AAH #665 - Why the UAW Strike Is About to Get a Lot Worse

Out online. After Hours is brought to you by Bridgetone Tires Solutions for your

Journey. Hey, everybody, thanks for joining us on today's show. We're

going to get into the details of where this UAW strike is going. Gary

Vasilish not here, he's out traveling. In fact, there will not be

an after Hours next week because everybody's out traveling next week. But nonetheless,

boy, what a crazy time it's been here in Detroit. I've had a

steady parade of local TV crews coming in to interview me about what's going on with the strike. I'm doing all kinds of zoom casts with other media outlets

outside of the state, and boy, there's so much to get into right here. And I've got three people who are just perfect to talk to on

this, including Lorie Harbor from Harbor Results. We've got Kayleie Hall from the

Detroit News, and also Sam for your he from Auto Fourcast Solutions. And

Hello everybody, so cool to have you here, great banks for having us.

Yeah, I don't know where to start this, so I'm just gonna throw it out. Kayley. I'm gonna start with you because you're the news

reporter. You're on top of all this and as everybody knows as we record

the show, this is Thursday afternoon tomorrow Friday. Sean Fayne has set a

deadline for noon, and if he doesn't get what he wants, he's closing down more plants. Kayley, what do you see happening? I think he'll

he will have more plants go out tomorrow for sure. We'll find out at

ten am which plants he will pick. It's hard to say. I've seen

a lot of experts suggest that it would make sense to go with the truck plants, which makes sense to me. But frankly, the UAW can pick

whatever plants it wants, and it could pick two from GM, one from Ford, one from Stlantis. It just depends on how they're feeling in the

moment, and right now it seems like they're pretty far apart with all of them. So, so you said, ten Aye, I thought the deadline

was new. The deadlines new. But he's going to have a Facebook live

at ten where he'll probably, I would assume, in that Facebook live he will say, you know, these are the folks that were calling out to go on strike, and probably at noon is when they'll walk. So,

Sam, where do you think, do you any any inclination is to the plants he wants to shut down. Yeah, we're with Kaylee. It's going

to be a big truck plant likely if he doesn't the way they did the last one, it's going to be the same group of trucks. So it'd

be all the full sized pickup truck plants, probably taking down a Ford plant, a GM plant, and a Stlantis large full sized truck plant. It

makes sense that he would do that, but that would be really expensive, and we're looking at doubling the pay for the workers who are out of work, taking ever more money from that that fund they've built. Yeah, Laurie,

what do you think if you were Sean Fayne, do you shut down the big pickup trucks? Well, I mean certainly if you want to get

the OEMs to move and move quickly, that's the way to do it, right. I Just for me, it's all confusing because I thought he would

have done that last week. The three plants he hit have virtually no impact

on in terms of pain, right, I mean over you got over inventory, not necessarily selling them right now because they're low out semiconductors. So you

know, I would have thought he did it last week, But I mean, if he wants to make it move quicker, that's certainly going to be a good target for him. Plus I think he might have thought the uniform

deal would have shut down F one fifty power trains and that got solved.

So that so now if he wants to go big, he's going to have to do that. Yeah, we'll have to get back into that in a

minute. But my thinking is everyone's saying they're going to shut down to full

size pickup trucks, and what Sean Fayne has shown himself really good at doing is doing the unexpected. Yeah, so I wouldn't be surprised to see him

do something else. And you know he wants to inflict pain, but he

don't want to kill these guys, at least not yet, I don't think so. I'm thinking, you know, they've got all contingency planning set up

right in case their pickup trucks gott go down, blah blah blah, we do this, that or the other thing, So do something totally different if you're Sean Faine. That's my thinking. I agree with that. I think

that that he surprised us all last week with that and I don't really actually think he wants to inflict that much pain this quickly. He wants to keep

him at the table right and it's it's a big impact on his members.

