Just one day after the UAW went on strike at Stellantis’ pickup factory in Sterling Heights, roughly 5,000 union members walked off the line at General Motors’ plant in Arlington, Texas. The UAW is now targeting automaker’s most-profitable facilities, with Tuesday’s walkout suggesting that the industrial game of chicken could be nearing its final act.
The union has been gradually ramping up pressure to prolong its own strike budget. But targeting domestic automaker’s valuable truck and SUV plants represents a major escalation in tactics. UAW President Shawn Fain threatened more walkouts last week in the hope that it would encourage automakers to tailor their proposed deals to align more closely with union demands. But he has also hinted that a deal may soon be reached.
Meanwhile, industry leaders have used the media to spread a message that their companies cannot give the UAW what it wants without jeopardizing subsequent investments or potentially endangering the financial health of the business. General Motors CEO Mary Barra recently said her company has already made an unprecedented offer and would refuse to agree to a contract that jeopardizes the company’s future.
Arlington Assembly is responsible for profitable models like the Chevrolet Tahoe, Chevy Suburban, GMC Yukon, and Cadillac Escalade.
The walkout came immediately after General Motors issued its earnings report, with the company announcing a net profit of just over $3 billion for the quarter. While that’s down 7 percent from the previous year, leadership said it felt confident about strong vehicle demand and pricing that would ensure desirable margins.
Fain said that GM’s offer still lags behind Ford by preserving a two-tier wage structure and offering the weakest 401(k) contributions of all three companies — hence the UAW targeting Arlington.
Barra’s statements after news broke about the strike expansion echo her earlier position. “Accepting unsustainably high costs would put our future and GM team member jobs at risk, and jeopardizing our future is something I will not do,” the CEO said.
It’s hard to know who to feel sorry for, let alone who might be telling the truth.
Domestic automakers have enjoyed record-setting profits in recent years after culling small, affordable models from their lineups. While some of this was done to help circumvent stringent regulatory laws that would have been expensive to comply with, we’re also living in an era where six-figure pickup trucks aren’t uncommon. Vehicle affordability is at an all-time low while the industry seems to have been thriving due to MSRPs being at an all-time high. Companies have also invested billions into electrification and automated driving programs over the past decade without either resulting in reliable profitability in themselves.
Automakers have likewise laid off workers since the strike began, blaming the union walkouts for the job cuts. However, rolling layoffs have been relatively common since the turn of the last century. In 2000, there were roughly 300,000 domestic auto workers. But that number had plummeted to just 140,000 by 2009.
While employment rose consistently in successive years, peaking at 240,000 domestic employees by 2019, layoffs have returned at a staggering pace. The pandemic pushed the workforce down to just 110,000 by the end of 2020. Many jobs returned as lockdowns ended. But we’re still nowhere near the number of positions that existed beforehand and the number of assembly jobs continues to shrink.
On the other side of the fight, we unionized workers who have spent the last few decades giving up benefits as they watched executive compensation skyrocket in relation to their own. The wage gap between labor and management looks to have reached untenable proportions, encouraging the UAW to play hardball with an industry they previously made concessions to help save only to see more jobs migrating elsewhere.
But the union has likewise endured some criticism for its past political allegiances and has a long history of corruption that today’s leadership is striving to get away from. Previous contract negotiations have indeed been undermined by former UAW leaders accepting bribes from the industry in exchange for favorable treatment — a wrong Fain said he’s committed to correcting while in charge of the organization.
We’ll see how it all plays out in the coming weeks. In the meantime, the industry is going to do what it can to frame the UAW as greedy and endangering domestic production while also using the strike as an excuse to continue raising prices. However, the UAW’s actions do have consequences and will eventually reach a point where its strike budget runs out. One could argue the union is asking too much and will effectively encourage the industry to build more factories outside of the United States just as easily as they could claim that the UAW is fighting against nationwide wage stagnation created by greedy multinational businesses that only care about their shareholders.
[Image: UAW]
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