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journey, Gary John, how are you. I'm doing well, boy.
We got a momentous show, a momentous day for the auto industry right now.
Yeah. Usually I do something historical, but you know what, in
a few hours from now, this industry will be making history. That's right,
and we may as well. Bring in our guest, Merrick Masters from
Wayne State University. Great to have you back, Merrick. Well, it's
a pleasure to be here. Thank you for having me, gentlemen. Yeah.
Well, as you know, I'm referring to this as D Day because it's momentous for the industry right now. How do you see it? Well,
I think the way Sean Fayne characterized it last night as being a stand up relative to us sit down illustrates the historic moment that we are at.
That this is an unchartered territory that we are entering, and the UAW is experimenting with a new form of strike in an industry which has grown used to the targeted approach of the past several decades, and it'll be very interesting to see how it plays out. It's a risky strategy. What is unknown at
this time is how the companies are going to respond. But I'm a believer
in the law of physics that for every action there will be some sort of reaction, and I find it hard to believe that they'll be docile in terms of how they confront this reality if indeed they are going to go out on strike at midnight tonight. Right you know, a lot of people watching this
show, we'll already know the answer because we've got the live audience right now, but most of the audience comes over the weekend, so they'll know.
But I'm just signaling that to anybody watching right now. As of this moment
as we record the show, we don't know if there's going to be a strike for sure or not. But we've got some guesses and we'll get into
that. So, America, I want to ask you. I read a
quote from you that from the Detroit Free Press, and so I'm going to quote you to you, and I want you to explain what you meant by this quote. Sean Fayne's negotiating strategy for the members demands serves to throw the
companies off balance. The strategy reflects open communications industry wide bargaining with a labor
centered perspective and a willingness to strike all three companies while waging a corporate campaign to put additional pressures on the companies to make more favorable agreements. I read
that, I thought, Gee, they're open. That's a good thing.
You know what's different about this and why does it matter? Well, I
think let's talk about openness, for example, transparency. Clearly, Sean Fayne
has been more open about this negotiation than his predecessors have been in the past about revealing what the demands are on both sides, and that is living up to a promise he made to his members to be more transparent. No how
he operates the union, he feels a lot of internal pressure. I'm certain
to live up to that expectation. And he also has a court monitoring every
move that he makes. So he knows that he was elected by an eyelash
and that he's got to prove himself in this round of negotiations, and one of the ways that he can do so is communicating regularly with the members.
But I would say when you're open about things, there is a risk to associated with that, and that is sometimes when we are public about what we want. We become locked in those positions, and also it raises expectations on
the part of the rank and file, And if you start backing away from things, people may wonder, why are you backing away at this time?
Why not push it to the end. And I think one of the reasons
why he did what he did last night in telegraphing his strategy is that is also a negotiating tactic. And you can put pressure on a company in a
number of different ways, but one of which, in negotiations that you do is to educate the other side is to what the consequences of their actions are.
And he's telling them that if you don't make a better offer that puts us in the position to have a tenantive agreement by midnight tonight, you're going to have a strike. And that strike is going to be unusual, it's
going to be unpredictable, and presumably it's going to throw you off balance and exert more of a challenge upon you than would be the normal course of events that you could plan for. With that being said, we'll see how this
tactic might work and whether the companies move off their position. But I think
one thing that's clear is that the union believes and it's supporters outside of the UAW believe that the companies can make a better offer and that they are being a little stingy, and that therefore they think the union is doing the right thing and pushing the envelope in the situation. So Mark last night too,
right after Sean Fayne's live webcast on Facebook, Ford Motor Company came right out with its obviously prepared remarks, their counter their rebuttal to what he said.
There are several surprising things in there. Number one is that they said they
have given the union four offers without getting a serious counter offer. So I
want to hear your thoughts on that. Also, they said, Bill Ford,
the chairman, and Jim Farley, the CEO, met with union officials fully expecting Sean Fayne to be there with their fourth offer. And as I'm
sure you pretty much know, in classic negotiations usually you go through three offers and then and settle something. It seems to me going to a fourth as
a little bit unusual. And then they found out Sean Fayne wasn't even at
the meeting, and you know, I got reading between the lines that they were pretty miffed about that that here they thought they were going to give the union a really serious proposal including cola, you know, cost of living allowance, which I did not think they were going to do at all, elimination of all the tears, although John Fayne fought back a bit about that.
