The Big UAW Strike Sooper Thread

Filler

ore than a decade ago, as U.S. automakers were teetering on the verge of collapse & two were in the grip of bankruptcy amid the Great Recession, the unions and the autoworkers they represent made many concessions to keep the Big Three afloat. One of those concessions was the agreement to accept labor contracts that no longer tied worker pay to inflation.

The current strike by the United Auto Workers is as much a protest against the failings of Bidenomics as it is the policies of General Motors, Ford Motor Company and Stellantis.

The pressure put on the unions at the time was tremendous. The Obama Administration relentlessly pushed for acceptance of its program, largely because it wanted to claim credit for rescuing the auto industry. The workers were threatened with economic ruin if they did not sacrifice to prop up their failing employers. Politically, the unions were left adrift, abandoned by the Democrats who had long been their allies and finding little welcome among a Republican party still dominated by establishment types enthralled to the agenda of big business and Wall Street.

At the time, the concession on automatic inflation adjustments for wages did not seem too costly. The Federal Reserve had a hard won credibility on its promise to keep inflation low. Since the early 1990s, annual inflation mostly bounced around near three percent. Over time, prices were still climbing, but there were no sudden jolts that threatened to bury negotiated wage increases below unmanageable cost of living increases.

In the years that followed, the promise of low inflation was kept—and then some. The Federal Reserve officially targeted two percent inflation, and its biggest challenge in those years was often raising inflation to that target. The loss of an automatic inflation adjustment did not sting because inflation appeared to be under control.

The Great Betrayal

All that changed shortly after Joe Biden took control of the White House and pressed a Democrat-controlled Congress to enact the $1.9 trillion American Rescue Plan Act. Inflation quickly went from 1.8 percent in 2019 to seven percent in 2021. (It had fallen to 0.3 percent amid the lockdowns in 2020.) Despite assurances from the Biden Administration and the Fed that inflation was a passing phenomenon—transitory, they said—inflation persisted, clocking in at 6.5 percent for the full year in 2022.

The consequences of higher inflation were even worse in the Detroit region that is America’s automaking heartland. While inflation peaked at 8.9 percent year-over-year in June of 2022 for the U.S. economy as a whole, in the Labor Department’s Detroit-Warren-Dearborn district, it rose all the way to 9.7 percent. Over the last 12 months, while nationwide 12-month inflation has fallen to 3.7 percent, in Michigan it is still running at 5.9 percent.

While all Americans have been hard hit by the surge of inflation tied to Biden’s deficit spending, Detroit’s autoworkers have had it far worse than most of their fellow Americans. The place we once called the Arsenal of Democracy has become ground zero for Bidenflation’s destructive explosion.

The promise of low inflation has been broken by both the bloated fiscal policies of the Biden Administration and the loose money policies of the Federal Reserve.

To make matters worse, the Democrats continue time and again to downplay the dangers of inflation while passing the buck onto the greed of corporations or their favorite economic scapegoat: Putin’s invasion of Ukraine. As recently as this month, Democrat leftist stalwart Rep. Alexandria Ocasio-Cortez of New York claimed inflation was just “propaganda.” Even when Democrats admit inflation has been problematic and linked to excessive fiscal and monetary expansion, they contend it is a sacrifice which was necessary because of the pandemic. They have never mentioned the sacrifice has been borne more heavily by some than others, much less ever acknowledged the prices paid by autoworkers.

So what has become of the political party which once stood by American autoworkers? Where’s their apology for breaking the promise of holding inflation low? Where is their gratitude for the extra-burden of inflation assumed by the autoworkers in the name of “rescuing” America from a pandemic-induced economic crisis which had already passed?

Meanwhile, the Big Three have been enjoying an economic boom. “The North American businesses of Ford Motor Co., General Motors Co. and Stellantis NV have had a couple of outstanding years, as the pandemic’s factory shutdowns, followed quickly by rebounding demand, gifted Detroit with pricing power,” Bloomberg’s Liam Denning wrote in a recent article. Stellantis saw its adjusted operating income margin grow from 11.9 percent in 2021 to 13 percent in 2022. The North American operating margin grew to 16.4 percent.

