December 30th, 1936.
Another day of infamy for the organized labor movement in this state as General Motors workers launched a first-of-its-kind sitdown strike at Fisher Body 1 in Flint. And, after the 44-day strike was over and after the GM suits sent in the cops to tear-gas the sitdown workers, resulting in a riot, the body count was 16 line workers and 11 police officers injured.
There will be no human body count when the current auto workers strike is over, but something else could be damaged beyond repair if some of the experts are right: The death of the U.S. auto industry via bankruptcy.
“We’ve entered a phase which is combustible and has risks for both sides,” reflects Patrick Anderson, who has run the numbers on the financial fallout for GM, Ford, and Stellantis flowing out of the labor dispute.
And, he adds, “combustible means it could blow up.”
Item: The Detroit Three carmakers have constantly struggled for market share as the foreign car makers sell more cars, taking profits away from the domestic manufacturers.
Anderson says the current strike has the potential — assuming it is not over by the time you read this — to see consumers buying Hondas, Toyotas, BMWs, etc., if they can’t get American products because of the strike.
“American consumers have lots of alternatives, here,” Anderson said. “Alternatives built in Georgia, Alabama, Texas, and California by non-union plants.”
Because those workers make less money than the United Auto Workers employees, the foreign companies can sell their products cheaper, and the hefty pay boost that the UAW is seeking, Anderson adds, could widen that price gap, eroding Big Three profits even more.
Item: The electric vehicle market is a perfect example of that salary dynamic at work.
Tesla has about 60% of that market, as it pays its workers considerably less. The UAW wants to organize those EV line workers and wants fatter salaries to give them if the domestics will cough up the money.
Auto executives warn that, if their EV workers are paid more and they are not unionized, Tesla could get more than 60% of those consumers looking for a lower sticker price.
Item: Finally, Anderson fears that two of the bargaining issues reportedly on the table could force the car companies into the red.
That’s the jobs banks and returning to a defined contribution pension system.
Prior to the 2007 bankruptcy of GM and Chrysler, line workers who were laid off were sent to the jobs bank, where they got paid for doing very little.
“It was one of those things that drove GM and Chrysler to bankruptcy,” Anderson recalls, and he reaches the same conclusion if the new pension system is implemented. “That’s something that is a bankruptcy risk.”
Not to be lost in all that is the UAW’s argument that, when the industry was on its knees back in 2007, workers stood up and gave concessions needed to secure federal loans, and UAW President Shawn Fain argues the concessions were never repaid.
On top of that, you have those skyrocketing auto executive paychecks at a combined total of more than $70 million. Nobody on the line is making even a fraction of that loot.
Fain concedes the current labor disagreement comes at a historic transition time for the entire industry. And, while those joyful UAW members back in 1936 got union recognition and a 5% raise, the stakes are much higher now, going beyond mere wages, as the future of the industry appears to be on the line, too.