And I also think he's thinking about his suppliers. Yeah, I've heard that

some of the reasoning behind the original plans is that they weren't they weren't as connected to other plans, so they wouldn't have as much impact like sending other workers out. Now we have seen Fairfax has been idled as a result of

the Wentz full strike, but I've heard that that's gone into some of the decision making in terms of which plans to be select, because if you select some, it will shut down. Like obviously select power train plant, it's

going to take out a bunch of plants. Then that really trains your strike

front quickly. So I didn't expect him to pick powertrain at all, but

I would say that the ones that were selected were some of them were surprising for sure. Yeah, had that uniform strike gone into effect, that would

have that would have hit the truck plants in the US real quick, because about a third of the power trains for F one, fifties and supermuties come from Canada. So here's a question. Did John Fayne expect these layoffs at

the plants that are affected by the ones that are on strike. So you

know, you mentioned Fairfax is shut down. There's two thousand people that are

on layoff. Sean has said he's going to pay them five hundred dollars a

week. There's a million dollars a week just in that plant alone, and

then there's what like another nine hundred and fifty on layoff at both Ford and Stillantis. So I mean, you're you're starting to knock on the door of

two million dollars a week. Do you guys think that he saw that coming?

I think you for sure did. I'm sure that he. In fact,

I know that there was knowledge of the fact that fair that Winsfield did stamping for other plants, so and I know that when it came to the Ford plant, they specifically only pick final assembly and paint and they didn't pick another part of the plant they stamp. They stamp parts for the stamping and

welding right right right, So I know that there's knowledge of these things, and obviously they expect that there could be like ripple effects, but they tend to blame the automakers because they're the ones that forced the strike to happen, right, So yeah, he said that, you know, they didn't have to lay them off. But what are you gonna do? Have these people

just stand around for eight hours a day doing nothing? I mean, come

on, you know that's not real, right? Yeah? Well, and

it's the it's fair facts. So it's it's Malibou. Not a lot of

Malibu's moving through dealer lots right now. And Cadillac X two four I think

it's maybe ye right, yeah, yeah. The hit to GM directly was

was relatively minimal. I mean, we have you have Broncos and Wranglers,

and I'm glad you have Jether too, but the pickup trucks and the vans over a GM are relatively minor, so the fallout should have been expected.

Man, So how how long could this go? I mean, I said

from the very beginning, I felt it had to go a minimum of two weeks. But I want to get your guys sense of how adamant is he

because in my opinion, i'd love to hear what you guys say. They

cannot agree to pensions, they cannot agree to a four day work week.

They aff had already caved on cola and tears, which kind of surprises me.

And I'm not even sure they can agree to more retiree healthcare. I

thought that's what the VIBA was all about. But how how serious is Sean

about getting everything he wants? Do you guys think? Well, if you

look at the the way that the thirty two hour work week has been quiet since uh, since the strike happened, they're moving a little bit. You

know, They've they've lowered the price from forty forty percent to somewhere in the mid thirties, So there's there's some movement on that side. And uh,

we've got to expect it to hit between like twenty six percent and thirty percent raise over four years. Uh maybe six six to sixty five hundred dollars of

bonuses, but uh and and a cola adjustment of some sort. But but

like you said, the bringing retirees back into the fold just doesn't work in this day and age. Nobody gets that anymore. And uh, uh finding

that the automotive industry would do that for so much where the stock price that that those companies would take a real hit if they if they brought that cost back in the house. I think he's pretty serious. I mean, you

know, I went back and did some analysis of times over the years working with my father on these negotiations, and we worked on both sides. We

worked for the OAMS and we worked for the union. And I have not

seen the kind of energy and vigor that he has in what some people might say sort of off the rails that I've ever seen in the thirty seven years event in the industry. And he and to some degree, there's some good

reason to fight, right, I mean, I get it. There needs

to be some adjustment. That is, there are his demands appropriate? I

don't think so. But I also think it now he has laid such a

stake in the grain. Grain with social media and all of the talk and

all of the things that he has written from union people commenting on your posts and Mark Royce's post and everything that's been going on this week too, there's got to be some amount of showing a win, right. And remember you're

talking about what is it, three hundred and fifty thousand people in UAW membership that used to be one point seven million back in the eighties. So I

mean there's a fe you need to fight and uh, and I think he's got to. He's got a safe face with that, right. Yeah.