But I guess what I'm getting at is, what's your sense of the way these negotiations are going. That Ford claims it's made four offers without getting a
serious counter offer, Well, without being there, it's hard to determine what an offer actually is. I'm gonna say that I'm a little uncertain as to
what the position of the UAW is certain issues. For example, I don't
know if it's official that they have a demand out there for a thirty two hour work week. The UAW has never explicitly said that, although Sean Fayne
has referenced it as a something to think about. But that creates the ambiguity
in people's minds about what its position actually is. I think more generally,
the companies are going to be mythed because he's accused them as essentially being a wall and not forthcoming. He's filed unfair labor practice charges against two of them
and said they've been dilatory and their whole approach to this negotiation has been to delay, delay, delay. I would suggest that there is one reality here
that maybe he hasn't been touched upon as much as it should be, is that it is these negotiations with any one of the companies is very, very complex, with a lot of detail, and the devil is really in the detail. And I just look at Stilantis as a case in point. It's
thirty page proposal is very detailed, very specific, and really we'll take some effort to get through what they're asking to do in some of the operational issues and concerns that they have. And that's just one category of issues. And
they have a whole host of local issues to deal with on top of these national economic issues. And I wonder if trying to do all three companies at
the same time at the same pace has stretched one of the parties too thin, and they may not be in a position to actually get as much done as they would like simply because of capacity. But Mark, isn't it historically
that each company would have a negotiating team, you know, so General Motors has its people, and then the UAW has its people that represent them for general motors, that they're at a level that is executive but not necessarily the top. Yes, yes, but you have to think in terms of there's
new leadership at the UAW. I'm not certain about the experience level, and
they are trying to involve the members much more, which can delay the process as they try and keep them informed. And it's it's hard to determine,
you know, with a lot of turnover and new leadership, you know, organizations may have a hard time getting things together. One thing is certain is
that John Thing came in on March I think twenty six and his bargaining convention opened the next day. Now, I'm not saying this is the reason why
things my have reached the point of difficulty, but I'm just saying that they are complex and you have to really if you're going to negotiate all three at the same time, you have to have the capacity to do that. And
he's one person. He likes to be engaged in these things, and that's
going to be hard for him to do. And the limited amount of time
that they allow for these negotiations, so it's not common for you know, a party to be in negotiations. You know, they could have started these
in April and negotiate it up until now, but they're on a cycle that doesn't permit that. But one of the reasons why the Teamsters were able to
settle by their deadline of August the first was because they've been negotiating for quite a while and they've reached an agreement on some of the key issues before July the fifth, when the Teamsters walked out of the negotiations. I'm just saying
that, you know that there's a lot of potential things that may complicate these negotiations, and I think that may be one of the reasons why the parties are quarreling somewhat. You know, I think your point is well taken that
it's an all new team at the UAW. Correct me if I'm wrong,
But I think Chuck Browning, the UAW President for Vice president for Ford, is the only one who's been through the kind of set of negotiations before.
He has the most experience, and he has experience being the chief of staff of the UAW from twenty fifteen to twenty nineteen. He saw all three negotiations
and participated in those, and so I think he's got a good idea and handle on each of the contracts, which is important, but there's a lot of work to be done. You know, if you're going to make audacious
demands, is the uaw as lay with them. You've got to be prepared
to spend the time and invest the time and leave the other parties time to digest things, because it is a very very complex set of situations and people need to think through how they're going to make proposals. And I would say
there's another complicating factor here, which which has also been somewhat overlooked, is that if I'm one of the three companies sitting there and you're negotiating with all of us at the same time, I might be a little hesitant about coming out there first with my offer and public annoying it's going to be made public, and say I want to be the first one to go out there and put myself on the line. I might wait for the other parties to do
that. And it just seems that, you know, with a different dynamic
going on, not only in terms of the substance of the negotiation but the process, that it might have taken some getting used to. But that doesn't
matter. If there's a will, there's a way they could have found the
time. They could have made the time if the parties were willing to move
enough. What is clear is that they haven't been willing to move enough,
and it's going to take both sides that are going to have to move more than they have to come to some sort of a middle where they can get an agreement and avoid a prolonged strike. And the longer a strike goes out,
you know, the less valuable any agreement you come to. Is do
you think that the OEMs were surprised at the approach that Faint is taking or was I mean, did they think it would be just as usual? I
don't want to get into what their calculation was, but I think there were some people, some observers of Sean fame, that didn't pay enough attention to the statements he was making and understanding that this reflected not only a different tone, but a different philosophy. And his tone is not just that the companies
have had too much of a cozy relationship with the union in the past and that they were going to put a stop to that. His philosophy is that
there is essentially a struggle between labor and capital going on in this society in which one side has been on the winning side for too long a period of time, and it's time to rebalance the distribution of power and wealth in society, and that we've given too much to the rich and we haven't given enough to the working class. And this is a historic You mentioned this before in
your introduction. This is a historic moment that I think it is because this
is a struggle between in their mind almost as Sean Prayne phrased it last night in invoking scripture between good and evil. Right, Yeah, when you get
into the biblical references. Wow, we've never had that brought up before that
I'm aware of in UAW negotiations. That was amazing. Well, I know
they've been very, very devoted people at on both sides in the past, but usually those things are reserved and more, you know, for quieter, more closeted circumstances. But this is something that is out in the open,
and this really reminds me of the struggle that went on associated with the Civil rights movement. They're saying basically that this is workers have gotten the shaft for
too long a period of time. They've gotten into this mindset that their obligation
is to make concessions to help companies compete, and that they're tired of that approach. They want to approach that is more like what Alter Ruther identified.
