General Motors, Ford, and Stellantis workers on strike! How does it affect geometry?
The major strike in the US automotive industry shows no signs of easing. A week ago, the Federation of Automobile Workers in the United States officially launched a strike against the three major American automakers - General Motors, Ford Motor, and Stellantis Group. This is the first time in over 80 years since the establishment of the United Automobile Workers of America that automobile workers have simultaneously launched a strike against the "Big Three" in Detroit.
According to public information, the Federation of Automobile Workers of America is one of the largest worker associations in the United States, with a membership of up to 146000 in General Motors, Ford, and Stellantis, accounting for approximately 56% of all workers in the US automotive manufacturing industry. According to convention, employees of the Federation of Automobile Workers in the United States sign contracts with the Detroit Big Three every four years. Due to the failure of both parties to reach a labor management agreement through negotiation before the deadline, American car workers angrily took action.
The American Federation of Automobile Workers is asking a high price for this major strike. They believe that the leaders of the "Big Three" in Detroit have seen an average salary increase of 40% over the past four years. "In this situation, workers' salary increases should also remain synchronized," because "under the impact of high inflation in the United States, workers need higher wages to cope with the surging cost of living.". However, after several rounds of negotiations, although Detroit's "Big Three" have made some concessions and offered a salary increase of nearly 20%, it still falls short of the demands of the workers. As for the request to restore the fixed welfare pension for all workers and work 32 hours per week, it has been rejected by the car company.
For the "Big Three" of Detroit, it is almost impossible to fully accept the "lion's mouth" of the United Automobile Workers of America. It should be noted that currently, the hourly labor costs of General Motors, Ford, and Stellantis in US factories are significantly higher than those of Asian and European automakers in non union assembly plants in the United States. According to calculations by Wells Fargo Bank, if all the requirements in the negotiations are met, the hourly wages of Detroit's "Big Three" workers will skyrocket to an astonishing $136 in the future. Industry data shows that the average hourly wage for Tesla workers is currently $45, while the average hourly wage for Detroit's "Big Three" workers is about $66. This means that the high annual labor costs will greatly weaken the market competitiveness of Detroit's "Big Three", and even become an "unbearable burden" for them.
In the first half of this year, the "Big Three" in Detroit all performed well in profitability, with Stellantis at $11.9 billion, General Motors at $5 billion, and Ford at $3.7 billion. The problem is that the global automotive industry is undergoing changes in electrification and intelligence, and Detroit's "Big Three" do not have an advantage in these changes. Faced with increasingly fierce market competition, car companies need to invest more funds in electric vehicle research and development, carry out industrial upgrading, and it is also difficult to make profits in the short term on new tracks. Ford CEO Jim Farley is concerned that the proposed 40% salary increase, shortened working hours, and increased new pension benefits from the Federation of Automobile Workers in the United States may lead to the bankruptcy of the company, which is by no means a exaggeration.
The automotive industry is the largest manufacturing sector in the United States. Due to the large and complex industrial chain, this major strike will inevitably have an impact on the US automotive industry and economic operations. From the current perspective, this strike only involves three factories of General Motors in Missouri, Ford in Michigan, and Stellantis in Ohio. The number of people participating in this strike is less than one tenth of that of the Federation of Automobile Workers in the United States, and there are still 22 assembly factories under the Detroit Big Three in production.
It seems too early to predict the extent of the impact of this major strike, as it depends not only on how long the strike lasts, but also on how deeply it affects upstream and downstream. If progress cannot be made by September 22nd local time, the subsequent expansion of the strike may lead to more car factories in the United States shutting down, which will put pressure on the labor market and push up new car prices. In the long run, union demands such as salary increases, reduced working hours, and increased benefits will have another impact on the direction of the US and world economies.
