Autoworkers Have A Deal

The Daily Escape:

Sunrise, Northern VT – October 2023 photo by Kristen Wilkinson Photography

The UAW announced Monday evening it had reached a tentative agreement with GM, the last of the Detroit car companies to complete negotiations with the Union. So all three have a tentative agreement which will now be voted on by UAW members. This is a big deal, even if nobody’s talking about it.

Some details from The Insider:

“The 25% pay increases by April 2028 agreed to in the new contracts raise top pay to about $42 an hour, according to the union. That starts with an 11% immediate boost upon ratification, three annual raises of 3% each, and a final increase of 5%. The UAW said restoration of cost-of-living increases, which were suspended in 2009, could boost the total increases to more than 30%.”

Some industry analysts have estimated that Ford’s contract, if ratified, would add $1.5 billion to the company’s annual labor costs. Ford estimated that this could add up to $900 in labor cost to each vehicle rolling off its assembly lines. Another analyst says the pact will reduce profitability by 1%. To put these numbers into perspective, keep in mind that a fully loaded Ford F150 can run over $80k. That means the car companies can afford this deal.

Labor accounts for 4-5% of the average cost of making a car for the Big Three. Also, the Big 3 have made $250 billion in profits over the past decade and have diverted a substantial amount of that money into stock buybacks to enrich wealthy shareholders and top executives instead of investing in their businesses or paying their workers.

So please spare us the tears about the workers’ hard-fought gains putting the Big 3 in peril. The NYT wrote:

“The terms will be costly for the automakers as they undertake a switch to electric vehicles, while setting the stage for labor strife and demands for higher pay at nonunion automakers like Tesla and Toyota.”

To paraphrase, the NYT says that those evil unions are ruining shareholder value and will cause strife at Tesla, a company renowned for its fantastic working conditions.

Be it ever thus in the media: Unions demand, management offers. Note how the media framing is always “the automakers” as the protagonists, with workers as a mob that’s making trouble. Why can’t those workers be happy and content with their lot in life, which is ordained for them by the Higher Power?

Back in the real world, the tentative UAW agreement rewards autoworkers who had sacrificed much during and since the Great Financial Crisis. They now get record raises, more paid leave, greater retirement security, and more rights at work.

The UAW win is a testament to the power of unions and collective bargaining to build strong middle-class jobs, while helping a few of our most iconic American companies to thrive. The UAW workers have not only seen many of their jobs automated and offshored, they also hadn’t received an inflation-adjusted raise since the early 2000’s.

That the UAW prevailed shows that unionizing on a large scale is a viable path to rebuilding America’s middle class. Fed up with continual economic hardship at the hands of the Big 3’s management, these strikers achieved something good for themselves and their families. Moreover, they did it legally. Despite the NYT’s protests, they didn’t steal anything from anyone. They didn’t ask for handouts. They demanded a good future for themselves and their families.

This should be a lesson to all people whose labor is undervalued. You can organize and negotiate better contracts for yourselves.

And don’t underestimate how important a low rate of unemployment is to low-wage and working-class Americans, and how that also gives unions leverage. Biden’s American Rescue Plan Act of 2021 provided an economic stimulus that boosted US consumer purchasing power to the point that we avoided the expected recession. And today’s scarcity value of labor helped close the deal with the Big 3.

For some context, these landmark gains by the UAW, along with what the Teamsters secured with their UPS contract, and what health care support staff got at Kaiser Permanente go far beyond the pay and benefits that workers receive at their non-union counterparts. Except for railroad workers, it’s been a very good year for unions.

Once again, Biden took a risk that he hadn’t before by explicitly siding with the UAW. It paid off for him and the Union as well.

Finally, kudos to Shawn Fain and the UAW negotiating team!

Wrongo appreciates that Fain seems to understand class consciousness by describing the workers as working class. And their strategy was pure divide and conquer.

The final word on these tentative agreements will ultimately come from UAW members themselves when they vote on the new contracts.