Mary Barra, the GM CEO, saw her pay rise to 362 times the median worker’s earnings in 2022, up from 203 times in 2019. Inflation probably has not hurt nor impacted her buying power by much.

The Union VS The Government

No wonder one of the UAW top demands is the return of cost-of-living adjustments. The companies have offered to pay inflation bonuses to help repair the damage inflation has done to the earning power of workers. In order to accept that proposal, unions would once again have to trust the Biden Administration & The Federal Reserve to contain inflation. Given the betrayal of the last promise, such a request may not be practical.

Of course, the Biden Administration’s betrayal of American autoworkers goes far beyond inflation concerns. The Biden Administration has also been pushing New Green Deal policies to mandate the manufacture of electric vehicles. The rush toward electric vehicle conversion will mean a rapid decline in payrolls for autoworkers—even as the automakers enjoy Inflation Reduction Act subsidies. Although the Biden Administration is claiming there will be many new “clean and green” jobs created, no plausible estimates see any net increases in employment occurring for autoworkers from such a transition. You don’t need as many employees on an electric vehicle assembly line as you do to build gas-fueled cars. It also has not gone without notice by the unions that many of the proposed new green manufacturing plants will be located in anti-union, right-to-work states.

Even if you happen to believe in the notion that climate change is an existential threat which requires transformation and sacrifice, how can the Government justify autoworkers to assume a disproportionate amount of that burden?

A Threat To Economic Growth & Inflation?

Despite what you may have heard from the establishment business press or the Big Three’s media allies, a strike would not be ruinous to the U.S economy. Analysts at Bank of America estimate a full UAW strike at all three manufacturers would be a drag on GDP growth of only 0.1-0.2 percentage points annualized per week due to any lost production. A strike lasting a full quarter at all three manufacturers—could drag GDP growth down by 1.6 to 2.2 percentage points, according to Bank of America’s analysts. In an economy growing at a faster than three percent rate, that’s not a catastrophe.

There’s also likely to be little upward pressure on inflation—even if the unions win their fight for higher wages. The new contract will directly affect around 150,000 workers, or 0.1 percent of the U.S. workforce. Very likely much of the increased cost would be absorbed by manufacturers margins rather than car customers.

“This means that even a one-time increase of 30% would only boost wage growth by a few basis points. Therefore, it will not be a significant contributor to wage inflation by itself, which in turn means limited upward pressure on price inflation from wages,” the Bank of America analysts conclude. ✪

FILLER

n Thursday night, the United Auto Workers (UAW) union went on strike against all of Detroit’s big three automakers at the same time for the first time in the union’s history after General Motors, Ford and Stellantis failed to reach a labor agreement with the union before their contracts expired. 

“Tonight for the first time in our history we will strike all three of the big three at once,” UAW president Shawn Fain said on Thursday. They are prepared to strike at midnight, according to Fain.

The stakes for a strike — whether at one company, two or all three — are high for the union and beyond: disruptions to the local and national economies, possible financial hardship by the workers themselves and, perhaps more than anything, a hint at the future of manufacturing jobs in America.

The strike commenced at a General Motors assembly plant in Wentzville, Missouri; a Stellantis plant in Toledo, Ohio; and a Ford plant in Wayne, Michigan. “If we need to go all out, we will,” Fain declared. “Everything is on the table.”

Even with only three local unions on strike, though, production could still grind to a halt at General Motors, Ford and Stellantis, which builds vehicles under the Jeep, Ram, Dodge and Chrysler brands for North America.

The union says their targeted strike plan – a “Stand Up strike,” as Fain described it – will give them more power in negotiations. “If we strike tonight, I’ll see you on the picket line at Michigan assembly at midnight,” Fain said.