You know, in nineteen fifty eight, he gave a very interesting speech on Labor Day in which he said, you know, our obligation is to get an agreement that respects the and these are his words, the equities of workers, shareholders, and customers. And I think that that reflected his philosophy that
he also said that labor had a right to its fair share. Of the
word he used was the abundance of companies and it shouldn't be something that they had to should have to get through the exertion of the muscle of collective bargaining.
Powerful words those, but I mean they were they were really reflected a different philosophy that we haven't heard much of in recent days. But I think
it's interesting that the speaker they're going to have tomorrow is Bernie Sanders, right, and Bernie's all in with them on that. But i'd like to get
your viewpoint on this. When Walter Ruther gave those very eloquent words, it
was a different world. It was gm Ford and Chrysler the biggest industrial corporations
in the world. It was boom times for the US auto industry. It
was the postwar boom. The UAW was a monopoly on automotive labor. Today,
gm Ford and Chrysler have less than half of the US market from a market share standpoint, there are tens of thousands of non union workers making millions of cars in the United States. And what I'm wondering is, in your
opinion, I love your viewpoint, is the union aware of the big picture here, that crippling strike is going to help the transplants, that crippling strike is very likely to drive a fairer number of Tier two and Tier three suppliers who were already financially stressed before this came up right out of business, and that they could win the battle and lose the war. Well, I think
that's a very interesting point. When last night, when he invoked the comparison
the metaphor stand up to sit down and talked about the strikes of the mid nineteen thirties, I thought, what's the difference between then and now? And
one of the first things that occurred to me is exactly the same thing you referenced, and that is in the thirties, although we were in the midst of recovering from the depression, and people had lost a lot in their wages, and clearly the workers were not paid well then and had a lot to complain about in terms of their situation. The United States was, particularly as
we entered World War Two, on the ascendency and we became really an economic hegemony. We dominated the world. We dominated manufacturing, We had a very
large share of the world's GDP. We rebuilt the countries that lost in World
War Two, and we rebuilt their manufacturing to our detriment in the sense.
So in the mid nineteen sixties, the three companies had over ninety percent of the market share in the auto industry. In nineteen sixty, the UAW had
one point one million members. That peaked at one point five million members in
the late nineteen seventies, and that was a years of struggle. But we're
in a much, as you said, a much different world now. The
United States is in decline, it's not in ascendency. We are no longer
the manufacturing power how that we once were. The auto industry in terms of
the Big three has shrunk and its market share from over ninety percent to just barely forty percent. The international competition from the you know, the foreign transplants
in the United States as well as China's trying to get ahead of the game and EVS is severe. And also you've got the non union ev producers in
the US which have added another element to it, and they're not going to miss any opportunity that they can to capitalize on any difficulties that the Detroit Three or the Big three find themselves in. So it is a much different error.
And I think it's also different from the standpoint that these workers it's hard to say that they're vastly underpaid relative to workers in general. I mean,
they've got gold standard healthcare, they've got defined contribution plans. It's not that
they don't have retirement plans. They do have defined contribution plans, which everybody
else has. Now they've got, as I said, better healthcare plans than
we do. And they're you know, they get lumps some payments which are
huge in terms of profit sharing, performance bonuses and the like, and they're going to get wage increases this year, which which most people are not going to get. Only six percent of the workforce in the private sector is unionized.
So I think it's really hard to say that it's a comparable situation.
And these companies are vulnerable. If these companies are crippled by this strike,
their future is threatened. And also they don't have to do business here forever.
You know, companies like Stilantis, it's not a domestic company, it's really truly an international company. These companies are going to look at if the
price of labor becomes really unacceptable, They're going to look to substitute labor with capital. They're going to look for ways to produce electrical vehicles with non union
labor. And also they may team up with they may be forced in a
position where they have to think of consolidation with other companies so that they can survive, and that could have all kinds of implications for their footprint, their employment footprint. So I think that we have to realize that this is a
this is a global struggle, and that the United States and the companies that employ these workers are just a sliver of this overall struggle. You know,
Ford has only five percent of the market share in the world right wording, one quick introjection. Hold that thought because Big Barney popped up a question,
there are most of the suppliers non union, and it's true that the vast majority of automotive suppliers in the United States are not UAW. The ones that
are do have UAW representation tends not to be across the board. It's in
maybe many of their plans, but it's all legacy suppliers that have that, none of the news suppliers. That's one point. Just that was a great
question, But yeah, it is, it is, and that's that contributes to the uaw's challenge, So go ahead. So so, the biggest change
I would submit between the last contract and this contract is the ascendency of Tesla in the auto industry. It's it's changed everything. And we talk a lot
about Tesla on the show from the standpoint of its valuation in terms of its stock and how other companies, meaning the traditional Detroit three, are desperate to get the same sort of love and attention from Wall Street as as Tesla does.