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The Auto Strike

The Daily Escape:

Trail Ridge Road, Rocky Mountain NP, CO – September 2023 photo by Rick Priebe

On Friday, The UAW union expanded its strike against GM and Stellantis, two of the Big Three automakers, ramping up pressure on the companies to reach deals on new contracts. The union walked off the job at parts distribution centers of both manufacturers but spared Ford, saying the company had done more to meet its demands. From the NYT:

“Our pressure on Ford is starting to pay off,”

But there was no indication a deal with Ford was imminent. More:

“Stellantis workers walked out at 20 of the company’s parts distribution centers Friday, while G.M. workers went on strike at 18 centers.”

Ford Canada reached a deal last week with the union that represents its Canadian workers. It may offer a clue to the US outcome: The deal provides for pay increases worth up to 25% over three years, as well as bonuses, improved retirement benefits and measures to protect employees as Ford retools factories for electric vehicles. The union, Unifor, is negotiating separately with GM and Stellantis in Canada.

The UAW is asking for a 37% wage increase over four years, improved retiree benefits and shorter work hours. They also want an end to a tiered wage system that starts new hires at much lower wages than the top UAW pay of $32 an hour. Importantly, more than 18,000 UAW members are now on strike.

Some context: UAW workers made significant sacrifices to help keep the big three afloat, amidst the financial crisis in 2009. They made those sacrifices based in part on the promise that the Big Three would eventually renew their compensation and benefits, which the Big Three never did. There were no cost of living adjustments, despite the Big Three going from losing money to record profitability (and tens of $ billions in stock buybacks).

And this week, Biden will join the strike in an extraordinary move of support. From CNN:

“Biden will travel to Michigan on Tuesday and walk the picket line with members of the United Auto Workers union, he announced Friday…”

Biden said in a post on Xitter:

“Tuesday, I’ll go to Michigan to join the picket line and stand in solidarity with the men and women of UAW as they fight for a fair share of the value they helped create. It’s time for a win-win agreement that keeps American auto manufacturing thriving with well-paid UAW jobs,”,

This presidential appearance on a picket line is a historic first. It is also an opportunity to score political points, since it comes one day before Trump is scheduled to deliver a speech to an audience of current and former union members in Detroit. In July, Trump asked the UAW to endorse him, so both politicians are working hard to gain traction with the union.

The UAW was angered by Biden’s pumping tax money into nonunion electric vehicle suppliers, and has withheld its endorsement, even as most other labor unions have rushed to back Mr. Biden’s re-election.

Back to some context for the UAW strike: The WSJ reports that:

“The Detroit companies’ labor costs, including wages and benefits, are estimated at an average of $66 an hour…”

That compares with $45 at Tesla, which isn’t unionized.

Hopefully, the UAW strike will yield fair results for the workers, given the enormous profits the companies are making, 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 in 2008.

This may well be the union’s last big strike when you consider that nearly half of all the cars built in the US are manufactured in 31 foreign-owned plants. None of these facilities are unionized, and their workers are generally paid less than those at union plants.

The move to EVs will be also be a sea-change reality for auto labor. There is likely to be 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 that in less than 10 years, two-thirds of all new cars will be electric.

While the impact on labor throughout the supply chain will be dramatic, plenty of internal combustion engines will remain in use, even if not in production. That will provide stability for auto maintenance and repair workers for decades to come.

Nonetheless, the writing is on the wall. Workers with computer skills and AI capability will replace many traditional lunch-pail workers at plants assembling automobiles.

Time to wake up America! Not so long ago, the thought of a UAW strike was traumatizing because of the enormous workforce the union represented. A half-century ago, the UAW represented 1.5 million auto workers (1.5%) out of a total American workforce of just under 100 million workers. Today, UAW membership at GM, Ford, and Stellantis is about 150,000 employees (less than one percent) out of a total American workforce of 160 million workers.