When I talked to autoworkers on the line, you know, all of them are they seem to really like Sean and they are supporting what he says, and they agree that they want back what they feel like they is rightfully old owe to them. They're also sick of working across from somebody who makes like

ten dollars less than them but is doing the same thing. butN autoworker put

it this way, he felt like the last administration they had like a business relationship with the autoworkers, and now he are the automakers, and now he feels like, you know, as a as a worker, he's actually the center the focus of this. And one of the things he pointed out to

me is in two thousand and six he made twenty eight bucks an hour.

Twenty twenty three, he's making thirty two. So from his perspective, you

know, they have given up a lot, and he's totally backing what Sean Fain says, and he's hope they push this out and they get all the things that they ask for. Yeah, look, I'm all for them getting

a whole lot more money, because you're right, Kayley, if you inflation adjusts what they've been getting, they should be making forty bucks an hour right now. They really should on an inflation adjusted basis. Now they've had inflation

protection. But I'm saying their base wage should be higher than it is right

now. But here's where I'm getting at. I'm all for them getting paid

more money. I'm all for them getting better profit sharing. You know,

taking eight years to make the full transit, that's crazy. I mean,

come on, get out of here and sweeten the retirement and things like that.

But my question is do the workers really think that they're going to get full pension, four day work week, you know, something akin to a jobs bank and all that, because I don't think that the car companies can agree to do that. Those are the legacy costs that drove of them into

bankruptcy, you know, back during the Great Recession, and so that that's what I'm trying to figure out here is you know, I love what you guys were saying, ed U. You think Sean's going to push it all

the way to get everything. But I'm saying, telling me the car companies

can't agree to that. So I mean, I said, I think the

strike's going to go on for two weeks. But if he's trying to get

everything, and the membership thinks he's going to get everything, this strike is going to Christmas. Yeah, I was. I was in the eight to

ten weeks phase before the whole thing started last week. So because I think

he's going to fight for a ton and I agree with you, John, I mean, we know the numbers. They're going to be ragingly in competitive

if they accept all these things, right, you're just handing market share to the Japanese and the Germans by doing that, right. Yeah, if this,

if this drags out any at any length of time, it's just diminishing returns. The less market share, the less demand for employees, the less

workers, the h and the lower stock price on these companies, they have less money to give the workers. In the end, it's just it runs

out of energy after three or four definitely five or six weeks, right, But you know, the pain is real for the people that on strike.

I mean five hundred dollars a week. I mean for a lot of people

that's not going to pay their house payment. You know, for the for

the month, or certainly house and food. I mean, it's all great

right now where you know you're you're full of energy and you're ready to take it to these car companies. But Laurie, if you're right six to ten

weeks living on five hundred dollars a week, yawza. There's got to come

a time when they go to Sean and say, hey, look, you know you got enough already, right. I agree, And I'm not really

in that space anymore. I think it's going to be less than that.

But the pain is real for them, and it's going to be real for the supply chain even if it goes past Friday. I mean one week.

I mean our data shows one week in two weeks and you start to see a real fallout from from suppliers. So and I think the year it's going

to get just as uncomfortable. Yeah. So our big, our big fear

is when the Tier twos and Tier three start falling apart, when they when they can't pay their bills and they start closing doors. It's just it's snowballs

after that point, and there's no benefit to the union at that point.

So, Sam, how long is that? How long can the suppliers hold

on. Some of these smaller suppliers won't last a month if if the strike

is down that long. They just need to have that income. And you

know, we're talking about dozens of workers and some of these small suppliers.

