- In the face of a good offer from General Motors, the United Auto Workers' 50,000 members still went on strike last week.
- It's the first GM strike since 2007 and the first major action against an automaker since 1982.
- The UAW insists that it is trying to get the best deal for its members, but GM had made numerous, significant concessions already.
- The union had been bristling for a strike since early 2019 and had backed itself into a corner, hence the walkout over what appears mainly to be a dispute about hiring temporary workers rather than problems with health care or profit-sharing.
- The UAW needed a big show, after failures to organize plants in Tennessee and Mississippi.
- The UAW has also made no progress in organizing Tesla, which operates a factory in California that was unionized when it was operated by GM and Toyota before the financial crisis.
- By choosing spectacle over substance, the UAW has sacrificed good faith in its negotiations with GM.
- Visit Business Insider's homepage for more stories.
Tesla and Volkswagen could take a look at the strike against General Motors that started last weekend and breathe a sign of relief: "Whew — that could have been us." Nearly 50,000 GM workers walked off the job, shutting down production for the country's biggest car company, the biggest labor action against an automaker since 1982 and the first since 2007, when GM endured a short, two-day strike.
To be honest, VW might not breathe a sigh of relief because if it had labor unrest at its factory in Tennessee, the German automaker would be OK at least with the structure of collective bargaining because that's what it's used to from the heavily unionized homeland.
VW actually took a hands-off attitude toward 2014 and 2019 unionization efforts in Tennessee, on the basis that a union there would enable better alignment with workers in Germany. But organizing efforts failed anyway, due in part to staunch political opposition in a so-called "right-to-work" state. (Japanese and German automakers have established numerous factories in the US South, and none of them are unionized.)
The union's abject failure at Tesla
Tesla is a different story. It took over an old GM-Toyota plant in the Bay Area — a plant that had been unionized prior to GM's 2009 bankruptcy. California is decidedly not a right-to-work state, and for years, there have been rumors that an organizing effort is underway at Tesla. Management, including CEO Elon Musk, hasn't strongly opposed collective bargaining, but they haven't endorsed it either.
Perplexingly, however, union efforts at both plants have either failed (VW) or failed to launch (Tesla). Neither campaign had the kind of bare-knuckled (not literally) quality of an unsuccessful bid to organize a Nissan plant in Mississippi in 2017. In VW's case, there were two votes to unionize, separated by five years (2014 and more recently in June); the UAW lost by a slight margin in 2019, just 57 votes in a potential bargaining unit of about 1,600 workers.
In the South, the anti-union script usually involves the nonsensical threat that the big car maker will close its factory and move production elsewhere, immediately killing the jobs.
Volkswagen and Nissan operate unionized plants everywhere but the US South, so the threat is meaningless at that level. But these companies have also spent billions to set up production in one of the world's most lucrative auto markets and have been investing in something called "backfill" — choosing the South not just because of its tolerance for lower wages but also due to its appealing demographics. There are enough future workers in Tennessee and Mississippi to keep factories staffed.
Tesla's somewhat indifferent counterarguments maintain that its workers, in Silicon Valley style, have equity in the company and don't need a union to improve their deal. But Tesla also has the only car factory in California, and certainly in the Bay Area. With approximately 10,000 workers building cars — that's a lot, by the standards of modern automaking — the company can also quietly note that it has the best deal in town for folks who lack advanced degrees.
Neither argument should prevent the workforce from organizing a bargaining unit, however. I've always thought that Tesla should simply look completely the other way and accept that what was a UAW shop before should logically be once again. The UAW should be able to coast into adding a significant number of members.
But, pointedly, it hasn't. Worse, the organizing effort at Tesla seems to be going exactly nowhere. If you're looking for the biggest miss by organized labor in the 21st century, this is Exhibit A.
So what does this all have to do with the GM strike, which has now lasted a week?
GM gave away the farm — and the UAW went on strike, anyway
On its face, the strike is hard to understand. GM might have come to the negotiating table with some tough proposals, but ultimately the company appears to have bailed on mostly everything except the question of using temporary workers to align its cost with its Detroit competition and with the plants in the South.
The UAW has been grousing about how profitable GM has been over the past three years, as US auto sales have boomed, but the hourly workforce has gotten an average of $11,000 in annual profit sharing each year, and in 2019, if the membership approves a new four-year contract, it could get another $8,000.
The union is also playing chicken with GM's credit rating, which could fall into junk territory if a strike drags on, making it more expensive for the company to borrow and undermining its ability to invest in the expansion of electric mobility that could secure the UAW membership a brighter future (GM representation has declined by about about 20,000 since the last action against the company, a short-lived strike in 2007 when about 70,000 workers walked off).
Don't get me wrong: collective bargaining is collective bargaining — it's rarely pretty. I also like to remind young journalists coming into the business of covering cars and planes that both industries remain significantly unionized in the US. That's a fact of life. Both sides deserve a completely fair shake.
But unfortunately what's been happening with the GM strike — being the largest since 1982 and intersecting with the woolly leftism of several presidential candidates — is that the walkout has taken on an alarmingly romantic quality. A declining labor movement is flexing its muscle against a company that had to be bailed out by the taxpayer in 2009 and has been racking up the earnings ever since. Time to share the wealth!