The union is attempting to reverse deep concessions that go back as far as 2007. At the time, years of losses had left Ford nearly out of cash and GM and Chrysler were on their way to bankruptcy and federal bailouts.

The number one concession the union wants to end is a lower tier of wages and benefits for workers hired since 2007. While top pay for those newer hires, who today make up a majority of membership, is the same as the $32.32 paid to more senior members, it takes many more years to reach that level.

The union also wants to restore traditional pension plans for those hired since 2007, as the more senior workers now receive, as well as the same retiree health care coverage. And to protect members from rising prices, it wants a return of the cost-of-living adjustments to pay that all employees lost in 2007.

Even Fain calls those demands “ambitious,” but he said they’re driven by record or near record profits at the automakers.

Nevertheless, union officials said a strike was not their preference.

“We’ve made great concessions to keep the companies profitable, GM, Ford and Stellantis alike,” Dave Green, the regional director for Indiana and Ohio for the UAW, told CNN. “We’re not asking to be millionaires here like the CEOs and CFOs of the companies. But we do want our fair share. And we believe that this fight is imperative not only for our members but for the entire working class.”

Roughly 150,000 American auto workers are represented by the UAW union. President Joe Biden’s green agenda is a major concern for autoworkers whose jobs are being eliminated by Biden’s rapid push for a transition to electric vehicles (EVs), which require less workers to produce than gas-powered vehicles. As Breitbart’s Senior Editor-at-Large Rebecca Mansour reported, “While autoworkers are seeing their wages slashed due to the EV adoption, the Big Three executives have enjoyed a windfall thanks to the EV tax credits in Biden’s Inflation Reduction Act (IRA).”

“UAW members feel abandoned by the Democrat Party,” former UAW President Bob King told Politico this week, noting the Democrat majority’s continued support for job-killing free trade as well as Biden’s Inflation Reduction Act (IRA) which is handing out billions in taxpayer subsidies to auto companies and their top line.

The White House declined to say Wednesday that Biden would support UAW workers if they chose to strike.

President Joe Biden himself spoke to leaders of the union and the automakers, as a strike could be politically costly for him, as well.

“I’m gonna leave it at, [Biden] believes the auto workers deserve a contract that sustains middle class jobs and wants the parties to stay at the table, to work round the clock to get a win-win agreement,” Council of Economic Advisors Chair Jared Bernstein told reporters during Wednesday’s White House press briefing.

Former UAW President Bob King also said:

“I think there’s a segment of the Democratic Party that sees itself as serving corporations rather than the common good … we’ve had a lot of disappointments. The looming strike by the United Auto Workers is as much a protest against Bidenomics as it is the policies of General Motors, Ford Motor Company and Stellantis.”

However, King said the strike would not be a “catastrophe” for the economy, as many Media outlets are predicting.

Ford blamed the UAW for the lack of a deal, saying the union’s counteroffer “showed little movement from the union’s initial demands submitted Aug. 3.”

“We don’t want there to be a strike. We’re ready to work until the deadline,” Ford CEO Jim Farley told CNN Thursday. “We’d like to make history by making a historic deal, not having a historic strike.”

According to the Associated Press, the UAW is asking for a 36 percent boost in pay over four and a half years, but the automakers countered with offers that are roughly half of that increase.

Pandemic supply chain disruptions and shortages of some parts, particularly computer chips, have led to record car prices. The average purchase price of a new car in August was nearly $48,000, according to Edmunds. That’s up 30% from August of 2019.

Automakers have used their limited supply of parts to build vehicles loaded with options to maximize profits. That’s produced a strong bottom line. General Motors reported record profits in 2022, and Ford posted near-record profits as well. Stellantis, a European-based automaker formed in 2021 by the merger of Fiat Chrysler and PSA Group, had 2022 profits up 26% compared to its first year of combined operations.✪

FILLER

he House passed legislation on Thursday that would prevent states from forcing automakers to go electric by phasing out sales of new gas-powered vehicles to combat climate change.