Imagine if today’s number is reduced by 40%, or 60,000 workers! This means that the UAW loses its ability to represent its workers effectively by 2033!

To help you wake up, watch and listen to Green Day perform their hit “Wake Me Up When September Ends” from their 2004 album “American Idiot” at England’s Reading Festival in 2013. Frontman Billie Joe Armstrong wrote the song about the death of his father when he was 10 years old. But it has come to express loss of all kinds. Gotta love those English crowds:

You realize that the country is growing older, that Biden is growing older, the song is growing older, Green Day is growing older, and the union movement in the US is growing older too.

Regardless of how much time has passed, this song hits just as hard as it did when it was introduced 19 years ago.

Sample lyric:

Summer has come and passed
The innocent can never last
Wake me up when September ends

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Can Biden’s Union Roots Help Him In 2024?

The Daily Escape:

Red Mountain, San Juan Mountains, CO – September 2023 photo by Daniel Forster Photography

The “the biggest auto strike in generations” got under way last week, with 150,000 US autoworkers, including employees at Ford, Stellantis and General Motors walking off the job after contract negotiations failed to reach a deal. This strike, coupled with the likely government shutdown at the end of the month, will precipitate a very dangerous moment for the Biden administration.

From The Guardian:

“The United Auto Workers (UAW) union says workers have never been fully compensated for the sacrifices they made after the 2008-09 financial crisis, when they agreed to a raft of cuts to save the industry. The carmakers received huge bailouts and soon returned to record profits.”

The WaPo had a good article asking workers why they are striking. Most cited inflation and fairness:

“We’re not making enough money” said Petrun Williams, a 58 year-old Ford repairman. “People should be able to buy their own houses, but right now it’s not possible.”

This is going to be a difficult problem to tackle, because GM, Ford, and Stellantis are wildly inefficient giant bureaucracies with cost structures optimized to make $75,000 trucks, and their move into Electric Vehicles will take a lot of money and time before it pays off.

But the Biden administration isn’t necessarily helping: (Brackets by Wrongo)

“…Biden…is in a tough spot with the United Auto Workers….Through its industrial policies,…[Biden]…is giving away billions to automakers through production tax credits and loans, while supporting the transition to electric vehicles through consumer rebates and funds for charging infrastructure. Biden has promised that those incentives will lead not only to carbon emissions reductions but also good-paying union jobs.”

But the UAW leadership isn’t buying it. As the UAW goes on strike, their members don’t necessarily support Biden, but that doesn’t necessarily mean they support Trump either. Politico asked striking members if Biden had done enough to prevent the strike. They talked to Garry Quirk, the president of the local UAW union in Kokomo, IA:

“I don’t know what he’s done…Ask him. I don’t think he knows what he’s done. Seriously. I’m not trying to be mean.”

Quirk wasn’t freelancing: Fain and the union haven’t yet endorsed Biden’s reelection, throwing into doubt Biden’s standing in autoworker-heavy communities. But Politico reported that Biden had spoken that day with UAW president Shawn Fain and auto company CEOs. The chair of Biden’s Council of Economic Advisers said this week that Biden had been very much engaged.

But his efforts didn’t resonate with union member Denny Butler:

“Historically, man, if you didn’t vote Democrat years ago, and you were in the union, sometimes you got your ass kicked…I’m telling you what, the Democratic Party is not what it was 20, 30 years ago.”

So this is another Politico story about Obama voters becoming Trump voters and not looking back.

What Biden is fighting is the sense that the Democratic Party has not been truly on the side of union workers for a long time. It is true that today the Democrats are more on the side of unions. Neoliberalism is not nearly as powerful in the Democratic Party as it was during Obama’s time, or earlier.

But perceptions can be sticky. Clinton, Carter, and Obama (especially in the first term) all promoted corporate policies over the unions. Workers got screwed as factories closed, and no one offered much to workers beyond retraining programs that they didn’t want, and for the most part, didn’t lead to better jobs.

