‘Now Is The Moment That Workers Have Leverage’: The Latest On The UAW Strike

I’m unfortunately a product of the 1990s, so whenever I hear about strikes, my brain automatically plays the Garbage Strike song from Rocko’s Modern Life. You know, the one that starts with “We’re on strike, we’re on strike, we can do anything that we like…” But in the case of the United Auto Workers’ ongoing, unprecedented strike against all three domestic automakers, “do anything that we like” means “wage a sophisticated, social media-savvy campaign against an industry that hasn’t been used to taking hard punches from its workforce since probably the last Wildcat Strike at Lordstown Assembly.”

Today, we continue to discuss the latest on this strike and what it means for consumers and the wider industry. And as an added bonus, we’ll be talking about what the electric vehicle tax credit means for used cars. The short answer: nobody is sure yet! Happy Monday to you all.

UAW Workers May Have The Edge, Unlike Other Labor Battles

You’ll probably read or hear some comparisons drawn to the UAW labor stoppage and the Hollywood writers’ and actors’ strike. That one is about to be in its 140th day. And while both strikes are driven in part by technological changes—AI for Hollywood and EVs for the auto industry—there are some fundamental differences that indicate the auto workers could score some wins long before the entertainment strike draws to a close.

After all, it takes years to put scripted TV shows and movies out; getting cars produced and onto dealer lots is a matter of days and weeks. The automakers, dealers and supply chain will feel the effects of this instantly. Consumers haven’t really felt the effects of the entertainment strike at all yet. (The lack of movies that aren’t Marvel sequels was the state of things before the strike started, mind you.)

And not to negate the importance or urgency of that strike, but they’re acting at a time when the movie and TV studios are in utter disarray in the post-pandemic streaming hellscape. The auto industry, on the other hand, is posting record profits. So the workers may have more of an edge on this one, reports Bloomberg:

The UAW’s aggressiveness in many ways reflects the more assertive mood of the American worker, who’s anxious about job security in the age of artificial intelligence and angry about an ever-growing wealth gap. In this summer of strikes that’s seen Hollywood writers and actors walk off their jobs, and workers at companies as varied as Starbucks, Amazon, Apple and Microsoft all vote to unionize in the last two years, the UAW drama has taken on broader significance.

Fain’s combative stance is risky. If workers sacrifice for months, throwing their lives and others’ into disarray, only to end up having to accept something much closer to what the companies have been offering, they could serve as just the sort of cautionary tale managers use to try to dissuade workers from unionizing in the first place.

The UAW strike also is perilous for President Joe Biden, who’s made building an EV and battery manufacturing industry a pillar of his economic agenda. Can he live up to his own billing as the most pro-union president in history, without compromising the competitiveness of the US auto industry against lower-cost rivals, led by China?

“If the union has taken a more militant turn and is punished for it successfully, that will intimidate workers across the board,” said University of Chicago historian Gabriel Winant. “If they win, it will augment the message that is already circulating with greater frequency: that now is the moment that workers have leverage.”

By the way, here’s how things used to work, and did the entire time I’ve covered this business:

The union failed to capitalize on the carmaker’s improving fortunes to the satisfaction of many workers. Labor talks were largely opaque affairs in which UAW leaders stashed themselves at the union’s headquarters — called Solidarity House — in downtown Detroit and negotiated with management behind closed doors. They would emerge after a couple of months with tentative agreements that in recent years included steady, single-digit pay raises, but also kept in place lower wages for new hires. “We don’t bargain in the media” was a common refrain from leaders on both sides.

Now they have a comms team full of Bernie Sanders campaign veterans and a president who doesn’t think twice about snubbing an invitation to meet with Bill Ford. So it goes. One analyst who spoke to Bloomberg said they do not expect the strike to end before Halloween, and while it’s rather likely more plants will shut down in the meantime, it’s unlikely to see this go on for half a year like in Hollywood.

Ripple Effects Already Being Felt

So how long until the rest of the American auto industry feels the heat from the strike? Yeah, that would be Friday, last week, according to Reuters:

By Friday afternoon a ripple effect was felt.

