Volkswagen And Jeep Workers Get A ‘Christmas Miracle’

It’s been a bleak end of the year in some ways, so I’m going to try to cheer people up with today’s Morning Dump. Volkswagen’s union is calling the plan to eliminate 35,000 “future” jobs a “Christmas Miracle.” This means no plant closures or massive wage cuts, which is amazing, with most of the concessions coming to future jobs. The same vibe is continuing in Ohio, where Stellantis has reversed its position on job cuts to a Jeep plant there, for reasons seemingly having to do with the loss of one specific employee.

Did Elon Musk play a role in convincing President Trump and the Republican Party to nearly shut down the government in exchange for Tesla getting the ability to ship jobs to China? This is the claim that some are making and it’s hard to counter.

Ford’s had quality issues this year, and it seems like the brand is trying to fix those woes, although the speed that it’s been improving doesn’t seem fast enough for CEO Jim Farley, who is making more moves to try to lower warranty costs and improve his company’s reputation.

Volkswagen Workers Don’t Get The Worst Outcome After 70 Hours Of Negotiation

It was clear that Volkswagen and its German union, IG Metall, wanted to get a deal done ahead of Christmas. What was not clear was how that was going to happen given that Volkswagen wanted to close a bunch of plants, and workers, understandably, didn’t want that.

Volkswagen is far from the only major carmaker to find itself building uncompetitive products, struggling in China, and realizing it overcommitted to an EV future that isn’t going to happen without a lot of government support. But Volkswagen is a German company and that puts it in a uniquely tough position. The country’s government is in flux, and, by virtue of being in the EU, has to abide by some rules it wouldn’t necessarily make if things were entirely up to German leaders. General Motors faces a lot of these same challenges, though it has a strong domestic market it can fall back on to support itself. Volkswagen doesn’t, as Europe’s car sales have faltered this year.

Continuing to employ a lot of people, expensively, for years to come to make cars people don’t want or can’t afford isn’t a great strategy. This means that Volkswagen had to find a way to save money. The company’s opening bid was just to close a bunch of plants which, in some ways, is probably the most logical path forward. However, the complicated politics of Germany (the German state of Lower Saxony has a large voting share within VW) makes it difficult to close plants, especially given the rise of the far-right AfD party in exactly the places where job cuts would only bolster that party’s position.

The solution? Volkswagen is going to eventually take 700,000 vehicles out of production in Germany, albeit slowly and in a way that everyone involved hopes will avoid unnecessary pain, as Reuters explains:

VW said the deal would allow savings of 15 billion euros ($15.6 billion) annually in the medium term and saw no significant impact on its 2024 guidance. While there were no immediate closures, VW said it was looking into options for its Dresden plant and repurposing the Osnabrueck site, including looking for a buyer. Some production would be shifted to Mexico.

Vehicle production would shut at the Dresden plant by the end of 2025. VW AG’s staff will not get raises under a collective wage agreement over the next four years, while some bonuses will be scrapped or reduced.

Production at VW’s Wolfsburg plant, its biggest, will be cut to two assembly lines from four.

“No site will be closed, no one will be laid off for operational reasons and our company wage agreement will be secured for the long term,” said works council chief Daniela Cavallo.

A lot of my family is German, and the pessimism lately on the WhatsApp group has reached historic proportions, even for Germans. People clowned on former European Central Bank President Mario Draghi for his report on European competitiveness, mostly because it seemed impossible to make the changes he asked for given the current appetite for change and meta-governmental structure. I don’t think he was wrong, though. Germans are savers. That’s what they do. Other Europeans do as well.

That’s exactly the wrong response to this crisis. As Draghi’s report pointed out: When European inventors invent things, they go somewhere else to pay for them and make them. Why? Europe doesn’t invest enough in itself. If Germany is to de-industrialize it has to be able to do something else, and it’s not clear what this is. It’s also not clear that de-industrialization is going to work, especially as countries like the United States start to re-industrialize. I don’t know what Germany is supposed to do, and I don’t know that any German companies or politicians have articulated a clear enough strategy for the future.