If you said that Republicans (including Mitt Romney) were no better, you’re correct. But today’s Republican Party offers a way to channel anger and resentment. Union members can opt for the GOP path even if the GOP doesn’t have the union’s interests in mind.

Despite Obama (and Biden) saving autoworker jobs through the 2009 auto bailout, they did little to hold the auto companies accountable. They allowed the expansion of two-tiered wage rates that the union is still fighting during the current strike.

The perception is that the UAW shrank and sacrificed, while the auto industry leadership got richer.  Biden absolutely cares about unions, but he’s fighting against decades of belief that the Democrats aren’t what they used to be.

And no matter what Biden does, it’s going to be hard to get by that perception. There’s a mixture of anger and nostalgia that sticks in the minds of people who don’t really pay attention to the details of politics. Let’s take a look at the price of cars over the last ten years:

The Big Three automakers reported $21 billion in profits in just the first six months of 2023. Despite these enormous gains, the companies have cried poverty in response to union demands for wage increases that would make up for decades of pay stagnation. Worse, during the last year, the Big Three automakers have authorized $5 billion in stock buybacks, effectively giving those dollars to shareholders instead of to autoworkers.

The Economist had an excellent observation (paywalled):

“Late last year I took a trip…in a shiny new vehicle, Ford’s electric F-150. The car is in some ways an avatar for today’s Democratic Party. Joe Biden’s administration likes things that are made in America by union labor. It also wants to speed up the transition away from fossil fuels. The F-150 car ticks both boxes. It is also a high-end item that markets itself as a vehicle for working Americans.”

More:

“That’s a bit like the Democratic Party too…with each passing election Democrats lose votes among actual working-class Americans and gain them with college-educated ones (some of whom can actually afford a $75,000 truck).”

More:

“When we talked to a…UAW…representative near Detroit, it became clear the unionized workers are lukewarm on the green transition. Electric vehicles are less labor-intensive than cars powered by internal combustion, which is bad for the UAW members. In fact that is one reason why the union went on strike today. College-educated liberals, on the other hand, like electric vehicles a lot.”

Apparently union members see the problem much more clearly than the Biden Administration.

There could be a settlement reached between the unions and the companies at any moment, but it feels like this will be a protracted situation: If the UAW workers get the 40% pay increase they are asking for, they probably would learn to accept electric vehicles. Don’t hold your breath.

Biden’s relationship with America’s unions is deep and personal, but the next few months are really about his political strategy. And they’re an example of how the Democrats are always trying to balance competing aims.

Time to wake up America! Will Biden continue pursuing his environmental policies and risk losing even more support among working-class Americans? Or will he pump the brakes on environmentalism and alienate upscale Democrats? Biden won only 33% of white, non-college voters in 2020, so maybe that’s where his opportunity to expand his base in 2024 lies. But does Biden really have a path to take back more non-college voters?

To help you wake up, watch and listen to a recent version of the union anthem “Solidarity Forever”, written by Ralph Chaplin in 1915. Although it was written for the Industrial Workers of the World (IWW), the AFL–CIO have adopted the song as their own. Here it is sung in the Wisconsin capitol building in September 2011, by demonstrators who opposed then Governor Scott Walker’s “Wisconsin Budget Repair bill.”

The bill proposed to alleviate the state’s budget shortfall by taking away the ability of public sector unions to bargain collectively over pensions and health care, as well as ending automatic union dues collection by the state. Walker stated that without the cuts, thousands of state workers would have to be laid off.  After two days of arrests for “holding signs” on the first floor of the Wisconsin State Capitol, the Solidarity Sing Along took to the rotunda in joyful defiance:

The law passed and remains in effect today.