So once you once you stop the income from from the OEMs, they they've got to run out of money in a month. Yeah, I'm just getting

to drink what one seculory? Because Wayne Wallas is asking do strikers typically get

back They no way. If you're on strike, you walked away from your

job. They're not going to get your back pay for walking away from your

job. Sorry, Lorie, you were okay. We just finished our annual

benchmarking study. It was based on calendar year twenty two. We had a

fifty percent growth of a four hundred automotive companies in trouble, so sup suppliers, Tier Tier two, Tier three suppliers went from twenty percent trouble to thirty percent troubled. And and that was twenty two data. If I look at

the pulse of the first nine months, everybody's down ten to fifteen percent.

So we did a pulse last week and of a one hundred and eighty companies.

They had something like forty five percent that are saying after four weeks, I'm financially strained. And even if they can hunker down, their problems winding

back up again when the spicket goes on, because they're on borrowing base kind of banking relationships. Well, if I don't build, I don't think get

collect cash. And so if they don't have a good relationship, they can't

buy resin, they can't buy steal, they can't buy you know, aluminum.

So we're incredibly concerned that beyond two weeks and you're going to see some fault just at a week because they were already in trouble. Right, So,

Laurie, I saw your study, and what are the words that you used is that these companies are unbankable. I've stolen that term. Now I'm

giving you credit when I use your term that I got it from you.

But explain to the audience what you mean by unbankable. Yeah, So we're

measuring profitability against their debt to earnings ratio, and basically the banks don't like people that are over about three and a half to four to one on their debt to earnings ratio, because at the end of the day, if you're also not generating profit, you won't have enough cash to cover your debt service.

So we have again about five four hundred companies, and thirty percent of them are and some are at six and seven percent, So their balance sheet is just leverage to the hill. And then on top of it, they're

not making any profits, so they're not generating cash. At the end of

the day, the cashes came right and so if they're in their banks would say you're not bankable to meet go find somebody else. They weren't eight restructuring

deals right now just to try to save them, So bye, I'm bankable.

You mean you can't get money from the bank. Exactly what fled to

that? Like, what are the what's caused this for them? The pandemic?

Well, I mean, certainly, certainly the pandemic had had a bit to do with it, because they actually lost on both sides. If you

remember in twenty one, you know, durable goods demands I don't care if you're an auto or appliance is one of so they had to strain to get people and to build product well above where they were pre pandemic. And started

the supply chain crisis, and not just semiconductors. Couldn't get resent, couldn't

get steal, couldn't get fasteners, and so they couldn't meet demands. So

although their top line was showing some revenue, they still weren't meeting you know, expectations. And then you know, you hit the semiconductors of volume hits

down like it was one hit after another. Frank, we were just getting

our sea legs about us in the summertime, so really make money, and then all of a sudden, the fear of strike hits. And I already

have Tier two suppliers that make seat components for Wayne truck that are down and not making production right now. And for three million dollars shop that could be

five million bucks a year annualized. Right. Yeah, it's amazing what we've

been through in the past few years, you know, with we had the forty day strike in twenty nineteen, and then we went right into COVID and then we went right into semi conductors and all these other supply chain issues.

Yeah, it's been a very Keep in mind too, that these guys are a lot of family owned, small businesses, privately held. They didn't all

handle their PPP federal funding the best way, you know. But they bought

maseratis, is that what you're saying? And boats, boats and motorcycles.

You know what, It's not just the tier twos and threes. I was

talking to a tier one executive what's today Thursday, last night, and this is one of the major major multi not US based multinational, one of the big ease and he was saying, they're running out of cash. They have

a very strong balance sheet, but they're running out of cash and they may have to furlough people. Sam, I, I don't know, have you

looked into this the impact on not just the twos and threes? Yeah,

the bigger suppliers that we deal with are not quite that bad yet. But

you know this is this is a big deal. When you're supplying large portions

of large vehicles to uh keep your income going, you can shut down a plant or two or three if if the production ends for uh what is the base of your income. If that plant shuts down, you're gonna lay off

hundreds of people real quick. We should talk about the political fallout of all

this too, because as all these people get laid off if they are in the union, and especially on a complex that striking, they're probably not going to get unemployment. But as you guys know, there's a ripple effect.

