2023-10-03 14:00:40
The three big car manufacturers in the US, General Motors, Ford and Chrysler (now part of Stellantis), called the ‘Big Three de Detroit’have much more to lose than the immediate economic impact of the strike: their transition to electromobility may be hindered.
According to the investment firm Wedbush Securities“this is a critical period for Detroit and the future of the industry and we believe that if GM, Ford or Stellantis accept anything close to what the unions are asking for, the future of the US auto industry will be bleak.”
The Union United Auto Workers (UAW) requests, in summary, higher salaries and improvements in the conditions they gave up with the 2008 crisis, when Chrysler and General Motors went bankrupt, now that the manufacturers present historic income.
The companies, on the other hand, intend to avoid a new collective agreement that would bind them to personnel costs that would reduce their competitiveness with other manufacturers that are not subject to the UAW conditions, such as Tesla, foreign brands that produce in the US, such as BMW, or electric start-ups, like Rivian.
Furthermore, the Anti-Inflation Law (IRA) of the Government of Joe Biden It has made the construction of battery factories attractive, and states like Michigan or Illinois, which had invested for this purpose, are waiting for their clients to return to normal work and their resources not evaporate.
President Biden himself visited one of the protests in Detroit, and told striking members: “You deserve what you have earned, and you have earned much more than what you are being paid now.”
US President Joe Biden visited striking workers. Reuters
While workers continue to face slowly improving conditions, manufacturers recorded revenues of 18 billion (Stellantis) and 10 billion dollars (General Motors) last year. Ford presented net losses, but its income in 2021 was 18 billion.
On the other hand, these positive results have had an impact on the boards of directors: last year the CEO of General Motors, Mary Barrawas the highest-paid manager of the ‘Big Three’, with an annual salary of almost $29 million, about 362 times more than what an average GM worker earns.
Manufacturers agree that their workers deserve a raise, but argue that what the union is asking for is too much. “The resources requested by the UAW are those that the ‘Big Three’ have to use to finance their move into electromobility, where Tesla has a great advantage over them,” auditors Plante Moran say.
According to a report published by Wells Fargo bank, the labor costs of a ‘Big Three’ worker are around $66 per hour. Comparatively, Tesla, which prides itself on its automation and lack of union representation, is around $45.
If the UAW’s conditions were accepted, costs at the three in Detroit could skyrocket to $136 per worker, which would translate into an additional $8 billion in costs.
This, in turn, would translate into an increase in the price of electric vehicles of up to $5,000, making a product that requires demand incentives to be sold even more unaffordable.
The strike began on September 15 in a plant of each builder and has expanded to almost 40 different points throughout the country, including factories, parts logistics distributors or stamping workshops.
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