The United Auto Workers union is threatening a strike against at least one and perhaps all three of Detroit’s auto makers - GM, Ford, and Jeep/Chrysler (Stellantis). The complaint is that the union workers are not being paid enough, that the gaps between what new and older workers are paid is too great, and that job security must be better guaranteed. To put things in perspective, let’s review what the auto workers are being paid now and what they would be paid if their demands are met by the three Detroit based U.S. auto makers. Bear in mind that other makers in the United States such as Honda, Nissan, BMW, and Volkswagen are not union shops and thus not part of the negotiation. Today, at Ford, the average auto worker is being paid $78,000 annually or about $37 per hour (this roughly holds also for GM and Chrysler).That compares to the average U.S. manufacturing wage of about $27 per hour. Compare all that to the average Honda USA assembly line workers $51,000 annually. The UAW is now saying that the Detroit auto companies are cheapskates who need to raise wages by forty six percent to somewhere over $100,000 annually over the next four years or else the union will go on strike. MARKET SHARE AND AMERICAN CARS I can remember when GM made half the cars sold in America, when what we called the Big Three (GM. Ford, Chrysler) made virtually all the cars sold in America. Indeed, I can remember when the Big Three were the world Big Three as well as the U.S. Big Three. Okay, I am an old guy (just turned 82), but just saying. Now, we don’t call them the Big Three any more. Rather, they are the Detroit auto makers. GM is down to about 17 percent market share. Number two in the U.S. market is not Ford, but Toyota. Taken together the Detroit makers account for barely half of the cars made in America with Toyota being joined by the likes of Honda, Nissan, Hyundai, Subaru, BMW, Mercedes, and Volkswagen to make the other half. But here’s the real kicker. Ask yourself the question of who makes the most American cars, that is to say the cars with the most made in America parts and content. It is not any one of the Detroit Three. Rather, it is Tesla, the new Electric Vehicle maker which holds the top four spots for made with American parts and labor ratings. Okay, maybe that is to be expected since Tesla is a whole new, revolutionary type of vehicle that was relatively recently invented in America. So let’s look at who follows Tesla in terms of most U.S. content in their cars. Well, it is no one from Detroit. Rather it is Honda. All of the slots from number four to eleven are Honda with the exception of number five which is Volkswagen. Toyota pops up at number twelve and then the next three slots revert to Honda. Ford finally shows up at number sixteen and from there on Detroit does somewhat better. But, if you are looking for the major maker of real American autos that are not Tesla, it’s Honda. Indeed, given that Honda sells more cars in America than in Japan, and that it makes the most American cars, I suggest that Honda be designated as an American citizen. KEY POINT The really key point in all this is that the UAW, which used to represent virtually all auto workers in America, no longer represents much more than half and declining. And just to show you how it is declining, let me mention my own recent foray into the market. I have mentioned this in an earlier article, so please bear with me for a bit of repetition. I am in the market for an EV. It could be Tesla, but something like the Ford Mustang is more to my taste. Except, guess what. The Mustang is not made in America. Rather, Ford makes it at a factory in Mexico. Mexican workers, of course, are not paid $75,000 annually and are not threatening to go on strike if they don’t get a 46 percent increase. Indeed, I can imagine that Ford executives are planning to move production of other lines to Mexico as fast as possible. REAL TOUGH GUYS DON’T DO SUICIDE All the numbers show that the UAW has been on a losing streak for at least the past forty five years. It’s membership is way down. The cars it makes are not doing well in competition with those of its Japanese, Korean, European, and soon Chinese competitors. Indeed, one might think that it would be interested to see how its competitors operate and increasingly take all the jobs. Of course, the come back to that is to say that the foreign competitors pay low wages. Some do. But not all. The European and Japanese auto makers also have unions. Indeed, the European unions are so strong that they are often represented on the auto maker’s board of directors. Just ask yourself. Have you ever heard of a strike at Toyota or at any of the German auto makers? No, you have not, Toyota has a big union. In fact, large numbers of the Toyota management team are members of the Toyota in house auto union. In Germany, union members are on the Board of Directors of companies like BMW and all the companies meet together with the union as well as with government officials in one major compensation setting effort every four or five years. There is no talk of a strike. Rather the discussion is of the prospects for the industry in the next five to ten years and of the needs of the workers in the context of the national economy and likely evolution of the global industry. It is a peculiarity of Anglo-American manufacturing history and tradition that labor and management are always expected to be enemies doing their best to undermine one another. It is time to put paid to this tradition. They are not true opponents. The union should not be looking for a fight, but for a way to work with management so that its workers can remain competitive with those in Europe, Asia, and Latin America. This is not just a matter of the Auto Workers Union. All too often in America, labor and management see themselves as at war with each other. It is far past time to acknowledge that they are at war, but not with each other. Rather they are in life or death competition with the cooperative labor/management teams of other countries that are developing new products faster and making them with higher quality and for less cost than we Americans are doing. © 2023 Clyde Prestowitz |