I’m conflicted when it comes to the strikes and demands going on for much higher pay and older style benefits for autoworkers. The basis (boiled way down) in my estimation is that the auto manufacturers are enjoying huge profits and rewarding their executives but not the general workforce.
Here’s where I have some concerns- the manufacturers raised prices significantly while they were struggling to purchase parts during the pandemic. They were paying huge premiums for those parts and so the increase was understandable. Now things have settled out and prices for materials are pretty much back to pre-pandemic levels. But they have not reduced the prices of their products to match and so are making big profits.
Now the workers want a share (and rightly so, if allowed to continue) but this just contributes to the viscous cycle. I still refuse to buy a car while the prices are inflated and think the right solution was to begin reducing the prices back down. This cannot be allowed to be the new normal. Far too many people are priced out of the car market (new and used) because of this and only a precious few are benefitting. The answer is not to accept this new profit level as normal and just divvy it up more fairly, the answer is to bring the prices back down. Clearly, consumer pressure has not had any effect, perhaps there needs to be something else done to pressure automakers (and their dealerships) to return to the prior pricing scheme. It’s not like they were going broke back then. Now the profits appear to be obscene by comparison…
Autoworkers should realize that they are going back to what was unsustainable in the past. Pensions, early retirements, 20%+ increases…they are going to price themselves out of the market and labor will go elsewhere… my 2c
The union agreed to tiered wages. New hires get low pay. Senior workers get higher pay. New hires may be “temp” workers with no benefits. And little chance to move up as reg workers. Gm offered 20% raises over 4 years which means what? Same % raise for all workers? Workers want 40% raises? Really? Gm workers realized they don’t like what they agreed too?
Let’s see a graph of gm profits over last 10 years.
Economists are warning this will have a huge ripple effect just when it is the last thing the country needs right now. I think gm make somewhere around $4000 per vehicle which is not a huge sum to work with considering the proposed $100,000 annual employee cost. I don’t deny that a boost in wages is needed, but this is not a healthy industry anymore with Soviet style government intervention. Everybody wants a 40% increase to cope with rising costs. It’s just Econ 101. Ain’t it just great?
The profit margins for GM for the last 5 years has been, 6.1%, 7.5%, 5.1% and 4.9% for 2022 to 2019 respectively, I don’t consider that obscene, viewed as a percentage, do you still?
Would you still consider it obscene if I compared it to my high-yield savings account paying 4.25% interest… and I don’t have to argue with the UAW, suppliers, employees and customers to get that!
Now I have NO love lost for GM nor the UAW but this is simply history repeating itself. When inflation was out of control in the early 80’s we saw the same arguments and actions by both sides even WITH “cost of living” adjustments in the contract. They know they have the automakers over a barrel and they are exploiting it for whatever they can get.
A job is worth what a job is worth. I have absolutely no issue with workers negotiating a wage that’s commensurate with the effort and skills they bring to work. But corporate profits have nothing to do with that wage. How much money a CEO or a corporation makes is entirely irrelevant to what its workers make.
I was incorporated and ran my own business. One year the company operated at a $7000 loss, another year it operated at a $34000 profit. My employees wages stayed the same both years. Sure, the guys would have been happy to share in the profit. Would they have been happy to share in the loss? No. Nor should they.
My personal opinion, if your skills, abilities, and work ethic are unrewarded in your current job, find a better job. If there are no better jobs, perhaps your skills and abilities have gotten you as far as they are going to.
Story interviewed 12 yr worker in paint dept making $32/hr. And 22yr worker in QC making $32/hr. I think union ensures any worker hired after X date basically makes same wage. New hire makes $18/hr. Does 25 yr guy want 3 yr guy to make same money? I’d say no.
There are two sides to this. The 32 hour work week with pay for 40 hours is insane but with the increase in the cost of pretty much EVERYTHING these days, a pay increase seems reasonable. Even some of my most pro-union friends are completely against the 32 hour work week.
IMO it’s just the normal power struggle between the corporate executives who are advocating for the stockholders, and the workers who are advocating for themselves. Seems a fair fight b/c both sides will come out winning if they reach an agreement. Both will lose if they don’t. I wonder how many dollars of a typical $40,000 new car sales price goes directly to the striking employees in their paychecks? It seems like the majority of the $40K would go to the suppliers, insurance companies, legal-eagles, utility companies, marketing, warranty repair costs, etc.
I haven’t been to the ford employee site in years but back then it seemed like new hires were essentially paid minimum wage I think to gain approval by the senior workers in the last big go around. Maybe coming home to roost now at ford anyway but their compensation package seemed to generate a lot of dissatisfaction. Then Chicago? In some of these plants it will only get worse. I just haven’t kept up on the whole thing, but this will affect dealers, parts, prices, all the way through the economy. Remember jfk battling with the steel plants? But history tells us prices will never come down again so we’ll have the cost push for years to come when everyone trie to catch up.
I remember the revolution against government spending and our locals are at it again with increases nearing 10% and tax rates increasing the same also. The whole thing was terribly unnecessary. Can’t blame anyone for trying to catch up but the storm clouds are rolling in.