And so I'm wondering, is it not perhaps a result of the OEM's crowing about their profits that leads Sean fained to be able to say you know, look, guys, you know you're leaving us behind as as you're as you're growing your profitability. Well, I think that clearly something. The more
profit of where you are, the more they're going to look and say, we made sacrifices to get you to that point, and it's time that we get back what we gave. And I think that from an equity standpoint,
is what they're saying. You know, I think Sean Fame's language. I
thought this was very interesting because you haven't heard it much, but he said, we didn't give back those things permanently, we suspended them, and you know, I think there may be some debate about that. I was just
reading Steve Rattner's book again, Overhaul, and you get the impression that those things weren't given back temporarily, that these were real sacrifices that they expected to be made to make these companies profitable. I mean, GM was bleeding cash
and there were lots of reasons for that, but their automobiles weren't profitable and now they're You know, the auto companies are under government mandates to produce electrical vehicles. They respond as much to government mandates as they do customer preferences when
they build automobiles in California. I think it's by twenty twenty six, thirty
five percent of the vehicle sales have to be evs or else they face a fine. And that's going to go up rapidly. And so we've got this
whole push essentially by the end of the next day decade to be a complete electrical vehicle fleet and think of that transformation. So Teslab has captured the energy
of that and sort of driven the dialogue. And that's one of the things
that's interesting about this because all that we heard about in twenty fifteen, two sixteen, and even twenty eleven and before that was the comparison between wages at the UAW, the Big three and the transplants. Now it's the wages not
only at the transplants, but it's at Tesla. And you've got that situation
coming in. So you've got a new competitor that's come in and upset the
Apple carts and captured the market, you know, essentially as a dominant player in the market in the US. And what will be the market the market
there won't be an internal combustion engine market in fifteen years from now, and that's a huge transformation. Yeah, it is. You know, I want
to go back to getting some of your few points too, as to whether the Union is really looking at the big picture. You know, I raised
some of the other things that are going on, but Sean Fayne bores in on the offitability of GM, Ford and Stellantis, really the Chrysler Group in North America. And you know, look, if these companies were as wildly
profitable as he says they are, their stock prices would be going through the roof. And in fact, their stock is going nowhere, and they've been
going nowhere for years because even though they make decent profits on an EBITDA basis in North America, they're they're not very profitable. You know, Ford's return
on net sales is about five percent. GM is about six percent. You
know, when when Tesla and some of the other startups are at an EBIT basis of eighteen to twenty percent and some of the tech companies are at thirty to forty percent, I mean, who wants to buy GM and Ford's stock?
You know, it just doesn't happen. So this is why I'm questioning,
is Sean really seeing the big picture, or is he just trying to cherry pick data to drive his message to the troops. Well, I think,
you know, you look at these numbers and you say, well, they've got they're supposed to get there. I think it's thirty two or thirty
six billion dollars in profits this year. It's estimated they've committed to spend between
now in twenty twenty six one hundred and twenty billion dollars on electrification, and they're going to have to continue to spend at a very high rate. And
at the same time, they have to produce the internal combustion engine vehicles and do that with high quality so that they can sell them and finance their electrification efforts. And I look at you know, just I'm not an expert on
the finances of the companies, but I would tell you that Ford's debt and it's pretty high. And I think that when I look at these companies,
they don't seem that attractive. I mean, if I were looking up from
my business portfolio, I'd be hard pressed encourage anybody to plow money into them.
And you know, I know Warren Buffett, you know, was and had invested in General Motors and then Withdrew some of the investments. I think
he did that because of the timing, et cetera, to get, you know, get the most out of his initial investment and sell it when things were higher. But I'm not so certain that that that by going after their
profits and say every last dollar you make in profits, we want to go to something else, and therefore, because you make money, you can finance anything. I think, you know, that's just unrealistic. It's so expensive
to do the kinds of things they're trying to do. You know, they've
got the whole infrastructure of the industry they've got to help build up, and they're they're they're trying to do that with superchargers and really proceed as rapidly as they can. They've got compliance with emission standards, They've got all of the
sort of things that they have to do, and they're going to be hard pressed to find a way to do it. And the more you chip away
at that and cripple their capacity to be nimble competitively, the less they're going to be able to survive and grow. I mean, really, from the
uaw's perspective, the only way they're going to grow is if the auto industry grows because they're not going to make enough headway or haven't made enough headway in these other industries. If I look at the public sector, the public the
level of organizing in the public sector has been stagnant for forty years at about thirty four percent, and the private sector has gone down every year since the nineteen fifties. Where's the opportunity for a union to grow? I mean,
I hear people talk about Starbucks, and Starbucks has won elections in three hundred and forty eight jurisdictions to get a total of eight thousand newly represented members and they don't have one contract yet. Yeah, So I mean, I don't
know where they think the future is. And that's the challenge of the reality
the labor movement is is weak. It's competing not only against business, it's
competing against the environmental movement, which is pushing these companies in this direction.
