THEindustry, as we know, in the eyes of the markets it now counts for less than services. In the digital age, then, innovation comes from artificial intelligence and the development of chips rather than from assembly lines. But when the blue overalls cross their arms, today as yesterday, politicians, markets and central bankers raise their antennas. This time, at least in America, more than in the past.
While in Europe the sector proceeds with many uncertainties to recover sales (+17% in July, but compared to the crash of the same month in 2021 -11%), the US is preparing for a tug of war that reminds us of other times.
Auto: US unions ready to strike against Ford, GM and Stellantis
Last week, the 146.000 members of the US union United Auto Workers (UAW) voted 97% in favor of a measure authorizing the trade union to hold a general strike against Detroit's Big 3, that is Ford, General Motors and Stellantis (owner of the Chrysler and Jeep brands) as of September 14, the date on which the current contract will expire.
Then begins a challenge that promises to be very tough: the United Auto Workers has accumulated a treasure of 825 million dollars to support 11 weeks of strike if all three automakers were involved. For comparison, the last strike was called in 2019, lasted six weeks and targeted General Motors only. But this time the Uaw, unlike in the past, has decided to face the three houses all together, with a general mobilization that does not involve, however, the workers of the Sunbelt, or the employees of the plants of the Southern States, where the plants of the Korean and Japanese groups are located.
Carlos Tavares: "I don't let anyone dictate my agenda"
It will be a tough match, both for the contents of the requests and for the means mobilized by the parties. Unlike in the past, when the official meetings were preceded by informal talks (the privileged terrain of Sergio Marchionne, master in the approach with the unions), this time the union president Shawn Fain has started to publish the claims and the outcome of the first contacts on social media with the aim of involving the base, stressed by the renunciations, both on wages and on social security treatment, suffered from 2009 onwards to avoid the collapse of the sector. But poisoned by both the profit boom ($47,3 billion in 2022) and the dizzying rise in the earnings of the various CEOs, Carlos Tavares included. Nor does the decision of Stellantis' number one not to participate in the first official confrontation with the Uaw facilitate relations. “I have faith in my men in the USA – he commented after the criticisms of the unions – E I don't let my agenda be dictated of my commitments from no one”.
The demands of the US trade unions
Hence the prospect of a tough tug-of-war over a series of requests judged "imaginative" from the Big 3: a salary increase of 46% in four years, full-time conversion of temporary and supplementary workers and restoration of cost-of-living adjustments. The total labor cost for a single worker it would go from the current 65 dollars an hour to over 100 dollars, against 45 dollars an hour for Tesla, and 55 for Japanese car manufacturers.
Not only. Some requests made by the union such as, for example, the four-day work week, the reinstatement of a defined-benefit pension scheme and the creation of a "family protection" scheme, which would require companies to pay workers made redundant to do public service work, could prove too much for the auto companies.
The fears of the automakers
An excessive burden? Given the relative strength of their balance sheets and earnings, automakers are likely able to absorb wage increases. But the stakes don't end there. Corporations fear that the required changes may somehow undermine their ability to compete with global competitors and with those that do not include trade union representation, at a time of acceleration of transition to the production of electric vehicles. This last aspect further increases the value of the game even for the union itself, since the production of battery-powered cars requires fewer workers, at least 30%. compared to those required for the production of traditional cars and trucks. The Uaw is asking that the companies take on the redundancies and that the car contract be extended to the blue-collar joint ventures with the Koreans for the production of batteries. But on this the distance, if possible, is even more sensitive.
What will be the consequences of the probable conflict?
Although only about 10% of US workers belong to a union, the outcome of the negotiations underway in Detroit could have repercussions on the economy in general, not just causing productivity disruptions in the event of a strike, but favoring cost structures and higher expectations in the event of large wage increases. "The psychological impact of the strike - Joseph Amato of Neuberger Berman goes on to hypothesize - could resonate for a long time in the union offices, in coffee breaks and in the company's upper floors".
At the macroeconomic level, on the other hand, the high cost of labor could make the goal more difficult Federal Reserve for a soft landing of the economy. The central bank will carefully evaluate the effects of wage increases on inflation, which is now down but not too much, as Jerome Powell underlined. The bargaining match could therefore have serious implications for central bankers' rate decisions and the potential soft landing of the economy. Also because the blue-collar workers in Detroit signal a more general movement, as demonstrated by the (victorious) disputes of the employees of Ups and American Airlines. From January to July of this year there were 214 strikes involving 325.000 workers, a sharp increase compared to the disputes a year ago (76 employees involved.
Therefore, this fall, the US automotive sector will account for an important leading indicator of the future path of inflation.