The “Christmas Miracle” of this deal is good for about six years, and then I fear that Germany is going to need another miracle.

Jeep Trades One Employee For About 1,100 Others, At Least For Now

Both the outgoing and incoming American administrations are saying they want to bring more industrial jobs back to the country. If that’s the case, the last thing you want to do is close a bunch of plants here in the United States. Of course, that’s what then-Stellantis CEO Carlos Tavares, pictured above, tried to do.

This included cutting about 1,100 jobs at Ohio’s Toledo South Assembly Plant, which is home to the Jeep Gladiator. Now that Tavares is gone, Jeep has decided to reverse course, at least according to the UAW, via Toledo’s WTOL:

Another letter from the UAW on Friday stated that “the number for indefinite layoffs has been reduced to 125.”

“Who knows what it’ll look like when we get when we get to February, but, right now it looks like 125 people,” UAW Local 12 Bruce Baumhower said. “Then you think about all our suppliers, we had another 1,000 of them that were going to get laid off on top of the 1,100 from the initial announcement, and now, they’ll all be saved, too, if this all comes through the way we think it’s going to.”

Baumhower added that Stellantis is offering a retirement incentive that could further reduce the new number.

There’s a lot here that’s unresolved, and it’s not like the Gladiator is going to be a lot more popular, but maybe there’s another Jeep product that slots in here eventually? Either way, it’s good news for some workers in Ohio.

Democrats In Congress Claim Elon Musk Got President-Elect Trump To Threaten Shutting Down The Government To Help Tesla’s Business Dealings In China

Writing about Tesla CEO Elon Musk is not as much fun as it used to be. There are too many sites, and people, who get knee-jerk mad OR excited about everything Musk does, and one hint in either direction will eventually lead them to the conclusion that you’re for them/against them. Talking about Elon Musk sometimes feels like drinking ocean water when you’re dying of thirst.

I trust you, dear readers, and I enjoy the back-and-forths I have here, whether its with people who agree with me or the ones I disagree with as I learn a lot from both. This is a valuable aspect of this site, and I do not want to ruin it with politics. On the other hand, we are in the historically unique (I think, please tell me I’m wrong) situation of an automotive CEO (or, really, any CEO) who is leveraging his connection with a President to make some wild changes to the government. Imagine if Robert McNamara was CEO of Ford back when he drove us further into the Vietnam War; that’s as close as I can get.

There are three unresolved conflicts of the President Trump-Elon Musk tie-up:

• It’s likely, given their histories as dealmakers, that both think they’ve got the upper hand over the other one.
• Musk builds electric cars, Trump doesn’t seem to think much about them.
• Musk cannot make his future Tesla plans work without the Chinese government, which was President Trump’s favorite target.

My sense is that the first conflict will resolve itself on its own, with either one swallowing their pride or a huge blow-up. The second conflict plays well for Musk because he can afford to ingest a little poison and his competition cannot. The third one seems more intractable to me and, yet, maybe there was a solution this week.

As always happens around the end of the year, Congress was in a position of having to pass a short-term spending bill or force the government to close around Christmas. There was a bipartisan deal in the table which included a bunch of random stuff, including a provision that would require screening of investment in critical technology (like AI) in China. This is the kind of provision that few people get upset about in Congress because of historically bipartisan concerns over China.

Right as the bill was about to be voted on, both President-elect Trump and Elon Musk railed against the deal. President-elect Trump wanted to raise the debt ceiling for a few years, ostensibly so he could continue the large tax cuts that defined his first term. I guess another bipartisan belief is that “debt” is only bad when it pays for something you don’t like. However, there are a few die-hards on the Republican side of the government who don’t ever want to raise the debt ceiling, and Republicans have an extremely narrow majority and either need Democrats or every single Republican to get anything done.

