Electric Vehicle Shift Sparks Showdown
Amidst the backdrop of the most significant technological transformation in the automotive industry since Henry Fords revolutionary assembly line in the early 20th century, a contentious battle unfolds between Detroits carmakers and the United Auto Workers.
This conflict is occurring as General Motors, Ford Motor, and Stellantis, the owner of Chrysler, Jeep, and Ram commit more than $100 billion to the development of electric vehicles while still deriving the majority of their revenue from gasoline-powered cars.
The outcome of these negotiations will not only determine the immediate terms of employment but could also shape the power dynamic between workers and management for years to come.This strike represents a pivotal struggle, not just over wages, benefits, and working conditions but also for the future direction of the industry.
Nearly 13,000 U.A.W. members initiated a strike at three plants located in Ohio, Michigan, and Missouri after separate negotiations between the unions and the companies failed to reach agreements before a Thursday deadline.
While the union is advocating for a 40 percent pay increase over four years and a 32-hour work week, the core of these discussions extends beyond that. Workers are seeking job security as the industry undergoes a fundamental shift from internal combustion engines to battery-powered vehicles.
Electric cars require fewer components and thus can be produced with a reduced workforce compared to their gasoline counterparts.
"The transition to E.V.s is dominating every bit of this discussion," John Casesa, senior managing director at the investment firm Guggenheim Partners and former head of strategy at Ford Motor, told The New York Times.
Amid mounting pressure from government authorities and changing consumer preferences, Ford, General Motors, and Stellantis are making substantial investments to reconfigure their sprawling operations for electric vehicle production. However, they report minimal, if any, profit on electric vehicles.
Meanwhile Tesla, the dominant force in the electric car market, continues to demonstrate profitability and rapid growth.
Ford has projected a $4.5 billion loss in its electric vehicle business for the current year. Ford's CEO, Jim Farley, said meeting the union's demands for increased pay, pensions, and benefits would result in workers' total compensation being twice that of Tesla employees. He argued that such demands would force Ford to abandon its investments in electric vehicles, highlighting the need for a sustainable future rather than a choice between business viability and worker rewards.
In short, the ongoing strike symbolizes not only a clash over immediate labor terms but also a critical juncture in the automotive industry's evolution towards electric vehicles and its enduring competitive dynamics.
Labor Unions Are Wielding Influence
Airlines, package delivery companies, and ports, all struggling to recruit much-needed employees during the post-pandemic economic recovery, have reached agreements for double-digit pay raises with their respective unions this summer.
While it remains uncertain whether other employers, not facing such acute hiring challenges, will follow suit, there are notable examples of recent union successes:
In some cases, the recent gains made by these unions merely align with the wage increases secured by non-unionized American workers since the onset of the pandemic in 2020.
However, it's worth noting that wages and benefits for non-union workers increased by 15.8 percent from the end of 2019 through June, compared to a 12.2 percent gain for unionized workers, according to the Labor Department. Despite union workers earning more on average, their share of the workforce in 2022 stood at just about 10 percent, marking a record-low percentage.
The transportation, warehousing, and utilities sectors, which employ pilots, dockworkers, and truckers, have a job-openings rate that exceeds the private-sector average. In contrast, manufacturers of durable goods, including automobiles, have a below-average job-openings rate that has been declining this year.
Harry Katz, a Cornell University professor specializing in collective bargaining, attributes the success of pilots and Teamsters to their substantial bargaining leverage, stemming from a limited workforce relative to high demand in their respective fields.
The hiring of transportation and warehousing workers has surged in response to increased online shopping during the pandemic, with employment in these industries rising by 16 percent since the end of 2019, compared to a 3 percent overall increase.
Meanwhile, U.S. manufacturing employment, including the production of durable goods, has grown by less than 2 percent since the end of 2019 and has declined significantly since its peak in the late 1970s, primarily due to increased automation and foreign competition."
A Summer of Strife
This summer, a series of high-profile labor strikes and near-strikes signal a revival of the U.S. labor movement. Despite a pro-union president and public support for unions, membership has steadily declined over the past four decades, currently standing at just 10.1% of the workforce.
“We are certainly seeing more contentious labor relations and more of a push on the labor union side in the negotiations this summer,” Alexander Colvin, Dean of Cornell’s School of Industrial and Labor Relations, told The Morning Dispatch. “Workers and their unions are looking to make up ground from the inflation of the last couple of years, and they have more bargaining power because of low unemployment and a strong economy,” Colvin adds.
Also, many prominent unions now have new, more assertive leaders willing to confront management. Fain with the UAW is a perfect example of that.
The summer's high-profile labor actions kicked off with the Writers Guild of America strike in early May, focusing on pay and the impact of AI on the entertainment industry. The strike, later joined by actors, brought national attention to labor issues.
As AI continues to influence various industries and a tight labor market empowers workers, the potential for more labor actions looms large.
But despite headline-grabbing strikes, the decline in union membership persists.
The paradox between public support for unions and a reluctance to join them may stem from unions historically serving as a counterbalance to employer power. This weakened state of unions may motivate people to support them without necessarily becoming members.
Some labor disputes have been narrowly averted, such as the resolution between the International Longshore and Warehouse Union and the Pacific Maritime Association, preventing significant economic losses.
Meanwhile, United Parcel Service (UPS) workers reached an agreement, averting a massive strike.
The Biden administration, despite claiming to be pro-labor, faces challenges in balancing support for unions with policies like the promotion of green energy, which can disrupt traditional industries. The administration aims to stay out of labor disputes while favoring labor, but it may intervene in cases with broader economic implications.
While labor disputes have garnered significant attention this year, the number of strikes in 2023 has decreased compared to 2022, as reported by Cornell's "Labor Action Tracker."
This is our lead story in the latest edition of The Rising Tide. Seven other stories follow. For full access, to become a Tide Insider, subscribe at https://barberd.substack.com/
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