The GOP-led chamber voted 222-190 — with the support of more than a half-dozen Democrats — to alter the Clean Air Act so the Environmental Protection Agency is prohibited from allowing states to implement rules that directly or indirectly curtail the sales of vehicles with internal combustion engines.

The Preserving Choice in Vehicle Purchases Act would thereby reject California’s pending request to the Biden Administration for a waiver to ban the sales of all new gas-powered cars by 2035. Seventeen states have previously adopted all or part of California’s past vehicle standards, which are the strictest in the nation and require waivers because they go beyond federal emissions rules.  

“This bill says the market is driven by what the consumer wants,” Rep. David Joyce, the Pennsylvania Republican who wrote the bills, told The Washington Times. “California and California’s regulations shouldn’t set the standards to impact the entire market.”

Eight Democrats supported the measure along with all the chamber’s Republicans, marking the latest instance of Democrat lawmakers, primarily those in competitive districts, bucking President Biden on his green energy agenda. The Democrats who broke with Mr. Biden this time were Jared Golden of Maine, Henry Cuellar of Texas, Jim Costa of California, Yadira Caraveo of Colorado, Don Davis of North Carolina, Brian Higgins of New York, Marie Gluesenkamp Perez of Washington and Gabe Vasquez of New Mexico. 

However, the legislation is expected to be dead on arrival in the Democrat-led Senate. The White House warned the measure would “restrict the ability of California and its citizens to address its severe air pollution challenges.”

“Congress acted to preserve California’s authority to regulate emissions from vehicles over 50 years ago and repeatedly ratified and strengthened that authority in subsequent enactments,” the White House Office of Management and Budget said.

House Democrats charged Republicans with ignoring climate change and caving to the whims of Big Oil. 

“The transportation sector is the single largest contributor of greenhouse gas emissions and other dangerous air pollution, but once again Republicans want to bury their heads in the sand and ignore reality,” said Rep. Frank Pallone of New Jersey, the top Democrat on the Energy and Commerce Committee. “Nobody is taking away your gas-powered vehicle. Republicans are fearmongering in a deliberate effort to mislead the American people.”

The Biden Administration is proposing a tailpipe emissions rule of its own that would force automakers nationwide to sell a majority of EVs by 2030 and up to 67% by 2032.

Fourteen of the 17 states, predominantly Democrat-run states, are in the process of or have already adopted versions of the California rule.

Taken together, California and the 17 states that frequently follow its lead account for roughly 40% of light-duty vehicle sales nationwide. Automakers typically adapt their vehicle lineups to comply with California regulations for this reason, prompting fierce accusations from Republicans that the Biden administration is circumventing the legislative process to force new nationwide policies by way of a single state.

“There’s one national car market. The California carveout was not meant to create a de facto ban on internal combustion engines,” Mr. Joyce said. “If you’re in California and want an EV, that’s perfect. It’s just not a choice among my constituents.” ✪

Filler

n Thursday’s broadcast of CNN’s “The Lead,” Ford President and CEO Jim Farley stated that he’s not opposed to giving workers pay increases, “But if it prevents us from investing in this transition to EVs and in future products like the ones we have now like a new F-150,” they won’t do that because they’ll go bankrupt.

While discussing the pay raises demanded by the UAW in negotiations and pay raises for CEOs, Farley said that they have offered pay raises and are open to big pay increases, but the 40% that the UAW is asking for is too much and would put the company out of business:

“There’s a fine line here that we won’t go past, which is, we want everyone to participate in our success. But if it prevents us from investing in this transition to EVs and in future products like the ones we have now like a new F-150, the best-selling vehicle in the U.S., then everyone’s job’s at risk if we don’t invest. So, there’s a line. The line isn’t for us to go bankrupt. The line is somewhere in the middle, and the only way to resolve that is to actually negotiate.” ✪

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