And the bulk of ev is non union. It's more non union, and
so they're going to have the hardship of trying to organize those facilities and nobody's going to turn it over to them. Hey, look, merk, we
got to take a quick commercial break. Please stay with us. There's so
much more to go here, and you probably just saw the other pop up there from Pete Dog. He has a great question and I'd like to get
to that, but first a good shout out to our sponsor. How do
you bridge don't tire stocks shorter? On what roads? Is there hydrotrack technology?
But you don't have to know how the science works, just where the brain is. What really matters is they're bridge stone potential for u A W
strike tonight and Pete Dog just had a question of Hey, if they're not profitable, why are they putting five billion dollars into stock buybacks. Listen carefully
to what I said. I never said that the fire companies are not profitable.
I'm just saying their level of profitability stinks. And like I said,
there's stocks would be going through the roof if not for that, And that's one reason, under enormous pressure from Wall Street, they're buying back this stock because all Wall Street looks well I'm exaggerating here, but what Wall Street really focuses in on is earnings per share. And if car companies or any company
buys its own shares and retires them, fewer shares means your earnings per share is going to be going up, and that's going to bring in all kinds of other investment, hopefully, you know, especially institutional investors. But I
just wanted to make that point clear. Okay, back to another point that
you raised, Merrik, that I thought was very interesting earlier in the show.
You said, you don't think that the car companies are just going to be docile if there is a strike. You great physics equation for every action,
there's a reaction. What are some of the things you think that could
happen if there is a strike? Well, I would be hard pressed to
think that they're going to want to be in a situation where the UAW can time the strikes. So, for example, if they do use the selective
strike approach and they identify a handful or more than a handful of whatever the number may be of plants across one or more of the companies to strike tonight, with what Shaun Faine has said, this being the first wave, perhaps multiple waves strikes, that the companies would want to say, Okay, you can strike this first set and then we'll just sit and wait for you to decide which next one to strike. So, for our viewers were not familiar
with how strikes ordinarily happened. So if the UAW said, Okay, we're
picking Company X that we're going to strike them, all of Company x's plants would go down. And in this case, what Sean Fain is saying,
we're not going to take all the plants, We're going to take selective plants.
Yes, and it could be among all three not just one. Yes,
so he could strike hypothetically. You know, I think you've got at
Statlantis twenty six plants in North America, now at sixteen in the US.
I believe you could strike two or three of those. You could strike two
or three of the plants at Ford. You could strike two or three of
the plants at General Motors, and that would be your first wave. They
could pick up components, plant engines, transmissions that were vital to the overall production process, with exerting a wider impact. In nineteen ninety eight, this
was a local strike in nineteen ninety eight, not as part of the national contract, but they struck two plants in Flint, nine thousand, two hundred workers, but it ended up affecting over one thousand, five hundred workers.
And I think GM shut down thirty facilities. Actually, if you go back
to the strike in the nineteen thirties and mid nineteen thirties, it was really a wave of sit down strikes which began before the one at in Flint, at Fisher one and Fisher two, and it ended up being there were walkouts across many other GM facilities, so that at the peak of the strike there were about one hundred and twenty thousand I think workers out, and that had
a significant impact on the company. But you know, I don't think the
companies would want to just say, well, we're going to sit back and wait for you to time any strike. I think they're going to look at
what their options and I would I would imagine that they would explore what their ability is to lock workers out, because I would not want to be sitting back there and saying, you're just going to decide what day next week you're going to go out on strike. Strike two more here this week, two
days later, you strike three more over there. Eventually you may be at
your endpoint where you've struck all the plants at all the companies, you know, after a several week period, or it could just be several days he's left the timing of it. I mean he'll do it on an hour by
hour basis. Hey, Jeff Gilbert has just joined us. Jeff was going
to be on the early part of it. Just as we were getting going
forward, called the press conference with a backgrounder for some of the stuff.
