Hot Union Summer is upon us and the possibility of an auto worker strike during the Detroit Auto Show has created the perfect setting for a dramatic showdown. In one corner, you’ve got a United Auto Workers President elected by the slimmest of margins making huge promises. In the other corner, you’ve got the Big Three, who are trying to electrify while also facing down competitors who don’t have to pay union wages. In the middle? America’s most influential automotive analyst saying, essentially: It’ll all be fine, buy Ford and General Motors stock.
While we’re at it, we’ll get deeper into how Ford can win the contract negotiations. Plus, we’ll also look at Toyota’s huge summer amid a potential huge drag for the company.
The Number That Blew My Mind
It is not for me to referee or decide what happens with the UAW negotiations, but my unoriginal view is that both sides have more room to bend than they’re letting on publicly. My slightly more controversial view is that, with the exception of the 32-hour work week, automakers can probably give labor a lot of what they want (raises, the end of two-tier, some unionization for battery plants) and still survive. I have a bigger, wilder theory, but I’m going to save that for a little later. Stick around.
If you don’t know who Adam Jonas is, I don’t blame you. It’s not important for the average enthusiast. But, just so you do know, Adam Jonas is the analyst for Morgan Stanley in charge of automotive (and space!). He’s extremely well-respected, usually right, and mostly judges everything from the view of investors. Check this out:
Really interesting paragraph here from Morgan Stanley's Adam Jonas on why the big automakers can afford to stomach a 40% all-in increase in the amount it pays to UAW employees pic.twitter.com/v7lQzYzkGF
— Joe Weisenthal (@TheStalwart) August 28, 2023
What Jonas is saying here, basically, is that even if Ford or GM did in fact give everything to the UAW that the UAW wanted it wouldn’t be that big of a deal (there’s precedent for this: UPS basically gave its union most of what it wanted this year). But let’s get into some more of the detail:
“Ford has disclosed it employs over 57,000 UAW represented workers earning all-in wages and benefits/bonuses equating to $64/hour or $112,000 per year per employee or a $6.4bn bill for total UAW ‘exposed’ compensation and benefits. We estimate Ford will generate global revenues of $168bn in FY23. Ford’s UAW labor ‘bill’ accounts for 3.8% of our Ford global revenue forecast. Let’s assume over the life of the next 4 year contract that Ford’s UAW total all-in hourly wages rise 40% to nearly $90/hour. This adds $2.6bn to the labor bill or a bit more than 150bps to cost headwind to Ford globally.”
To clarify: all-in means benefits/pensions/et cetera, so it’s not like workers are actually getting $90 per hour. This is a lot of money, as Jonas points out, but it’s not as big of a deal as it sounds, and it wouldn’t bankrupt the company, though it would cut hard into the company’s margin. Jonas goes on to note that there are plenty of ways to make up for the cost increases, including passing it onto consumers (which automakers are comfortable doing). I’m not sure that Ford wants to cut into R&D right now, given how much the company needs to do to be competitive, so it’s definitely a difficult balance.
It’s the kicker of the Jonas analysis that’s most important, though:
Bottom line, we’d be a buyer of F and GM right now and during the negotiations as we believe even a ‘difficult’ outcome can catalyze far bigger changes to strategy and capital discipline that will eventually yield significant and longer lasting benefits to shareholders that will exceed today’s labor headlines.
Investors are gonna investor, which means that we can’t expect them to necessarily have completely predictable or logical reactions to a deal. Still, the fact that the main Morgan Stanley guy is saying that investors should see the negotiations as an opportunity to invest in Ford and GM is a big deal and a likely signal to executives to make a deal early rather than risk inventory drops just as sales are heating up.
This leads me to what I think could happen. Many people are predicting a long, Writer-type strike action that cripples the Big Three. I think there’s a likely alternative. Keep reading.
How Ford Could Win The Union Negotiations
I think Ford and, in particular, CEO Jim Farley are trying to do the smart thing. The right thing. But the company is still saddled with quality issues and it’s desperately trying to catch up to competitors by investing in electrification. It’s hard for me to say what I’d do differently than Ford right now, other than resurrect the Cosworth Escort RS as a Ford Maverick and bring the Ford Puma ST to the United States, which are both terrible ideas.
Here’s one thing I would do: Settle early with the UAW and Unifor (Canada’s version of the UAW.)
If we take the above analysis from Jonas as a hint of how the markets should respond to a UAW deal then I don’t see what the upside is to drawing out a fight. The small amount that Ford could gain by pushing back against union demands could easily be wiped out by dwindling sales right at the time the company is launching a new F-150 and other important products. It probably can’t (and some argue probably shouldn’t) give UAW President Shawn Fain everything he’s demanding, but the end of two-tier wages, some clarification on how to deal with joint-venture battery plants, and the restoration of some of the pre-2008 contract benefits seems like something Ford might swallow.
Even better, Ford has the biggest UAW footprint and making a deal early means that GM and Stellantis will essentially be forced to accept what Ford bargained for first or fare even worse. It’s a weird Prisoner’s Dilemma situation. There’s precedent for this as well: Delta made a big deal with the pilot union and now every other airline is being pressured into accepting similar deals, which negates the competitive disadvantage. Of course, many of Ford’s competitors don’t have union labor, so it’s not a perfect analogy, but in general it could work.
