally broken.” Mish
It’s one thing to point out a problem, it’s another to propose solutions.
For the record, I would tax the hell out of executive stock options. And some level of pay surely demands higher taxes although in general I support a combination flat tax plus a consumption tax up to some moderately high level, with no tax at all on food and medicine.
I will write up more ideas and details in a following post.
Hey Mish, I think this Topic may need revisiting. Some surprising developments to many, but you as well as many others, saw this thing occurring of course.
My point is: “ Where to from Here” (good headline), and I think I see, and would personally shutter all jobs possible where you only have to cover the lower cost (non-strike areas). The Unions only real leverage here is Biden Inc. and that dog don’t fight in this here fight. No Federal help, or even allowed if they would want too, crushes the Unions on the spot! Get back to work or you’re gone, and start your search for Non-Union replacements. Do this and become Viable and Profitable again, or sink like a rock!! No option the Unions will give, will work, if your to compete, stay viable, and be profitable in this new Global Market of Automobiles.
I value your opinion and thoughts on this Topic if you would Mish, as something is about to give here, and IMO, I think sooner rather than later… Thanks in advance for your consideration. Regards
my latest project in the garage is rebuilding a 350 Chevy engine for my 1967 camaro, using Chinese Pistons, connecting Rods, and bearings. What is this article about again??
I have a gut feeling that the spirit of Ross Perot will be smiling broadly when the “giant sucking sound” of the automakers going south of the border due to NAFTA turns into a giant roar due to the strike when combined with the handwriting on the wall regarding inflationary costs of production in America continuing to soar in the future.
Looking forward to seeing your pledge to offer viable economic solutions filled, Mish
The sad part about the national debt is that it will likely not be solved without a major crisis and meltdown. The current American public will refuse to support significant cuts to unsustainable government programs until they completely collapse. No politician who supports significant cuts will get popular support. Increasing taxes will not come close to solving the problem. Therefore, we appear to be caught in a death spiral with regards to these government programs and the increasing interest on the debt.
WHY do so many people even care about any of this. either buy or sell F…….stock or not. what a bunch of click bait nonsense. everyone and her mother is now a C suite executive in a fantasy league or some union representative in the same fantasy….. i sold my us auto stock position and held my chinese EV position. that puppy cash flows like nobodies business. but i’ll sell tomorrow if things change. i will say watching grown women and men get worked up over this is quite comical. sells eyeballs and TEEEVEEEE advertising.
A business has only so much revenue and profit. Workers have decided that too much of the productive output of their labor is going to Wall St parasites while their real paycheck for doing the work gets smaller and smaller due to CPIflation. This will not end well for anyone.
“This will not end well for anyone.”
You have overlooked the highest order of the parasites – those that operate from within the beltway in Washington DC.
Laid off workers get unemployment which is similar in amount to the strike benefit but doesn’t come out of the unions strike pay fund. Another win for the unions.
You do realize they are laying off workers in other plants that aren’t striking.
The reason being they are all interconnected so a strike at one can idle another.
Giving into union demands are the resulting bankruptcies by the legacy carmakers. Wouldn’t that be playing right into the narrative to cancel out ICE and heighten the power of the disruptive technology EV vehicle manufacturers? Or am I just a conspiracy theorist?
Where’s the Leverage?
That is what’s odd, not only with the strike, but with the outrageous demands! They have zero leverage, and once a few thousand get laid off, the workers and their families will be begging to come back.
They lost all Trust and that is everything if it’s ever going to work. I smell massive layoffs and closures. Jobs not coming back, as the economy is about to slow way down. People literally can’t afford the vehicles they have now. Just look at the repossessions occurring of late.
Play stupid games and you win stupid prizes…
Mary Barra is a Government Motors employee. Mary will bend over and say do me. No worries here. My last Detroit car was a 1984 Oldsmobile that could not be repaired as design intended at 105,000 miles. I drive a 1986 MR2 Toyota, best car I’ve ever owned. Runs like a new one after 38 years. Stolen twice to drag race and still runs fine. I like revving through the gears.
Wolf flew to Texas to celebrate RenFest, the largest renaissance festival in the
country. Five hundred thousands of people mock medieval kings and dons.
His blog celebrates Oct fest. Wine & beer samples for free.
Estimated per-vehicle labor cost for GM would be $3,378 in 2023, up 25.1% from $2,700 in 2018. Estimated 2023 costs for Ford will be $3,131, up 20.2% from $2,604 in 2018. Fiat Chrysler’s estimated 2023 costs would be $3,481, up 38.2% from 2018.