Jeff, can you'd fill us in on anything or is it embargoed? Well,
you know, in this particular situation, it was more I had a chance to talk to certain sources at Ford Motor Company. Obviously, when it
comes to negotiations things like this, nobody wants to really have their name attributed to things. But but the sources tell me a number of things that I
you might find interesting right now. One of them is that negotiations are not
going particularly well. They made a proposal, they have not yet received a
counter proposal, and they were hoping to spend most of this day talking at a high level and that hasn't happened. So that very much makes it look
like there is going to be a strike come midnight tonight. It looks like
it could be very disruptive, depending on what plants they hit, because there obviously are ripple effects, and you know, both Ford and GM now have offered roughly twenty percent wage increases. GM with a statement about an hour ago
detailing their offer, but nobody is calling this a final offer. It's just
basically detailed an offer, and we haven't had a response from the UAW for it. Also admitting that they're preparing for a strike, that they want to
keep their parts depots running, they want to make sure any shutdown of plants would be done safely, and they want to make sure that the workers are protected no matter what happened. So that was kind of the gist of the
conversation I had with some of the sources at Ford. A lot of the
rest of it was talking about their proposal, things that we knew, their concerns that I believe. They said that if all the union got everything they
wanted and they had it over the past four years, Ford would have lost fourteen billion dollars. So that's how expensive they say that the proposal is that
the UAW wants to give. So that's kind of an update. So as
we take a look at things, it's not looking good. As a countdown
clock ticks to midnight, Yeah, Jeff, can you hold on with us a few more medicine? You gotta go Unfortunately, I have a day job
that I have to imagine that on the radio. Yeah, but I just
want I told you that I would check in when I had that, so I just wanted to give you the update. Awesome, awesome, Thanks for
were taking the time. We so glad we'll have you back on another show.
This topic is not going away, obviously, but a million things next time. Let's talk about something fun. Yeah, And so for those of
you and Detroit, listen to Jeff on news radio nine fifty WWJ and he'll be reporting about this regularly and constantly, right Jeff, I'll be reporting on it in my sleep. Yeah, okay, all right, thanks j Yeah,
thanks for that. So very interesting, Merrit. Yes, very let's
pick up. We're Jeff left off because you know, back in twenty nineteen
when the uaw AND targeted General Motors to go on strike, and as a background, Gary Jones, the then president, had the FEDS breathing down his neck for you know, corruption charges, ended up going to prison anyway at eight o'clock that night, which would have been the equivalent of eight o'clock tonight.
Several hours hence, as we speak, GM laid down a contract and it pretty much gave the union everything it wanted and they went on strike.
Anyway, I personally believe it's because Gary Jones, the president, needed the membership to rally behind him, as you know, he was facing you know, a court case and ultimately prison. But the union's excuse was, hey,
they threw that down at eight o'clock at night. You know that it
was too late for us to go through as you said, you know, the Stilantis proposals over thirty pages long, very complicated, very detailed. Just
what Jeff said there that Ford has thrown down a fourth offer, gotten no response as we record the show, it's too late, there's going to be a strike. Well, here's where I think, you know, from a
negotiation standpoint, this becomes important. And the point is that you know,
to become fixated on deadlines and say that we're going to strike at this point in time because you give us a proposal at eight o'clock and we haven't had time to digest it, and midnight we're going to go out and strike.
Whatever your motivation might be, and sometimes it's not an altruistic motivation, as it might not have been in the case of Gary Jones, who knows what was going through the minds of the leaders at that point in time, because they were so corrupt and so compromised that it's hard to think that they did anything with integrity. But in this situation, they have decided that this is
a hard deadline. There's no if, sands or butts about it. And
one of the things that we know in terms of the focus of attention is that if you're preparing in detail for a strike based on an unconventional plan and have to get all the pieces of that together, you don't necessarily have the time and the wherewithal to respond to all the other things that proposals in as much details as possible. So now the parties are in a situation where they
they can't close things, they're frustrated, and it's become a foregone conclusion that you're going to have a strike. And I think that's unfortunate because we're in
a world now where you know, we need to realize that the more you jeopardize businesses and your jobs, the more you jeopardize the future of everyone who's dependent on this industry. And you've got to look at it as we're in
this together. And I'm not saying that you cave in terms of your interests,
you don't recognize that you have strong differences, and you fight for what you believe is just. But this is a different kind of struggle than it
was in the nineteen thirties, and it's for a different type of outcome, and I think that your ability to get that should be your focus. And
you know, the UAW has demanded things. If what the companies are saying
clearly, if they if they have all their demands, aren't the table are weighted equally. If a wage increases is weighted as equally as a cost of
living allowance, as retiree healthcare, as to find benefit pitching plans, as giving more to retirees, and also something that smacks of the jobs bank from before, then I think that that's an unrealistic proposition. And if they're going
to send the union out on strike for all of those things as opposed to getting a good, solid wage increase with some perhaps improvements in the profit sharing plan to get more money into their pocket, then I think that that's very risky and they may not get any of that as a result of this.