I think GM could probably swallow it if it had to, but I’m not sure Stellantis has positioned itself well here and may end up with a strike exactly when it doesn’t need one. This furthers Ford’s advantage as it could potentially have products for sale while one or more of its competitors suddenly run short of inventory. Plus, I think Ford coming out right before the Detroit Auto Show and saying “We’ve got a deal” would help it win the auto show and maybe give it a stock price bump. It’s a crazy idea and probably won’t happen, but it’s what I would do.
Oh, also, I should just randomly insert this little bit from The Detroit News about how Unifor has decided to start its negotiations with Ford:
“I’ve concluded that the best opportunity for our union’s 18,000 members in the auto sector to achieve our bargaining objective is with Ford Motor Co.,” Unifor President Lana Payne said during a news conference.
Payne noted that she had previously said Ford might make the most sense as the lead company. As the talks shift to focus on reaching an agreement with Ford ahead of the current contracts’ expiration at 11:59 p.m. Sept. 18, negotiations with GM and Stellantis will pause. The deal that Unifor reaches with Ford, once ratified, will set the pattern for agreements with the other two companies.
Crazier things have happened. Plus, I think Fain has puffed up his chest a lot and probably has more support than the automakers think among his workers, but there’s a huge risk that maybe he doesn’t.
Toyota’s Back, Baby
Toyota reports its sales on a weird delay, so we’re just getting July numbers globally as August is about to end. How’s it going? Per Reuters:
Toyota Motor’s (7203.T) July global sales rose 8% from the same month a year earlier to a record 859,506 vehicles, the Japanese automaker said on Wednesday…
That’s awesome for Toyota. The automaker has been behind the times on full-battery EVs and has been one of the automakers hardest hit by global shortages. Wait, what was the rest of that sentence?
a day after a system malfunction shut output at all of its domestic assembly plants.
Huh. That seems bad.
What Is Going On With Toyota’s Computer Network?
Yesterday, Toyota had to shut down 14 assembly plants because the e-kanban computer network it relies on to build cars just stopped working. This is a big deal. Most global automakers have borrowed from Toyota’s lean production model, but for the system to work the underlying communication network needs to work.
How bad is it? Again, from Reuters:
[Toyota’s] average global vehicle sale price in the most recent quarter was equivalent to $26,384, based on its financial reporting. Using that as a proxy would mean a full-day of production at the 14 plants would be equivalent to $356 million in revenue.
That’s not nothing. It’s quite possible that this is a weird fluke, it’ll get fixed, and it’s not a cyberattack that caused this. Toyota, though, needs to reveal what this was. What happened?
It’s yet another reminder of how fragile these just-in-time systems can be, especially in the more complex world we seem to live in at the moment. Whatever this is caused as much as $350 million worth of problems in a single day.
The Big Question
Guys, it’s time for some Game Theory. You’re the CEO of one of the Big Three automakers. You’ve got the auto show coming up, a strike on the horizon, problems with EV chargers, feds getting up in your business about driverless cars, Elon Musk, China, et cetera to deal with.
How do you approach the strike? Teach your execs to weld and say to hell with the workers? Let your competitors figure it out and focus on building cars? Make a deal? Let’s hear your thoughts.
If I was an automaker’s CEO, I would try, instead of paying my factory workers more in $ to give them a lot of stock of my company. Advantages :
– the buyback will increase the stock value, so for current share holders the operation is kind of neutral
– in the future, my employees and my share holders will have more common goals, which is easier to manage than divergent goals
– my employees cannot at the same time complain that I work only for the share holders and refuse to become it
Also before all that, I would have used the surplus money from this “boom” period to buy companies or real estate whatever, in order to artificially reduce my profit margin to a sustainable 3-4% so that :
– unions would be less motivated to get raises
– I would have things to sell in case of a harder time to come
I was thinking about the stock thing so I decided to do the math for Ford. Lets say that Ford gives each UAW employee 1 share per hour as a raise. That is about $12/hr. A pretty good raise. Assuming every employee works about 2,000 hours per year and there are 57,000 UAW workers Ford would give away 114 million shares per year. In 35 years, the UAW would own 100 percent of the 3.99 billion shares outstanding.
Amazing, had the UAW negociated this kind of deal a long time ago they would likely be the ones who give orders now !
The workers would control the means of production. Marx would approve
Hold on, is Adam Jonas saying that Ford and GM could afford to increase worker pay if they just raised prices and cut spending in other important parts of the business? That’s like saying I could afford a Ferrari if I just made more money and stopped buying as much food. Sure, it may be technically true but that doesn’t mean I should do it.
If they would buy less avo-car-do toast…(I’ll see myself out)
If the UAW insists on automakers paying all their line workers $112k/year, it’s gonna be a boon for those of us in the robot business.
How many times does this line get trotted out when workers dare to suggest they share in the spoils that they are responsible for? Any day now, McD’s is going to unveil a robot that will put those uppity burger flippers in their place.
