Here we are, and it’s no surprise. I’m dumbfounded by United Auto Workers President Shawn Fain’s tactical approach to this historic strike against all three major U.S. automakers.
Far from good-faith negotiations, he has threatened to “strike these companies in a way they have never seen before” with a series of coordinated work stoppages intended to "create confusion." Is this a labor dispute or the Russia-Ukraine conflict?
The unions are demanding a 40% wage increase, along with numerous other concessions, to recover what they believe they “lost” when major manufacturers nearly went bankrupt during the 2007-08 financial crisis. They see the record profits being made by dealers and manufacturers in the post-pandemic world and want to get back what they “lost,” as well as a whole lot more.
They’ve been offered pay increases ranging from 17.5% to 20%, but they want double that. Plus, a return to unsustainable and anticompetitive cost-inducing benefit and pension plans, 32-hour work weeks, and guaranteed job security. Really? Entry-level pay is currently $32.32 per hour. That equates to $67,225 per year with full benefits.
Everyone has a right to negotiate for their compensation. But no company – automotive or otherwise – can survive long term in a changing economy with guaranteed fixed labor costs. That’s not how capitalism works. Especially when their entire argument of entitlement is built on a fallacy that the record profits of the post-pandemic years are going to last. We all know they will not.
Those record profits are the result of two separate market forces. First, government money flooded the marketplace with excess cash, which led to inflation and today’s high interest rates (another big problem for the industry). Second, the pandemic created supply chain disruptions that led to record low inventories and resulted in the classic supply-and-demand rule that drove up the price of vehicles. Both of those market forces are gone.
The near-term prognosis for our economy is not healthy, especially for the automotive segment. We have high interest rates, ultra-long-term loans, and a product mix that is largely unaffordable for a large percentage of consumers. Add to that the state and federal governments pushing for more aggressive corporate fuel-economy standards, and escalating electric fleet percentages with looming deadlines. UAW thinks now is the time for “targeted strikes” and “shutting down multiple lines?”
Instead, what if the union had said, “Hey, we sacrificed with you back in 2007. How about a one-time, structured payment from those record profits to compensate us for our contribution?” That is a valid good-faith offer and 100% deserved. But threatening demands unless they receive guaranteed pay and benefit increases in perpetuity, all while reducing their worktime by 20%? Their combative ultimatums will disrupt local and national economies and potentially impact the future of manufacturing jobs in the U.S.
With so many Americans struggling right now, this type of hostage negotiation strategy from an already highly compensated workforce leaves absolutely zero room for empathy. They’ll get no sympathy from me.
Originally posted on Auto Dealer Today