So America, this seems to go back to what you were saying earlier about how putting all all of the demands out in public puts pressure on both sides from the point of view of you know, if you're Sean Fayne and you're not getting anywhere near the wage increase that you want, you know, you're you're not going to look very good to your membership if you don't get that number or something close to it. And then if, as you say,
there's you know, weighted the same for Cola and so on, you know, he's got a lot of explaining to do if it doesn't just look at this that retirees vote in the presidential election. They vote for international officers.
That's a constituency that's very large that he has to appeal to. And retirees.
I mean, I've just in my position where people don't have any necessarily reason to want to email me out of the blue things, but I've gotten emails from people that from retirees saying how disappointed they are and what's going on, and how frustrated they are. And you know, I get you know,
I've been posting a couple of things on my YouTube channel and I get retirees that are responded back. You still don't get it and you know,
and I think that that sentiment is widely felt. And I think tears are
another thing that I mean, the tears just anger. And I think,
to be honest with you, I think there's some confusion about what they mean by tiers. I think you had a lot of people in mind that they
mean the old tier, in which you had one tier with one wage scale for one set of workers and another tier for the legacy traditional workers. I
think now a lot of the discussion about tears involves in progression, the number of years in progression, and explain that for our viewers, because most people don't know about that, the whole in progression thing. Well, I mean
when you're hired, you're hired in at eighteen dollars an hour, and then after a certain number years eight years now you can be at that operate of thirty two dollars an hour as a production worker. And what the UAW wants
is that when you're hired in in ninety days, you're going to be at the top rate. The companies are saying, well, let's let's expedite the
process so you're in in four years. The tiered systems that were adopted in
two thousand and seven. That was that you were hired in at a different
wage scale. Altogether, you were hired in at a lower wage scale that
peaked at a lower level, and your benefits were less because that was a lower tier. It was basically a cost saving measure to help the companies maintain
the employment level that needed to produce to make money, but at the same time lower their labor costs so that they were more competitive the transplants. And
you know, but whatever, it is that the tiers have become a point of contention and it's a point of concern about equity between workers, and they want to get rid of them. And I heard Bob Kings say the other
day on a news program that you know, workers hated tears, and that's absolutely right. They hate tears, and so they look at the situation where
from their perspective. And I always try when I get into a negotiation,
I like to look at it from the other side's perspective and be coldly analytical about it and say, you know, this is where they're coming from, this is why they think the way they do. And that's why I looked
at Sean Thayne and say, this is a different ideology. This is a
different approach towards negotiations, and that's a twofold difference, which is very very important. It has implications for how they're going to conduct themselves. But in
two thousand and seven, the average autoworker made about twenty eight dollars, which they adjusted for inflation, that would be over forty one dollars today. And
that's a forty seven percent increase. Yeah, and so when they asked for
something like forty six, from that perspective, it doesn't look so much because the typical worker makes about thirty dollars an hour. I think it's even less
than that. It's stilantis and so you've got to you've got to think.
You know, they didn't get they gave up the cola, they had wage freezes, they gave up retiree healthcare, they gave up define right. But
but you know, remember, look they've been getting lump sum payments that have pretty much covered the cost of inflation. And that's what the lump sum was
for. You know, cola bakes into the base rate, so it's actually
an automatic pay increase every year. And yeah, retiree healthcare went away,
but they had the viva for that, right. I mean, the GM
Ford and Chrysler gave the union one hundred billion dollars and said, Okay, you want it, you got it, here's the money to do it.
So and look, I'm not trying to, you know, shoot down everything here, but I'm just trying to let the viewers know there's other offsets to that. I think you're absolutely right. And if I were sitting on the
other type of the side of the table, this is what I would say.
I would say that, well, of course cold goes into the base.
That's why we want it, and we don't want these pay increases, these someone increases not to go on our base. We want our base to
compound. And so when we're looking at it from that perspective, I'm also
concerned this time around in these negotiations that the companies are not going to be so profitable, right because they're going into ebs and I'm not going to be able to count on that profit sharing, right, And I'll just interject, Look, they're making billions now, but we know this is two years from now they could be losing billions. It's all We's been a cyclical industry,
right, I've been reading it back over the history, I mean, it just seems like every time you turned around, you know, the auto companies climb out of the recession or the downturn in the cycle, and then they climb up and then they climbed down again. I mean, they've never really
been on a linear upward pack. Never it's circling. You can almost set
your watch to it. That's how it. Yeah, yeah, it is.
And so I mean I think you've got to realize the vagaries of it that you know, they're they're doing good today, but they may not be doing good tomorrow, and you don't want to bake into a contract their doom, right right, That's what I'm concerned about. Yeah. So last night
Jim Farley said, and I quote the future of our industries at straight at steak so on a scale to one to ten. How much is that real
and how much of that is rhetoric? Well, I think the future these
companies is at stake, So I think that's very real, and I would say that there's no guarantee they'll exist in perpetuity. Ford celebrated one hundred and
twenty a year. I think of incorporation this year and it, uh,
you know, we hope that it's around one hundred and twenty years from now.