UAW demands would in no way double car prices.
Good points Charley,
“Estimated per-vehicle labor cost for GM would be $3,378 in 2023, up 25.1% from $2,700 in 2018. Estimated 2023 costs for Ford will be $3,131, up 20.2% from $2,604 in 2018. Fiat Chrysler’s estimated 2023 costs would be $3,481, up 38.2% from 2018.”
These are the real figures that count. It looks like labor costs would rise by about $340 a year for 4 years. So in 4 years labor per car will be $1360 higher per vehicle. Hardly a deal breaker or a reason for massive MSRP increase. Design errors, fickle design changes, supply chain increases, funding profit distributions and stock buybacks will be a bigger mover of price.
how did you calculate that?
but fiscal 2023 is already over
how about the cost in 2027
As the economy rolls over under the burden of “higher for longer”, the demand for cars and trucks will wane. The automakers are going to start bleeding from collapsing demand, how does the union think its going to squeeze more blood from this turnip?
Shawn Fain declared a special op against the multi billions corp, not a war.
UAW wants to bleed the big three, but not to destroy them. When the special
op will be over UAW and mgt will have to live together. The multi billions corp
are not a real enemy ==> they feed UAW workers for decades.
High wages killed the manufacture of cars here in Australia. Now the big 3 only sells imported cars, mostly made in places like Thailand. The big 3 market share is continually falling with Toyota now the biggest seller by a country mile. Lots of other Japanese cars as well like my current car (Subaru) and plenty of Hyundais and Kia’s. And the Chinese imports are the fastest growing segment of imports.
So will the last laid off worker in a big 3 plant please turn off the lights ‘cause your stupid demands will hasten the collapse of your industry just like it did here.
You got that right. Concessions by the automakers will make them less competitive.
Bingo!
A few comments, questions and observations…
1) Do those Auto CEO’s earn those lofty annual amounts in simple salary disbursements (i.e., Barra $29 million divided by 24 paychecks, or are those amounts also tied in to stock options, etc.)? I do agree however the “typical” Fortune 500 CEO remuneration amounts are shockingly inflated. (Apparently, not shockingly enough to be pared by the various Board’s of Directors.)
2) Regarding your reference to the WSJ article (of which I remain a subscriber), and their “surprise” to Fain’s strategy, you and I have to continually remind ourselves, “modern” WSJ reporters –and these three are all Detroit-based — have a different mindset (and different life experiences) than what we may have thought of the “bygone era-WSJ” reporters. I read the WSJ article and thought, while “somewhat” trying to be balanced, Fain was portrayed in a complimentary light. Maybe he deserves it or maybe I just “see” a bias in the article to his favor. (BTW, the headline writer, also has some strong input into this WSJ “presentation.”)
Final observation is, if Biden feels the big 3 should share any windfall profits they have acquired, Joe, as the Big guy, should throw a little donation toward the union too. After all, he too has profited by a convoluted Washington DC area “allowance/system” to sell, for what remains still a legal activity, worldwide influence peddling. This longtime DC practice, is there, for everyone to see…and to prosper by. Willie Sutton said about banks “Because that’s where the money is.” In modern times, the “biggest bank of all” is in the DC metro area.
Workers laid off from plants being shut down receive unemployment benefits, but no health insurance benefits. It’s late enough in the year that recently unemployed auto workers exceed the poverty limit for free health insurance. Cobra is expensive.
COBRA would only start for November. The strike likely will be over by then, but not for sure.
MR. Mish,
Fire them all and replace them.
They could hire some of the 10 million illegal immigrants that have come in to the U.S. in the last 3 years from Mexico or Africa for 7 bucks an hour.
That’s the plan anyway, right?
a thinking man understands there are 2 types in world. owners and serfs. been this way for eternity. i did not make it up, just realized this fun fact as a teenager and planned my life accordingly. ps, the tax code is really two tax codes. one for owners with lots of great goodies. and one for serfs, with nasty taxes and such.
Wrong. These people arent as stupid as you think and are unruly. Go ahead try that watch what happens. They came here expecting a better life and I laugh at the elite for having your opinion.
I know first hand how these people are. Plus many of them have been here years and are quick to educate them.
“Hundreds of thousands of Venezuelans in the US can apply for work permits after NYC mayor’s criticism”
In another post, I suggested how to dispose of the fired ex-union workers. It’s been working nicely to cut down the population of “deplorables” – hundreds of thousands over the last several years.