Bunk. GM has already shared the wealth. The company is also deviating from its strategy of "right-sizing" its global manufacturing footprint, to deal with the most ruinous problem in car-making: excess capacity. In a US market that's peaked at around 17 million in annual vehicle sales, with the market share of about a dozen companies completely locked in, GM still has enough extra capacity to build a million vehicles.
To sweeten its offer to the UAW, the company reversed course on a 2018 decision to shutter a factory in Ohio that had been living on borrowed time for years, while also rescuing a Detroit-area plant slated to be idled by earmarking it for a new electric truck. (GM now wants to set up a unionized battery factory near its Lordstown, Ohio, facility.)
Old-school confrontations versus a partnership with business
I could go on. Chatter around the car business suggests that GM's offer to the UAW is a good offer (I've asked the UAW for their thoughts and haven't yet gotten a response). Based on the usual picket-line interviews, the membership has been well-prepared to articulate its position: we want a bigger piece of the pie, we want cars to build in the US, and we want the temporary workers to have a better life.
GM's offer looks as though it would deliver most of that. The strike, then, is theatrics.
I get it. The union has to do something, and not just to distract from a corruption scandal that's rocked its leadership, with the FBI raiding president Gary Jones' house and alleging an embezzlement scheme. The UAW is failing at its mission, which is to sell its expertise and negotiating skill in places like California and Tennessee.
The reason for this isn't that complicated. The union is drifting back to the idea that management must be confronted, and that if a strike threat isn't real, then Big Auto will ultimately triumph in every confrontation. The wind is sort of at its back.
Some modern advocates of organized labor, striving to link unionization with matters such as inequality and corporate malfeasance, have decided that Big Labor's choice to become a partner with employers was stupid. That was just a neoliberal stab at turning outfits such as the UAW into blue-collar management consultants — the time has come to put down the Chardonnay and hoist the Bud Light, along with the picket signs.
Other labor experts also think that strikes beget strikes and have joined the very real struggle of teachers in West Virginia with the notion that for labor to reassert its relevance (only about 10% of US workers are unionized, well down from peak mid-20th-century levels) it has to engage in shows of strength. The UAW had in fact been doing this since the beginning of the year, saber-rattling and girding for a strike; by some measure, even if GM hadn't given away the farm with its offer, the membership still would have had to walk.
But the strike is still pointless. GM doesn't have that much left to give up.
Maybe I shouldn't say pointless. The display of labor power, even if it's limited to a few weeks, could move the needle in Tennessee and encourage the hapless Tesla organizers to get their act together.
The strike has a silver lining for GM
Interestingly, the strike isn't all bad for GM, despite estimated daily losses of $50 million in revenue. The car maker has about 80 days worth of inventory, which is enough to fully stock dealerships for a few weeks. But at this point in the year, with only a quarter remaining before the books are closed on 2019, the stockpile of vehicles was looking a little hefty. The strike could bring that into a better fit with demand.
Call it the silver lining. The undiscussed benefits of a walkout don't make the decision to reject GM's offer and throw the contract into chaos any less baffling. What makes this all really troubling is that GM and UAW, as they always have before, will achieve a new agreement. The workforce isn't going to stay out for months, at $250 per week in strike pay, with some relatively minor points left to resolve.
Organized labor advocates insist that for workers to get a better deal, they must grow their ranks and increase their bargaining power. For them, the GM strike — given the rarity of old-school, heavy-industry actions — could be symbolic.
In many ways, it regrettably already is. If you look at the facts, the UAW has lost membership, has been unable to organize plants that it should have, and backed itself into a corner with GM, which sensibly thought it was pre-empting a strike by producing an offer that the membership likely would have rushed to ratify.
This is what we've come to: Labor as spectacle. Not that we should be shocked. Politics is also spectacle, more so than at any time I can remember in my life, and if the UAW wants to use that to its advantage, it needs to get in on the game, especially with a national election in 2020 and the White House up for grabs.
What's lost is context. And with it, judgment. This is where business is supposed to shine in America, as stakeholders work out their differences and move toward shared goals, regardless of what's happening in politics, much of which is downright silly, and what's happening in the larger culture, which can become as unpredictable as it was in the 1960s or as staid as it was in the 1950s and to a lesser degree, the 1980s.
The country relies on the broad concept of good faith — the idea that various actors genuinely believe in their positions and are willing to both stand up for them and to give ground when the other side provides a valid alternative — to support the main pillars of society: civics and culture, politics, and business.
Good faith is breaking down all over the place, taking good judgment with it. If you have any doubts, you can look at President Donald Trump or at his feckless Republican enablers in Congress. But what might be more troubling is the shellacking that American business is being subjected to now, much of it based on a bad-faith exploitation of world-historical events that business didn't have that much to do with (and by "business" I don't mean "finance" — the two have separated in their priorities since the 1980s). That's coming from the left and the right.
I wouldn't have expected it to come from the UAW, which has been around long enough to have a beneficial relationship with American business. But bad faith is what it's fallen into with the GM strike, and once you cross that bridge, it's hard to come back.
This is an opinion column. The thoughts expressed are those of the author(s).
Get the latest Tesla stock price here.
Amazon invested $700M into an electric vehicle startup. Here's how Rivian is doing exactly what Tesla isn't.