They already have. Why do you think they give big discounts if you order in the app? Every McDonalds I have been to now has a ordering kiosk in the lobby. The drink machines are now mechanized and automatic. I think the example you chose actually proves his point.
a screen in the lobby doesn’t make burgers
They are also testing fully automated robotic kitchens and automated convey belts to give the food that the robots cook to the customer. https://www.linkedin.com/pulse/rise-fully-automated-restaurants-benefits-downsides-efficiency-dan-j#:~:text=With%20the%20latest%20advancements%20in,all%20without%20any%20human%20intervention.
Obviously Baron has never had to work in Project management and does not understand ROI for automation.
*jerkoff motion*
That’s a fanfic.
It replaces employees, and unless I am mistaken, that was your point.
A bit OT from the main point, but they want you to use apps and such logins more for the data collection, and the marketing potential there. The discounts just lure you into visiting more. If it helps carry less staff I’m sure that’s considered a bonus at this point.
Bingo, they aren’t looking to get rid of people taking orders and making food, they know that would be a PR and logistics nightmare. They want to sell their customer’s data for the free millions in revenue
Maybe that’s corporate’s goal, but according to the owners of local franchises, their reasoning is to reduce labor cost. The National Restaurant Association also makes that point.
https://restaurant.org/education-and-resources/resource-library/existing-tech-and-reasonably-priced-add-ons-can-reduce-labor-and-supply-costs/
You jest, but Miso Robotics is currently shipping a product that does just that with our robots. 100% not fanfic.
https://misorobotics.com/flippy/
Won’t someone think of the shareholders?
Seriously though, end stage capitalism is pretty much here. Younger generations are seeing what their parents went through and are far more open to things like communism. Capitalism’s greed and wealth consolidation will be what ultimately kills it, despite our government’s best efforts to keep the status quo.
This sounds like it could be ripped from a Communist Party manifesto in 1900.
Capitalism is going to be with us for a very very very long time to come, “end-stage” rhetoric notwithstanding.
No man, Communism may not have worked in Russia, China, Vietnam, North Korea or Cuba but it will surely work in the U.S.
I look forward to standing in line for 4 hours a week for beet rations. Perfect time to do a crossword or catch up with neighbours.
Yup those are the only two options. JFC.
Say good bye to that dodge viper in your profile pic then. Under communism you’ll have to drive a government issued Mitsubishi Mirage like every one else.
I think you might be confusing me with someone else. The minute you see me praising communism on here will be the minute I’ve gone legally insane.
My bad. Misread your comment.
… so, move to a Communist country. Plenty of people will be happy to help you pack.
Know what Ford et. al. should be doing in the US? Advocating for universal healthcare! Do that and the amount of compensation per employee drops substantially because the benefits no longer have to cover literally everything, reducing the amount they need to pay for benefits.
Sure I would love for my taxes to skyrocket to pay for 5 other families healthcare… 1 healthcare company being the government will never happen in the US.
Let’s also have universal college just an extension of HS, so I can pay for that too for 10 kids.
Heck just make everything FREE to EVERYONE in the US. 100% of everyone’s paycheck just goes to the government.
I was close to moving to Western Europe a few years ago and when I compared taxes and what I have to pay for insurance (despite my employer covering most of the costs), my actual take home wouldn’t be that different then being in the US. And you get so much more for your tax dollars as opposed to the US.
So other countries have figured it out. And really, are we all so selfish that we don’t want America as a whole to prosper? Reaganomics really screwed up America with this selfish approach, and we’re really seeing the impact of America’s steady decline over the last 40 years.
…well, bye.
I mean, you’re paying for insurance now, right? That means you’re already paying for other people. You’re just also paying for insurance profits.
Neat fact: Your health insurance ALREADY DOES pay for 5 other families’ health care! It also pays for the vacation homes of the executives of the insurance agency.
You’re also paying for the billing department of the hospital and the extra overhead that causes. Plus, you get to pay more money for good insurance than you would if it was part of your tax bill. And you wouldn’t have to fight for coverage if you got a chronic illness or had an emergency.
You’re paying a ton of money to get worse care because you want to spite other families whose care you’re paying for anyway.
Your taxes already pay for everyone else’s healthcare – just in the least efficient way possible – through free emergency room care. I have family members in the medical field and it’s a fact that ERs can’t turn away people even if they lack insurance. So the uninsured wait until they’re dying or whatever before they go to the doctor and then you and I get to subsidize their free healthcare in the most expensive way possible. Imagine if, instead, we supported each other’s preventative healthcare. The savings to the system would be staggering.
I don’t hate my fellow Americans and would gladly pay virtually the same amount out of pocket in taxes to fund universal healthcare instead of paying MVP or any other scumbag health insurer that profits off us while providing literally zero benefit, while also taking on literally zero risk.
I get ‘government bad’ this and that, whatever, but we’ve proven over a course of decades that the privatized system is so, so, so broken, and that other countries have already figured this out.
You’re going to get roughly 20 comments saying the same thing, and/or going more in depth than I’m willing to go, so enjoy those. I’ve been willing to consider alternatives from those more conservative than I, but oddly in the 20 years that I’ve been discussing this with folks, I haven’t been given a single, rational alternative other than telling everyone else to suck it.