I would say that we will be very fortunate if it's around twenty years from now, as it as a distinct independent company named Ford. The same
thing with General Motors. You know, he had MARCIONI that wanted to merge
General Motors with Chrysler, and who knows what it might have been named.
But I think you're going to see this type of consolidation and restructuring of the industry as electrical vehicles go forward, and as the international market change even more so. Is this going to be driven by the UAW contract or just by
well, I think the uawstract will certainly have a lot to do with what these companies decide what's in their best interest. Yeah, America couldn't agree more
with you. Look, take the whole UAW contract negotiations out of this.
The legacy auto makers are under threat, under threat of existence, you know, so the UAW thing that we're talking about now just compounds that. But
I still want to go back because you to how the OEMs, you know, GM FOURDA and STILLANTIS might respond like you said, reaction, action, reaction, you said lockouts. I mean, take us through more of your
thinking. Well, I mean, I mean what they could do is they
could say, maybe not a lockout per se, but they say, if they're going to strike certain plants, we need to shut down the others because we've got to protect our property, we've got to protect our facilities, and we're going to shut them down so that you just can't pick us off.
And you know, we're right. We don't want to take new orders,
we don't want to start new processes, and then you have you strike the next day right in the middle of this, and lose product and have to go through that and suffer the additional losses. So because we can't plan and
adjust, you just don't shut it plant down and reopen it, you know, easily. So I would say you'd want some more predictability in your operations
and say, if you really want to make this a test of economic wheels, let's make it a test of economic wheels. And if you want to
hold out for as long as you possibly can, then maybe that's something we have to do. But I'd rather do that than let the union decide incrementally
it's going to strike ten ten ten ten ten, just in the hope that you capitulate at some point in time, and I think I'll put put your best offer forward, you know, towards the end of today, and say, look, this is where we stand. This as good as we can
do, and if your members want to stay out on strike for that for a long period of time, then that may just be the price that we have to pay. You know. I think Sean Fame said, you've got
to pay. We're willing to pay a price, a high price for this,
just as the workers did in the nineteen thirties. And I think what
the companies have to be able to say is that you know, we have a bottom line and that we're not going to beyond that and we just can't do it. We can't remain viable operations, and we're not going to back
to where we were, where we put ourselves where we're vulnerable and we can't succeed because then we're just we're baking into the cake our own doom. And
you know that maybe have to be what happens, but we don't want to be a party to it. So do you believe from what you know that
it will be a long strike, And if it's a long strike, what does a long meaning Well, I think if they if the UAW wants to get everything on the table, more than just a high wage, it can get a lot of money into the pocketbook of workers if it's flexible about how it goes there, right. If it wants a little more profit sharing,
it could probably get that. If it wants higher wages, I'm certain that
it could get that. If it wants inflation protection payments, it's going to
get that. If it wants to, you know, more paid time off
or more regularized schedules, I think all those things could be done. But
if you're talking about those other items bringing back the past, that's not going to happen. And I think if they're insistent on that, then you're going
to have a very long strike. You know, we've had strikes historically of
more than a hundred days, and I'm not certain you know that the companies are in a position to take a strike that long, you know, without crippling themselves. At some point in time, the cost of a strike become
irreversible. You just can't recoup them. And you've got to also remember something
else that happens. People get angry during the strike that goes on for a
long period of time, and it's hard to go back to the workplace without those feelings coming with you. And so I think under those circumstances, it's
going to be a real challenge. Wow, I think we should wrap up
the show right now, but I want to tell the audience you just got a master class from mister Masters himself in what's going on with the labor situation and the Detroit auto industry. Right how well, thank you very much.
It's been a pleasure of being with you. And when I teach negotiations,
I always tell people that one thing you ought to focus out is is what do you do if this doesn't have if the worst case happens. It's sort
of like we're a lawyer, what's the worst case we had to prepare for?
And that's the way I approached them, because under certain circumstances, you're going to get that, and I hope it's avoidable. I think there is
a strike could be bargained, but you're gonna have to be flexible. Both
sides are going to have to be flexible. Marky, You've been brilliant.
Thank you much, so so much. We're coming on, you know,
we're going to ask you back. I'd love to come back, and I
will. I will always do my best for you guys. Thank you,
thank you so much courtesy and compliments and kindness. Okay, look good,
take care. Thank you. Yeah, thank you. I'll do online after
hours. This brought to you by bridge Stone Tires Solutions for your journey.
If you liked this program, I would like to learn more about the automotive industry. Check out our website at Autoline dot tv, or look for us
on YouTube on the Autoline channel.
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