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Saturday Soother – October 5, 2019

The Daily Escape:

Fall colors, Adirondacks, NY – October, 2019 photo by nikhilnagane

You can be forgiven for not focusing this week on the UAW’s strike against GM, which is now in its 19th day. Shares of GM have plunged by double digits since the strike began, mostly because the automobile sector has reported weak sales figures. Wolf Richter reports that:

“New-vehicle deliveries in the US…were…flat, at 4.32 million vehicles in the third quarter. For the nine months, deliveries were down 1.6%. This puts new vehicle sales on track for about 17 million…in 2019, the worst level since 2014, and below 2000….”

So, automobile unit sales are at the same level that they were 20 years ago in 1999-2000. With the strike, GM vehicle production has ceased at nearly all of its North American plants. This hasn’t really hurt GM yet, because they had around 90 days’ sales worth of vehicles in inventory as the strike started. They typically have more like 60 days on hand. So shutting the plants helps work down their inventory bulge.

Back to the strike: Julianne Malveaux reports in the WaPo about how GM betrayed the UAW after the union made sacrifices when GM nearly folded in 2008:  

“General Motors was on its knees in 2008. Amid a global financial crisis, the company was so financially challenged that it had no choice but to accept a federal government bailout. In 2009, the United Auto Workers joined the feds in saving GM, making concessions on wages and benefits to rescue the beleaguered company.”

The partnership paid off for GM. The company has earned $35 billion in profits in the last three years, partly as a result of the concessions the workers made over a decade ago.

But, does GM owe the UAW anything in return? The protracted strike shows that GM feels it doesn’t owe them much. Darrell Kennedy, a UAW striking worker said in a video:

“We gave up a cost-of-living increase, a dollar-an-hour wage increase we were due, tuition assistance and more…”

The union wants to include non-union workers who are part of GM’s three-tiered wage system. Those hired before 2007 (the union members) are Tier One workers who earn roughly $31 per hour, plus guaranteed pensions. Those hired after 2007 are Tier Two workers, earning about $17 an hour and have the opportunity for 401 (k) participation. The third tier are temporary workers who earn less than Tier Two workers and have no benefits.

The union wants better pay for Tier Two workers, and a path to job security for Tier Three employees. But since GM plans to move toward electric vehicles which use less labor that gas-powered cars, they are uninterested in commitments that reduce their flexibility in the future.

In business, Wrongo learned the hard way that making concessions, and expecting it to create good will that helps a future negotiating position, is usually a bad idea.

But, in this case, it’s difficult to work up enthusiasm for either side.

For example, GM spent $10.6 billion since 2015 buying back its own shares, some of which went to the UAW, who originally owned about 17.5% of GM after the bailout. The UAW has now sold over half its GM stock. Since the 1960s, GM has consistently demonstrated poor management. Their share of the automobile market has decreased from about 50% to about 17%. If it wasn’t for the government bailout, GM wouldn’t be here.

The UAW is rightly trying to grow its membership by advocating for GM’s Tier Two and Three employees. OTOH, in 2009, the union didn’t agree to cooperate with GM out of any sense of benevolence. They were saving their jobs. Finally, since the bailout, GM’s UAW workers have a profit-sharing deal. In 2018, the 46,500 UAW hourly employees earned up to $10,750 each.

Wrongo is very pro-labor, and often pro-union. In this case, it’s difficult to get behind the UAW’s strike.

Time to move past which State Dept. official in the Ukraine texted what about the Bidens, or how much more blatant Trump’s overtures to foreign governments will get. Let’s enjoy a Saturday Soother!

Start by thinking about the leaves piling up outside. Friday night brought frost to Mansion of Wrong, so our fall clean-up is in full swing. If it’s warmer where you live, enjoy the last of the warm weather.

No coffee today, get outside and do something physical. But before you go out, let’s remember the great Jessye Norman who died last Monday. She was a gifted singer with one of the greatest and most beautiful voices ever. She had all the qualities to make a performance both convincing, and memorable. Here she is singing “Ave Maria” by Schubert:

Those who read the Wrongologist in email can view the video here.

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