The math really doesn’t support that. While taxes would rise, the cost of heath insurance taken out of your paycheck would dramatically drop. If you consider the amount taken out of your paycheck as a tax (everyone has to pay it according to law due to the ACA), then your effective tax actually decreases, and your take home pay increases as well. Depending on your current income, it could rise substantially. The Guardian did a piece on it a few years ago during the last election. Their opinion pieces do lean somewhat left, but their news reporting is highly regarded. Here’s the link:
https://www.theguardian.com/commentisfree/2019/oct/25/medicare-for-all-taxes-saez-zucman
This is your brain on Fox News.
I get where you are coming from but do you realize how much your insurance costs between you and your employer paying for it? And then you still have deductables and copays and out of pocket minimums. Oh and somehow with all these obscene costs the doctors and other care providers are actually getting screwed on their compensation too. Insurance is still socialized medicine because they spread the risk across the policy holders, except there is a parasitic middleman who not only rips people off but is more and more involved in dictating the actual treatment.
Also Medicaid really pays doctors like crap so they definitely don’t like it so there aren’t great existing options picking between the two.
This is a dumb take and doesn’t take into account that you’re already doing this just with worse outcomes
Companies tend to hate the concept of universal healthcare, because it would force them to transparently compete for workers based on salary, instead of the mind-numbingly confusing borderline impossible to calculate differences between health plan costs between employers.
Employers want you to depend on them for healthcare because it forces their workforce to have to make the choice between staying or being without health insurance. Can’t compete with your own small business if you’re beholden to your employer!
You’re right, but I think when you’re stuck in a position where you’re going to have to pay substantial benefits to your huge workforce, it becomes beneficial to find ways to reduce that cost burden.
I mean, Ford doesn’t have to worry about small businesses competing with them – no mom and pop operations making cars.
No, but they do compete with other employers in general. And the UAW/large employers have great bargaining power against health insurers, etc.
One of the phenomenon’s around these parts (I live not far from a state capital) that I’ve noticed is that nearly every family needs to have someone working for the state, just for the benefits. And those people I know who work for the state tend to badly want to do something else, and probably something more productive for society to be honest, but alas, they’re stuck with their state job merely to afford health care. I don’t think a lot of people realize how much freedom would be afforded to the working class if they weren’t forced to grovel to their employers for health care.
I have to imagine that anyone out there campaigning for government-funded universal healthcare has never been on Medicare before.
Medicare is typically deliberately run poorly to get people off of it.
That’s why you don’t want a two-tier system.
Or had to get healthcare from the VA
I can tell you that the UAW insurance for the workers is far and away better than any of the rest of us get. The Ford plant here has it’s own doctors clinic that if you go to it is basically free.
Last year, during the onset of consumer inflation, I decided to index the salaries of all my employees to the inflation rate. Most are paid a base salary plus commission and/or performance bonus. Our business has been healthy and expanding, even with the recent slowdown caused by the Hollywood strikes (part of our client portfolio is exposed to that). What I have is a workforce that isn’t looking over their shoulder wondering how they will pay their bills. Instead they are looking forward and firing on all cylinders. That’s worth every penny.
I have worked at businesses that have had to pivot or transform on almost the same level as the EV transition at conventional automakers. It won’t happen if your team isn’t on board. The amount passive aggressive non cooperation you can experience will cost you dearly and can completely derail the effort. Execs and investors are surprisingly blind to all of that, that’s why I don’t buy their stock.
Kudos to you!!!! This, to me, is the smart way to run a business. Eliminating that source of passive aggressiveness is probably worth even more than you suggest. Psychology is a thing, despite the rest of the medical world denouncing them. People will endure huge amounts of pain if they perceive it coming from a real threat, as opposed to your family or employer, because of the psychological effect. IMHO.
Give them what they want, full stop. Everything.
Watch when the world does not collapse, profits and investors don’t disappear, and market share goes up due to actually making people happy.
If that approach fails, then you can hold it against them forever. “Sorry guys, you made this bed”.
It’s pretty bad when investors say it’ll be fine and might actually be beneficial for the long-term health of the business, while the companies are opting to fight it out.
“If the share price falls even a little, EVerY SHaREhOlDer wILl flEEEEE PerMANANTLy!”
Agree to the union’s proposed compensation, but make it a quarterly bonus payable only in the event there are no more fucking recalls.
I thought about the recalls too, but I wonder how many of those recalls are due to bad engineering designs forced onto objecting engineers by an accountant?
I don’t have a finger on the pulse, and much of the recall shenanigans go in one ear, and out the other, however…
This was my first thought, too. Many of the recalls don’t sound like Union issues. It’s more engineering (both in the product development stage, as well as the manufacturing development stage) and supplier related.
Given how many recalls are solved by a software update, I’ll give the workers a pass on that one.
I’m not sure if the amount of recalls is a good quality OKR to measure workers against. Was it bad engineering? If it was assembly related, was the tooling and processes what caused the fault?
