Auto File: The UAW Wins a Truckload

Panasonic Holdings

30/10/2023 14:37

Oct 30 - Joe White
Global Autos Correspondent
     
Greetings from the Motor City!  
 
Weekends mean nothing in Detroit these days.  
 
The United Auto Workers and the Detroit Three automakers were
hammering away on overtime Saturday and Sunday. As Monday darked
– we don’t get sunlight here until after 8 AM local time – GM
was facing a wider shutdown because of its refusal to sign up to
the rich contract pattern agreed to at Ford and Stellantis. 
 
But then, shortly after sunrise, word came that GM and the UAW
had settled. Pending ratification votes, the UAW's extraordinary
march to record contract wins is over. Whether the Detroit Three
CEO’s labor nightmares are over is another question. 
 
How well did the UAW do? We’ll get into that below, and plenty
more.   
 
Today - 
    * The UAW wins big at Ford and Stellantis 
    * GM abandons its final stand 
    *         BYD makes big money on EVs  

 
The UAW Wins Big and Aims Higher  
The UAW released more details Sunday about the record-setting
contract it negotiated with Ford. The deal offers 33% raises for
veteran workers and a path to 150% pay increases for current
temporary workers.  
 
But that’s just the start. It took nearly five hours for UAW
President Shawn Fain and other leaders to walk through the list
of pay raises, benefit improvements and retirement plus-ups the
deal offers for Ford union members – and by extension all
150,000 UAW members at the Detroit Three.  
 
The UAW’s summary of the Ford contract is here. 
 
UAW leaders will repeat the process Nov. 2 when they are
expected to release details of the tentative agreement reached
Saturday with Stellantis. That deal promises new life for the
Belvidere Jeep assembly plant that appeared to be doomed. The
agreement commits Stellantis to adding 5,000 new UAW jobs and
$19 billion in product investments.  
 
Details of the GM deal will likely come out late this week or
early next week. But we know some things already: 
 
The UAW has taken Wall Street’s cheese. That’s one way to sum up
the impact of the UAW contract campaign.  
 
Higher wages, bigger company contributions to retirees and
contract provisions that give the UAW veto power over plant
closings and in Stellantis’ case product investment all point to
more cash flowing to workers than to investment funds in the
form of buybacks and dividends.  
 
Ford, GM and Stellantis shares barely budged in early Monday
trading. Ford and GM remain near three-year lows. Ford and GM
shares are down more than 30% since July and have shed a
combined $40 billion in market cap. 
 
Somewhere in the new contracts there are provisions that will
help the automakers offset higher wage and benefit costs over
the next 4 ½ years.  
 
Ford will get to offer an unlimited number of buyouts to
high-seniority workers, and move UAW workers from Dearborn,
Mich. to staff its new EV manufacturing complex in Western
Tennessee. Stellantis will get a new mid-size truck factory and
a battery plant in Belvidere subsidized by the State of Illinois
and possibly the U.S. government. 
 
UAW President Shawn Fain needs to get the Ford and Stellantis
deals ratified. And he has to close a deal at GM (see below.)  
 
But already, labor experts say the UAW’s new contracts could
lift the fortunes of workers in other industries. 
 
Fain and UAW strategists are looking beyond the Detroit Three,
aiming to reclaim the UAW’s former status as the leader of a
broader labor movement opposing what Fain calls “the billionaire
class.” 
 
    In a thread of posts on X.com late Sunday, the UAW noted
that its new contracts expire April 30, 2028 – and called on
other unions to time their next contracts to expire the same day
so that workers across industries could stage a general strike
on May Day 2028 if they don’t get better deals. 
 
“We strike on May Day,” UAW lawyer Benjamin Dictor posted. 
 
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    * The real numbers behind the “EV Slowdown” -S&P Global 

 
GM makes a stand – then settles 
General Motors CEO Mary Barra did not want to sign the same UAW
contract that Ford and Stellantis agreed to. One reason: The
pattern contract could spike GM’s already heavy pension costs.  
 
But early Monday, GM and the UAW reached a deal. Neither side
announced details. GM had little choice after UAW President Fain
ordered a new walkout Saturday at the automaker’s Spring Hill,
Tenn. Manufacturing complex. The shutdown at Spring Hill’s
engine factory threatens to cut production of some of GM’s
best-selling models – including Silverado pickups – at seven
North American factories not already on strike.  
 
The UAW caught GM caught in a squeeze play.  
 
The former world’s largest automaker has 300,000 retired workers
or surviving spouses on its pension plans – roughly seven times
the number of active UAW-GM workers.  
 
Matching the Ford contract could mean hundreds of millions of
dollars a year in extra pension costs – and that does not count
the expense for boosting 401(k) contributions for current
workers by some 50%.  
 
But the UAW strikes at GM before Saturday were already costing
the company $400 million a week. An extended Spring Hill walkout
– or walkouts at the Flint heavy duty pickup plant or an engine
plant in Tonawanda, NY - would have pushed the running cost of
resistance closer to the price of settling on the UAW’s terms. 
 
Who makes money from EVs? BYD 
    Chinese EV leader BYD reported a record, $1.42 billion
quarterly profit. 
 
BYD did not earn quite as much as Tesla in the latest quarter,
but it left legacy automakers and EV startup rivals choking on
dust.   
 
BYD and Tesla’s results show that it is not impossible to make
money on electric vehicles. But with each quarter, BYD and Tesla
are making it harder for money-losing rivals to close the gap
without raising new funds or slowing investments.  
 
An Italian supplier’s bumpy EV transition 
A plan by the private equity owners of a Marelli combustion
engine parts factory to shut down the operation has provoked a
backlash from unions and fretting from Italian politicians. 
 
The Marelli operation is relatively small, with about 230
workers. But the position of company owner KKR  that it can no
longer sustain those jobs because of declining combustion engine
sales is fueling the debate over policies aimed at displacing
combustion vehicles with electric ones. The impact of the EV
transition on jobs is at the center of auto labor disputes in
the United States and other countries.  
 
In Italy, as in the United States, taxpayers, via state
subsidies, will be called on to save combustion auto jobs that
market forces are putting at risk. 
 
Fast Laps 
Panasonic echoed Elon Musk’s warning earlier this month that
demand for expensive electric vehicles is slowing down. The
Tesla supplier cut the profit outlook for its auto battery
business by 15%, and slashed battery output in Japan by 60% to
shrink inventories. 
 
Stellantis and Canada’s Unifor union reached agreement on a new
contract after a strike that ended almost as soon as it began.
Unifor has now reached deals with all three Detroit automakers. 
    
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 (Editing by Alexander Smith)