What did Musk want? According to this letter from Democratic Representative Rosa DeLauro, it was to protect Tesla’s investments in China:

This outbound investment provision was agreed to after months of bipartisan, bicameral negotiations and years of advocacy from Members of Congress. It would have kept innovation and manufacturing in semiconductors, artificial intelligence (AI), quantum computing, and other cutting-edge technologies in the United States and prevented wealthy investors from continuing to offshore production and U.S. intellectual property into China – benefiting only their bottom lines and the Chinese Communist Party, while hurting American workers and threatening our national security. Importantly, many of the innovations this bill would have protected were developed with the help of taxpayer dollars – all the more reason for these innovations to remain at home and not be used to fuel adversaries’ technological and military capabilities.

It is no surprise, then, that “President” Musk does not want to see a funding deal containing this provision be signed into law. Musk’s investments in China, and ties with its government, have only grown over the last few years – alongside his growing involvement in American politics. Musk’s car company, Tesla has poured billions of dollars into investments in China, particularly its “gigafactory” in Shanghai. The Shanghai plant is Tesla’s largest car manufacturing facility – the Chinese gigafactory produced about 50 percent of Tesla’s global automobile output over the last year,1 and Tesla drew nearly a quarter of its global revenue in 2023 from sales of Chinesemade vehicles from the Shanghai factory.2 And there are signs that Musk plans to double down on his company’s investments in China – as Tesla awaits the Chinese government’s approval of its “Full Self-Driving” technology, Musk noted that “the value of Tesla lies primarily in its plans for autonomous driving.” And in May of this year, Tesla broke ground on a new $200 million factory to manufacture large batteries critical to its electric vehicle supply chain – down the street from its Shanghai car factory. Notably, proponents of regulating U.S. investment in China have advocated for the inclusion of large battery manufacturing in the list of technologies subject to outbound investment screening.

Rep. DeLauro is far from the only person accusing Musk of doing this, and the allegations are getting a lot of attention in the media.

Is this what Musk truly wanted? It’s impossible to know for sure unless he comes out and says it, but there are some reasons to believe this is the case. Discounting what Democrats say because, you know, they don’t like Elon Musk, it’s clear that Musk needs China. Not only does the company sell a ton of cars there, but Musk has been courting China’s government in order to try to build out his self-driving car capabilities with a huge pool of consumers.

Additionally, Musk got exactly what he wanted. President-elect Trump of course didn’t get his debt-ceiling increase. Not much of the bill actually changed, but this provision was removed from the final bill. Trump looks weaker here, as does House Speaker Johnson, who looked to be cruising to easy reelection to Speaker in January and is now facing a potential revolt with some even suggesting Musk as Speaker of the House.

There’s an old truism about the Internet that often applies to Musk, which is that when people are right they’ll refute you, and when they’re wrong they’ll just make fun of you. I will therefore end by pointing out that Musk made fun of Rep. DeLauro on his media platform X.

Ford: We’re Still Working On That Quality Thing

Ford CEO Jim Farley has made the improvement of quality at the company a huge issue for The Blue Oval, going so far as to delay the rollout of the F-150 until issues were addressed. The company is still spending a ton of money on recalls and fines, though mostly for cars built before 2021 it says.

What’s the next move? Appointing a new quality chief. From the Detroit Free Press:

Ford Motor Co. is appointing a new head of quality, the company confirmed Wednesday, as the automaker works to reverse its industry-topping record of recalls and reduce warranty costs.

The automaker will move control of its quality team from Jim Baumbick to a new leader who has not yet been announced, as Baumbick takes on the responsibility of EV programs.

Baumbick, who has led quality since late 2022, will oversee the entire vehicle programs team, which focuses on keeping the costs and timing of vehicles on track, now including EVs under his supervision as well as gasoline-engine vehicles.

If Ford can save money on recalls it’ll be a big improvement to the company’s bottom line and reputation.

What I’m Listening To While Writing TMD

I realized this year that “Christmas Wrapping” by The Waitresses was actually one of my favorite modern Christmas songs. It’s so ’80s and I love it.

The Big Question

What car are you most looking forward to in 2025?