That said, coming up with a quality OKR that can reasonably be tied to worker performance/quality that isolates against outside factors isn’t unreasonable in my opinion.
Funny enough I saw a Puma (with manufacturer plates) slinking around Southgate, MI the other day….
Toyota’s networks for car connected features and dealer tools goes down every other day, so not surprising that factory software went wrong too
To make this part absolutely clear, it’s not like there’s some conspiracy among American unions to screw over just the Big Three on labor costs. The Big Three are unionized for a lot of reasons, but a chief one is the historically antagonistic relationship between management and employees.
Yes, Japanese, German, and Korean automakers have generally set up shop in the South, where wages are typically lower and worker protections are weaker. But there are other reasons those plants aren’t unionized. Management and workers are a team. Wages and benefits stay competitive relative to the local economy. Any worker on a Toyota assembly line, no matter how junior, has authority to stop the line when they see a problem. That same worker gets told “get bent, we’ll fix it in the recall stage” at Ford.
The Big Three have big labor costs relative to their competition, and that is due to unions. But let’s stop pretending these costs are some act of God. They’re the Big Three’s own doing.
Really, in a perfect world, we wouldn’t need unions. Governments would be invested in protecting workers and employers would treat their employees fairly. But the reality is that (in most cases) governments aren’t too interested in protecting workers and employers are worried more about their shareholders. So who’s left to advocate for the worker?
Retired Teamster and proud F and GM shareholder here, thanks for your support of union workers and I’m hanging on to my stock! These autoworkers built me a new Ford during the hell of COVID and now everything they buy has gone up in price- They damn well deserve a big raise!
My grandparents held onto their solid gold GM stock until 2009 when it suddenly became worthless, even though the company still exists and is profitable thanks to the taxpayer.
The 32hr work week is a big bargaining chip in favour of the automakers.
Planning manufacturing is always done in hours, then you figure out the number of workers.
Let’s create a hypothetical scenario.
You have a factory that needs 40000 hours of work per week. With a 40 hour work week you need 1000 workers.
If you go to a 32 hour work week, you need 1250 workers.
The union is asking for a package that increases the company cost per employee hour 40% and is holding strong.
The company counter offers with a 25% increase and a 32 hour work week.
If accepted, the company now has 1250 employees that are still doing the 40000 hours of work per week.
But the real cost is only a 25% increase in labour cost. Compared to keeping the 40 hour work week with a workforce of a 1000 that is now costing them 40% more in labour costs.
The workers on a 32 hour work week hopefully will tire less and increase quality.
The workers’ quality of life will be much better as well.
The union also now has 250 more members.
Thanks for explaining that. I felt the 32 hour week was a pretty weak request, but now I see the benefits. As a slave to the 40+ hour week myself, I’m wondering would they still get benefits? Is that what the Union’s request is really about?
There is a 0% chance the UAW would agree to a 32-hour week if it meant giving up benefits. That’s where the real cost lies, not so much in the hourly wage of those additional 250 employees, but the benefits.
Exactly, that’s why I used the term labour cost and not hourly wage.
Benefits are much less of a bargaining chip for Unifor in Canada because basic healthcare is not on the employer to cover. Unions in Canada tend to focus a bit more on salary for this reason.
Interestingly enough, in the early 30’s the 32 day workweek was almost approved by Congress. It had bipartisan support (imagine that!) but FDR caved from pressure by manufacturing industries and 40 hours was the compromise.
Employers tying benefits to that 40hr number is just arbitrary. If a 32 hour week is considered “full time”, it should also come with full benefits.
LOL, as if worker quality of life is at all important.
We had a meeting at work last month with bigwhigs from corporate. A coworker and I brought up the 4 day week, and we were answered with a reply about “doing what’s best for the business and customers yada yada yada”. I explained the benefits of the 4DWW as found by the UK’s big study, and he said he’d need to see data. (how does one obtain data without trying?) He mentioned financials, my reply that happy employees are priceless was met with a scowl.
There are fixed costs per employee that are not tied to pay rate which make the numbers worse than that. I don’t know how much worse, but it’s definitely not that simple. Just onboarding an extra 250 people is an expensive exercise, both in terms of money and time.
“What Jonas is saying here, basically, is that even if Ford or GM did in fact give everything to the UAW that the UAW wanted it wouldn’t be that big of a deal.”
But…but Johann said it would bankrupt them!
Ford will have to sell their Dearborn headquarters and move to New York City.
Johan says a lot of things.
He says CT4, CT5, CT6, XT4, XT5, XT6…
Wait…$26k is Toyota’s average vehicle sale price? I don’t think anything other than a base model Corolla can be gotten for that in the US.
Bear in mind they sell globally and many of their cars are cheap econo cars that we don’t see in the US along with stripped down trucks with no frills that won’t pass safety standards in the US either.
I’m not even a truck guy, but I’d buy & drive that purple-red Landcruiser wading through a stream in that picture. Just not got the $60+ it would go for here in the US
As AlienProbe said, they don’t sell most of their cars in the US.
The Corolla is a perennial top 5 global seller (usually #1 of late) and is decontented to sell cheaper in developing markets. It’s also the “aspirational” car in a lot of those, where smaller vehicles sell in more total volume.
