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“UAW President Shawn Fain stressed that the Detroit automakers were making billions in profits” – keywords are [were making]. Increasing the prices? Good luck with that.
This could very well be the beginning of the end for the Big 3. I hope not but time will tell.
Nah. $850-900 on a $48,000 vehicle is less than 2%.
The article points out elsewhere that prices escalated 25% over the past 3 years…and people are still buying cars. 2% isn’t enough to kill the Big 3.
Profit at GM in 2022 was $14.5 billion. After all of that hand-wringing, the fact that the labor costs have increased by $1 billion really shows that the Big Three were acting in bad faith with their “the company could be doomed” rhetoric. They will be fine.
The price increases will have to be greater each year than for the
non union auto plants.
Add the rising interest rates on top of the projected price increases.
There’s also the fact that the EV market is still not viable.
Ford is losing $ 60,000 dollars per EV unit manufacturered.
Jobs will be lost.
The non-union companies are likely to raise wages and benefits to prevent labor bleed-off to their competitors. Yeah, the EV market is going to take a while. You don’t make a profit on something that has such a big capex budget and will take years to scale in the first 1-2 years of sales.
A R–
There may indeed be some labor bleed-off away from Japanese and German and Korean companies to the Big Three. But that’s presuming the Big Three can ride boldly onto the sunset through the aftermath of these wage hikes, raising prices on their vehicles without causing demand to flag. What if they don’t? What if, as basic laws of economics would tell us, demand continues to decline as they raise the price of a Ford Focus or Chevy Malibu? Ford has still lost half its US market share since 2000, and it’s the only one of the three that didn’t get bail-outs
Demand was flagging on American vehicles even when their prices were stagnant. And American vehicles notoriously depreciate faster. And, as someone else noted, the Big Three have a sliver of a market share in Europe. Might be better in Latin America, I don’t know, but I don’t imagine there are many foreign markets where GM/Chrysler/Ford have as big of a share as Volkswagen does in the US. Maybe none.
This is a company turning out increasingly luxe working conditions for its manufacturing force without compromising on the wages for exec-level admin. This is to be expected, but generally it can only work well if the product is growing in demand. In many parts of the country, you can go 20 cars before you see a Ford or Chevy on the road.
Lauren, have you been inside a Big 3 (or any mass production) factory? “Luxe” is not a good descriptor of life on the line.
Chris B–
It probably isn’t Alpha Bet or Twitter (under Dorsey–not Musk), but it’s a far cry from conditions under Henry Ford.
They get to eat meals sitting down and they don’t resort to tourniquets when there’s an injury on the assembly line. It might be slightly more grueling than a Starbucks barista, but baristas aren’t making $42 an hour. In a state like Michigan, $42/hour is well above the median household income. HOUSEHOLD, not individual.
The three largest automakers in the world are Japanese (Toyota), German (Volkswagen), and Korean (Hyundai). Stellantis is only fourth because of the Italian/American/French merger.
A majority of American vehicles are being made in other developing countries. Situations like this are a major reason why.
Or—they could cut admin expenses and stockholder premiums.
You really don’t understand business or economics
But but…the stock buybacks! The executive bonuses! Whatever shall they do?!
Why own stock then in GM???
Remember, the profits should go to the shareholders. They are
the ones risking their investments ( usually invested in retirement accounts ).
Keith, there is basically no risk in owning GM stock because the company is “too big to fail”.
The profits should go to the employees and their health and retirement. They are the ones working day in and day out to make money for the company, not the shareholders.
Under your pretense, that profits should only go to the employees,
then why by stock in a company.
See what happens when people start pulling their money out. The company
will collapse.
The profits belong to the shareholders. They are the ones taking the risk.
Otherwise it makes no sense to buy stock in a company.
Good luck raising capital.
The non union plants do just fine without the entitlement mentality of its
workers demanding the profits. In fact they are more productive ( and
not by a little ) and more profitable.
You’re assuming a false narrative where it’s either pay or workers or pay your shareholders. It’s about priorities. Pay your workers just compensation first, THEN address the shareholders. Profit is what is left over after expenses, it’s not an excuse to screw over your employees to make a faster buck. I’m fact, businesses have done that so much that it’s why we have labor laws and labor rights. Employees are 100% entitled to unionize and negotiate for their salaries and benefits, just like corporations can develop partnerships and bargain for deals on raw materials, sales, and cross-promotions. Deal with it.
Also I hope the non-union plants wake up and smell the roses.
UNIONIZE!
If you can’t raise capital and also pay your workers fair wages and benefits, then you don’t have a good business model and don’t deserve to survive as a company. Full stop.
A R–
Annnnd…if you’re too stupidly possessed by ideology to see how there’s no definition of “fair” that will ever satisfy the permanently-aggrieved, then you deserve to go out of business when you think you can pay burger-flippers $15 an hour, charge $24 for a Big Mac, and still expect customers to flock to your product.
More luxury beliefs from our utterly out-of-touch bourgeois who deserve all the urban misery they keep voting for.