“Our production system is highly interconnected, which means the UAW’s targeted strike strategy will have knock-on effects for facilities that are not directly targeted for a work stoppage,” Ford (F.N) said in a statement.

It told 600 workers who are not striking not come to work on Friday and GM (GM.N) told some 2,000 workers at a Kansas car plant that their factory likely would be shut down next week for lack of parts, stemming from a nearby plant being struck.

Damn. And a few other tidbits tacked on at the end of that one:

Nearly half the 12,700 striking workers are at the Stellantis plant, although management has been preparing: a parking lot of finished Jeeps is more than a mile long outside the factory.

GM said on Thursday the UAW wage and benefits proposals would cost the automaker $100 billion, but did not elaborate.

Fain has rejected the automakers’ assertions, saying the companies have spent billions on share buybacks and executive salaries.

While Biden is pouring billions in federal subsidies into expanding electric-vehicle sales, this shift could threaten combustion powertrain jobs. The UAW has not endorsed his re-election.

Biden’s likely opponent, former president Donald Trump, on Friday criticized the shift to EVs as a job-killer for the UAW.

What a wild thing to witness, all of it.

A Silver Lining For GM’s EVs? Maybe

We all know that GM’s bold new lineup of EVs is kinda made-up at this point. You have the Bolt and Bolt EUV, the Cadillac Lyriq that barely exists outside of the Detroit press car fleets, the equally low-volume Hummer EV, and uh (checks notes) not a lot else. The Blazer, Equinox, Silverado and Bolt replacement EVs are coming soon, but many of them have experienced numerous delays as GM works out kinks around batteries and software.

Could this strike buy GM some time to get that stuff figured out? One analyst I like, Sam Fiorani, says yes, but that opinion isn’t quite unanimous. One more from Reuters:

A longer strike could help GM address and potentially resolve some of those ongoing issues in its EV and battery operations, according to Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.

“A production stoppage could allow GM to solve bottlenecks,” Fiorani said.

The automaker has not been able to roll out its most important EVs in a timely fashion, but could benefit if it used the labor stoppage to resolve some of its technical and operational issues, he said. “GM could ramp up output faster once the factories start running again,” said Fiorani.

[…]

Wedbush auto analyst Daniel Ives said the strike was “a potential nightmare situation” for GM given it comes exactly at a key period of ironing out EV issues.

“In this crucial period of EV execution, model roll-outs, distribution, marketing, with EV competition rising across the board, the timing could not be worse,” Ives said in a research note.

I tend to think any hit to quarterly returns won’t bode well for future R&D, but we’ll see.

EV Tax Credit Weirdness Moves To Used Cars Too

The longer this year goes on, the less highly I think of the new EV tax credit scheme. Sure, it’s great at incentivizing battery production here and not in China. But so far it’s been a massive gift to Tesla and nobody else, and the fine print is proving to be remarkably opaque for such a key part of President Biden’s signature legislative package.

Now there’s weirdness around the rules for tax breaks with used cars too, reports Automotive News:

As part of the Inflation Reduction Act, qualified buyers could get up to $4,000 for the purchase of an eligible used EV under Internal Revenue Code Section 25E. Vehicles must be at least two model years old and cost $25,000 or less, but they are not subject to the same stringent battery sourcing rules as the revamped tax credit for new sales of personal EVs, known as Section 30D.

The Treasury in December clarified what’s counted in the retail price for new EVs, specifying that “optional equipment physically attached to the vehicle at the time of delivery to the dealer” is included, while optional items added by the dealer as well as destination charges, taxes and fees are not. However, it did not specify what’s counted toward the sales price for used EVs.

“With the discussions I’ve had with dealers, they’re obviously having to make a judgment call as to what ‘sales price’ really means,” said Adam Neporadny, managing director in the national tax professional standards group at Forvis.

Have you tried to buy a used EV this year? Let us know how that went for you.

Your Turn

When do you think the UAW strike will come to a close? And what plants will they target next as this continues?