While you won’t find them on your dealer lot, Toyota is great at making cheap cars. It’s another reason they weren’t quick on electrification.
Perhaps that is the Toyota company’s average sale price. But they sell to dealers, not to the public. It doesn’t say what the average public sale price from a dealership is.
I work in the highly unionized commercial aerospace industry and at first glance these numbers are making the pay here (in one of the most expensive cities in the country) look like an absolute joke. Unless benefits have some insane high “value” it sure looks like their pay scales are about centered where ours top out.
I am not sure I will be able to stick around until contract renegotiation at current salary prospects. Even if I did, our union is really good at losing benefits every time they renegotiate.
I guess my point is that if these numbers aren’t skewed by near-worthless benefits it seems like really good compensation.
I also feel like if they are able to raise wages that much they should either be increasing wages or cutting MSRPs. Unfortunately, corporations don’t care about people (neither the ones that work for them nor their customers) and instead only care about their stock price.
Benefits can easily cost a company 30%+ of the worker’s take home pay so wages-only would be closer to $40-45/hour.
That’s a little higher than I would have guessed but according to job listings the aircraft mechanic union jobs top out about $40, you need to tack on 50% to hit the AVERAGE quoted UAW number.
That 30% number is pretty out of date, with the perpetual increases of health insurance and the like. It drops as pay increases, but 50% is a better overall number.
It’s insane on low pay positions. Spending more on an employee’s benefits than their salary is not uncommon. (Basic example would be a full timer at $13.50/hr with a family health, vision & dental policy, employer covered life insurance, AD&D and defined retirement contributions will easily clear $30K.)
As CEO, I’d wait for the strike call and walkout, then put my white collar employees to work unpacking the robots and other automatated systems I’ve hidden in the basement to fully automate my production lines and vehicle delivery transportation. Once that was done, I’d replace the engineers, marketers, managers, etc. with AI. I’d press the big button to start it all, ensuring that the factories initially maximized production of lower end vehicles like Mavericks and Bolts to get the buying public onside. Oh yes, I’d also release packs of those wicked robot dogs to provide security. I’d flood the internet with rumors and deep fakes about union hierarchy involvement in child pornography, sex trafficking and drugs. I’d buy off more Congress members and judges, and elect a President that will completely turn over power to the oligarchy. Then I’d decamp to my $700 million “yacht” and watch the world burn. How hard could it be, we’re more than half way there already.
The basis of the American mass market economy, is that workers get paid wages sufficent to buy the product which the mass mrket factories create. This creates a ‘circular flow’, which theoretically balances aggregate production and aggregate demand.
The unbalancing of this system over the last forty years (around when Reagan was elected) by systematically decreasing real wages for the average worker, has resulted in manufacturers being forced to move their products upmarket just to survive. Because those are the only workers who can afford to buy them.
The thing few people understand about the kind of inflation we are in right now, is that it isn’t being forced by excessive wage demands. It’s being forced by the divergence between manufacturers going for that higher price-point brass ring (thus higher consumer prices) and the decrease in real pay amongst the consuming public.
As less and less people can afford product, this incentive perversely ensures that only high-end product gets made. And inflation worsens.
Both Congress and the Fed need to grasp our current economic reality. The only way to fix the structural problem happening here, is to radically address the complete lack of growth in real wages over two generations. Until they do that, we will continue to bump up against a barrier to growth, and see occilations between inflation and recession which amplify until system destruction.
Now, I’ve got to go change the alternator in my old Mercedes. Enjoy your day gang.
Good luck convincing Congress of this when the official numbers at the CPI and BLS don’t show a wage decrease/price increase. The actual measurements and data themselves have been corrupted to the point where it is impossible to directly compare prices/wages today to what they were in say, 1970. The same can be said about the official unemployment rate. The methodology with how the statistics are defined and compiled has changed over the decades to suit a political agenda.
But most people in the real world aren’t just seeing the decline in their living standards, they’re living it, and tens of millions of them are using constantly increasing debt burdens to continue to pretend that they are still middle class when they’ve actually dropped into the working class or even working poor, even in cases where they earn above the median income. But they won’t be able to pretend forever, because all of those bills eventually come due, which will have a ripple effect through the overall economy when that debt can’t be juggled around anymore. The younger generations are especially experiencing this firsthand because they can’t afford homes, cars, college, or healthcare at their age, when their parents and grandparents could(often without debt). Most Millennials and Gen Z can forget about ever having the financial wherewithal to start a family, unless they want to put themselves into poverty, live the rest of their lives as such, and never retire.
All superfluous robots have been allocated to hollowing out the moon lair, refining the detritus into titanium support structures, and will announce completion with death ray test firing.
That’s some super villain level shit. Good stuff.
Different industry but A24 is following a similar “settle early and keep in production” strategy with the actors’ and writers’ strikes. Detroit isn’t Hollywood (as David well knows…) and there’s no real automaking equivalent to being a slightly-bigger-than-indie film studio that doesn’t do big-budget CGI, but there’s something to be said for having the only releases available for movie theaters to screen and there would also be a similar advantage to having the only work and HD trucks available for companies to buy in a period of either continued post-Covid growth or a slight downturn that leads to a relaxing of interest rates.