Well, GM is not the worst offender as far as I can tell. However, if you look around, there is some disparity in the number reporting. I tried to review quite a few sources and the numbers I find are significant. Here’s an example-
Depending on source, Stellantis had around $176-$188B in revenue in 2022. In 2021, they made $2.9B in profit. Last year, they made $22B.
Ford had around $136-$165B in revenue with 2021 profits of $1.28B and $18B last year.
Profits there have gone up 10+ fold YoY with executive compensation increasing something like 30% in that same time.
Look at Toyota- 2022 revenue of around $279B with profits consistent YoY at $21.2B and $25.4B respectively. I wonder why their profit in 2021 wasn’t as abysmal as the others?
I am quite familiar with the numbers games. You can make a ton of profit but what is reported is affected by all the accounting actions countering the profit. What I do know is that car prices have risen something like 40% in the last few years and are not going back down. Costs have abated and so that is translated into profit and most sources cite it as record profits. If it feels and smells like a rotten egg, it’s probably a rotten egg
I did get a chuckle out of the 4.25% interest and “high yield” in the same sentence. It is tough to stomach. Apparently, we both lived through the 80s and watched money vaporize before your eyes even with 21% interest on savings accounts. I don’t want to live through another one of those periods!
I was a young teen in the early 80’s, too young to care much about mortgage rates, but do remember this:
One of my older cousins had just gotten married, and one night came over to see my folks. It seems he and his wife found a house they wanted, and their mortgage broker could guarantee the rate of 12% if they signed in 3 days, but they were a little short on their down payment. Could my folks loan them $1000 to ensure lock in that rate?
People today are blanching at 7% mortgages, first house I bought in 1995 was at 6.5%.
I believe labor costs are the 600lb gorilla in any manufacturing operation. They are, where I work, by a wide margin and we do not have half the benefits being discussed in these contract discussions.
I’ve got nothing against labor getting their fair share. I am all for that. My gripe is that the prices are artificially inflated and we’re (consumers held hostage) the ones lining everyone’s pockets. If they weren’t making record profits, we probably wouldn’t be having this discussion, at least not at these magnitudes…which I believe are unsustainable long term…
We built in 76 the first time. I went fir a mortgage in 75 but the banker said they needed 50% down which was a little rich. In 76 it had fallen to only 20% down but the price had increased 40% in one year. So you pull the trigger before things got worse, if you can. So we now have a new generation that have no memory so will repeat the same mistakes. Paid every penny of my school loans too with 6% interest, and the wife’s school loans.
Yeah I know. I had the benefit of good parents, reasonable intelligence that some here would argue, good health, and mechanical aptitude that allowed cutting out the middle man. I feel sorry for kids having only a birthing person, and can’t change a tire or light bulb. (I had to change the light bulb at the in laws. Phd in music).
Many homes at that time in Colorado were entirely seller financed, no bank involved at all. Sold on contract, often w/no down payment. That was the only way many sellers could unload their houses, b/c of high bank interest rates and bank demands for large down payments. In most cases that method seemed to work out ok for both seller and buyer.
Apparently, many people don’t recall those days. I have to confess that I was never able to get more than 17% interest rates on my savings accounts, but that was still sufficient to enable my first home purchase.
It’s all about timing, and even with an initial mortgage rate of about 17%, my brother and sister-in-law were still able to profit from their home purchase.
It’s all about timing, but you have to remember that you don’t control the timing, and if you do manage to prosper, it wasn’t necessarily because of your financial prowess.
My first house was financed with a 10.63% loan and we happy to get below 11%! My college tuition kept jumping 25% a year when inflation was 15%. I managed to complete school with a small loan even though I was earning increasingly more money as an engineering intern at GM.
BTW costs to build those cars has not dropped a lot even by now. Friends still working in the industry tell me premium shipping costs are huge due to continuing parts shortages. Better, but still difficult.
Anyone who has had a car sidelined from lack of repair parts understands that supply shortages are not over.
Sorry but I never heard of bank fdic savings account rates in the 17-21% level. Even my cds never approached 5%. In 76 the standard mortgage interest was 9%. They just adjusted the down payment. My folks sold their house on a contract in 66 and I think the rate charged was the standard 6% because contracts were very risky for the buyer. One missed payment and the contract could be cancelled. I think the reason they did it was because the buyer could not qualify fir a bank mortgage. As I explained to a lawyer in dealing with habitat, a contract was a contract for a deed, not a mortgage where you get a deed up front with an attached lien. So if you didn’t fulfill the contract, you didn’t get the deed. He was on the council too so must have missed the real estate class. I’ve run into some dumb lawyers. Not to change the subject.
In 1965 a standard stick built rambler with lot and a two car garage and hardwood floors was $16,000. So no wonder people are living in tents. Of course my dad changed jobs because he wanted a 10 cent per hour raise and they wouldn’t give it to him. They said then they’d have to give the Anderson boys a raise too. So he got an increase of $1.50 an hour at the new job, and took his pay stub down to show the Anderson boys just to sow a little discontent. Dad was not one to trifle with. Heh heh. Family history.