I teach my engineering and management staff close order formation. If the UAW wants a war, I will bring literal war! None of this hid behind stuff either. My staff will stand tightly together because we’re family here! Each employee will be given one shot muskets to keep cost low. My hat will be large and filled with numerous feathers, so staff will be aware of my location in the back. We will meet in Waterloo, Ontario for contract negotiations.
Don’t forget a nice, high horse to ride upon. Preferably a white one.
A corporate boardroom without a fine steed? Are we not civilized, of course I will be upon Josephine. She is acting CTO.
I suspect the Toyota network thing will be found to be tied to a Chinese or Russian hacker group. Despite the fact that Toyota itself says it ‘doesn’t believe this to be’ an organized foreign attack, there is simply too much similarity to previous ransomware situations they’ve endured, for me to swallow that line.
Eh, never attribute to malice that which can be explained by incompetence. Apparently their eKanban system dates back to 2002, so there’s a good chance it was related to either a failed attempt to upgrade it or going too long without any maintenance.
I’m a bit suprised/disappointed there’s no Rootwyrm rant in the comment section about how terrible and fragile their system is, honestly.
I just want Fiat Jolly’s to roam the streets again as CEO.
“Let’s hear your thoughts.”
Who you gonna call?
https://pinkerton.com/contact-us
“We get results! And we’re the only accredited agency with a guaranteed sub-50% mortality rate of striking workers!”
Sigh..Strike breaking detective agencies just ain’t what they used to be:
Baldwin–Felts began hiring out their detectives as private security forces for mining companies and so the company is remembered for its violent confrontations with the labor unions.
Baldwin–Felts was allowed to maintain such operations because public law enforcement and the maintenance of order in labor disputes were often left to company owners. Therefore, they could employ the likes of Baldwin–Felts to suppress strikes; collect intelligence on unions; prevent labor organizers from entering company grounds; and evict the families of union members living in company-owned housing who had gone on strike or failed to pay rent.
In 1912, Baldwin–Felts agents were soon employed strikebreaking in West Virginia at the Pocohantas Coal Fields and the Paint Creek–Cabin Creek. Their thuggish behaviour and their known propensity for violence led the former Attorney General of West Virginia, Howard B. Lee, to remark in his 1969 book that Baldwin and Felt were the “two most feared and hated men in the mountains.”[4]
Between 1913 and 1914, Baldwin–Felts agents had moved west and become involved in another coal field struggle in Las Animas County, Colorado. Agency detectives were employed in squads to harass striking workers. They used an armored car with a mounted machine gun (it was called the Death Special by the miners). Charles Lively, who infiltrated the UMWA in West Virginia and other states, was tasked with spying on the miners in Colorado and killed a man, for which he pleaded self-defense.[5] The events culminated in the violent confrontation known as the Ludlow Massacre, when the Colorado National Guard used machine guns to kill 21 people, including miners’ wives and children.
https://en.m.wikipedia.org/wiki/Baldwin%E2%80%93Felts_Detective_Agency
If I was CEO, I’d settle pretty quickly (just long enough not to give the impression I’m folding like a tent). Macroeconomic conditions are not conducive to waiting the workers out (low unemployment, high wages at competitors, auto sales increasing), so losing weeks or months of revenue is likely to get me the same contract result anyways.
I’d never give in on 32 hour weeks, I’d give them back the single tier wage scale, I’d allow the battery plants to unionize if their employees wanted it, I’d give them most of the pay increase but attempt to tie more of it to stock or profitability metrics rather than base comp since my business is so boom/bust, and I’d hope to get it done. If Mr. Fain is reckless enough to turn that offer down, I’d put his narrow electoral mandate to the test.
You’re hired
Great, I demand the following be put into immediate development depending on which automaker has hired me:
-The Bronco Raptor R with a 5.0 or 5.2
-The Cadillac Elmiraj with a minimum 6.2 V8 (more cylinders or displacement welcomed)
-The Gen VI Viper, with intact V10
The rest of the lineup is irrelevant to me, do with it as you wish.
I would have also accepted the Cadillac Sixteen.
You get all of that, but unfortunately, the Viper is a crossover now
If the V10 is still in it, I wouldn’t even care.
That’s horrible, but strangely likely. Get the V10 or the hybrid.
Why? In my experience as a production supervisor we had way better success finding employees, as well as making less favorable shits not quite so bad when we were able to offer more flexible schedules. But, I guess it really depends on how many shifts each plant runs and what days. Ultimately, in my experience it was cheaper and more productive to have people work two separate A/B 3×12 hour day shifts complemented with a single night shift of 4x10s than it was to try and run two 5×8 shifts.
As I understood it, the demand was not for flex schedules, but being paid for 40 hours while working 32 (on top of the other wage increases). That’s a non-starter for me unless other demands are scaled way back.
Being paid to not do work is something that doesn’t sit right with me (and is probably not great in the court of public opinion either).
If I’m wrong about the details of this, then I’d be much more inclined to give it to them.
Oh, yeah, I fully agree with that. If they want 32 hour weeks, I’m cool with that; but I’m paying 32 hours. I don’t mind having fewer hour to spread overhead/benefit costs across; but I wouldn’t consider pay for hours not worked. I’ll pay more per hour if that’s what it takes too, but again, only for hours worked.
It’s not about being paid not to work. The 40 hours pay for 32 hours of work is based on the idea that as productivity increases, more work is being done in less time. People have become to the total amount of pay based on 40 hours, so even though they are physically at the workplace less, it does not mean they’ve done less work. Think of it as salary vs. hourly.
Employees could be put on salary, or have their hourly pay increased 20% to count for the 5th day.
Maybe not on an assembly line, but in other environments people are stretching 32 hours’ worth of work into 40 simply because they “have” to be there for 40.
I’m at work 40 hours a week, but rarely do I put in 40 hours of work. There have been multiple studies on this, data shows that people are more productive over a 32 hour week than a 40 hr week. I could easily complete everything I need to do for the week in 32 hours, as could most of my coworkers.
I buy this argument for knowledge workers, but working on an assembly line is the definition of output measured in pieces per hour.
Salary workers have an implicit tradeoff; some weeks you’ll have less than 40 hours of actual work, some weeks you’ll have more. Either way you’ll be paid the same.
I doubt very much that the union workers would agree to work 48 hours while being paid for 40, so why should the company agree to the reverse?
I almost agree with you, lol. The 32-hour workweek is an interesting concept, but I am not familiar enough with their overtime rules/bylaws to decide either way.
As far as compensation rolled into stock/profitability? Well, the majority of workers get a bonus as it is already. I don’t think any workers give a shit about getting some stock instead of cold, hard cash. If they choose to buy stock on their own, that’s one thing. Having to sell stock at a potential loss in order to pay for little Ginny’s braces is a stick in the eye. I don’t think the folks on the line are gonna be swayed by some stock that’s dependent on how management functions. It’s not like there is a bunch of trust between the suits and the grunts as it is and they aren’t gonna trust them with their personal net worth.
No, I should have been more clear on the stock thing.
I’m not proposing to pay the workers in stock, just converting some of the proposed 46% wage increase into adding/expanding bonus targets tied to stock performance (as well as some other things). Basically, the hourly workers demand and receive protection in bad economic times when salaried and executive workers are in danger of losing their jobs; my remedy for that unfairness is having them earn more in good times as well.
I’m still not exactly sure what you mean by protection. They already get bigger bonus checks after a good year. The guy on the line dropping in passenger seats has no say or control over the product he is making. All he wants is a nice direct deposit on Friday. As long as the check clears and their job is secure, they don’t give a frick what the company decides on a quarterly basis. They want to do their shift and for those asshole “The Bobs” upstairs to leave them alone.
What I mean is if the hourly workers (justifiably) want to be protected from layoffs in bad times, the bonus should be a larger portion of their pay than it is now.
The auto business is very boom/bust, and if you want to share in the good times, you should share in the bad, like salary workers do (typically via layoff).
As a salaried worker, I’ve had plenty of bonus structures and payouts dependent on factors completely outside my control. That alone isn’t a reason to veto the idea.
I understand what you are saying but I disagree. As a unionized railroad employee, I got paid to show up rain or shine, fatality or derailment, etc. do my job, and go home. That’s it. If there was a problem when I wasn’t on the clock, it wasn’t my problem. I got paid for my time on the property.
To suggest that their pay is firmly tied to stock price/sales is not a ship I would ever be onboard.
Also, they should get full-rate pay in the event of a plant shutdown, not just unemployment crumbs. It’s not their fault the company messed up.
What I don’t understand is how other automakers are allowed to not have unions or protection for workers. The Big 3 and Suppliers are going to be really affected by the strike.
Everyone at my job is waiting for Sep 15th and see what is going to happen… its going to get ugly soon
They are allowed, but employees at those plants have voted the UAW down, multiple times in some cases.
Don’t forget there are law firms that specialize in the art of keeping unions out. I say art because their tactics push the limits of what’s legal, or break the laws in ways that are near impossible to prove. We had one of those firms at my plant when it was unionizing.
My takeaway after they laid out what we can and cannot say (we weren’t allowed to take notes) was to forget everything I was instructed. If an hourly employee asked me how I think they should vote, I would just say “read what’s proposed and make up your own mind”. I would then add “I’ve been in UAW plants that were good to work in, and some that were nightmares. It’s up to the membership to decide which one we become”.
My read on this is the UAW’s trying to get a major win with the Big Three this go-around, and then they are 100% going to aim their guns at the European and Asian plants in America and Tesla. I get the sense they’ve been kinda laying low on those other initiatives (at least this year) but it’ll be a “Look what we can do for you” situation when this contract ends.
The UAW’s been struggling with a declining membership for decades. I think they know they have to expand or die. The battery plants are a good start here, but if they pull off some victories this time it could be a different ball game than we’ve seen in the past.
I am CEO. Get fired, use golden parachute, next person’s problem. That is the American way 🙂