You know, for every one automotive job on the line, there's I don't know, at least seven other jobs in the economy, you know, the people who have the restaurants that are around in the gas stations and blah blah blah blah, and they're gonna start filing for unemployment. And here's all these

state governors that are going to go crikey. You know, this strike's gonna

bleed our unemployment fund dry. You know, Kayley, have you heard anything

about this? Oh? Yeah. And I actually thought about the fact of

like how they selected the plants, Like Whitmer is obviously a Democrat and pro union, and they selected one plant here, and I kind of wondered if that was part of the strategy to not there's obviously a lot of assembly plants some Michigan and you could easily hit two or three. So yeah, I'm

we're very much watching what all of the politicians are saying. Biden was supposed

to send a team up here, but then didn't do that, I guess, And then next week, of course, we have Trump visiting on the twenty seventh, and he's supposed to meet with some some autoworkers. So yeah,

we're we're trying to pay attention to how this affects, you know, especially we're coming on obviously a very important election year, and how this affects Biden and you know all the other the governors too. Yeah. I had

a great opportunity last week John to work with some with MEMO and some other lobbyists on talking to the White House and just so everybody know me, Motor Equipment Manufacturers Association who don't know right, right, right, And it was it was good because we had a really direct line right into the White House.

It was the team with people that you've read about the media that are working on do we need to come up with funding for these Tier two and Tier three suppliers? Yeah, And you know it's unfortunate, and I get

it, it's politics, but they really don't understand manufacturing on any level, right, And it's just some from their questions and their comments, right, And although they want to help, they're not sure how to do that, and it's a very difficult. There are s federal funding available to do it,

But I think there's because we're in the put an environment right now or an election. Theoretically they don't. They're not sure where to step right And

remember he's the Union hasn't back Biden yet, so that creates a little bit of a hiccup in it. And I don't know if yet it's the right

term. Maybe they won't, so Sam, that's really interesting. Kaylee raised

a really good point there. You know, Whitmer's a Democrat, presumably the

Union doesn't want to hurt Democrats. Ohio's got a Republican governor. I confess

I don't even know what's in Missouri who who's is a Republican or Democrat there?

But what I'm getting at is should we look for the Union to spread the pain so that Ohio, Michigan, and Missouri don't have more plant shutdowns?

And and if that's the case, where would you go? Well,

I was thinking about her point in Michigan being so many plants there, you take Wayne down and the local economy isn't that affected because there's so much other stuff there. But when you get to Missouri, you're talking about a larger

portion of the local economy and that's gonna hurt the locals. That's gonna hurt

the politicians because the local economy has taken a bite. So it's it.

It will definitely fall out around these these smaller areas. And then when you

tap into the next wave, we're talking about potentially Louisville, we're talking about in Ohio for Ford. Uh. There are a number of areas where it

will snowball this whole thing. And we could look at Indiana, we could

look at a number of other areas that that could be the next wave when this comes up tomorrow. Yeah, well that's what I'm wondering. I mean,

why not go to taxas shut down Arlington? Yeah, you know,

Arlington has to be on the list, but that that's a huge plant, right right. And you said Indiana, I mean I love talking to you

guys because I mean you got my wheels turning here. Maybe that's the strategy

now is hit individual states. Don't double up in a state for two reasons.

Number one, you go to another state, you get Megamedia coverage in that state. And number two, now you're not putting the burden, you

know, on on states that have got plants. You're you're you're spreading the

pain, so to speak. Yeah. I did just look it up in

the Governor of Missouri's Republicans So okay, there you go. It'll be fascinating

to Texas. Makes sense though, John, because you also hit one of

the biggest profit generators of general motors, right so the biggest Yeah, that is the most profitable plant. It might be the most profitable plant in the

world. Yeah, yeah, for sure. So if we hit Texas,

we hit Kentucky, and then uh, you're left with a Stlantis plant in Michigan. Again, they like doesn't have it's footprintisnas you know, it doesn't

spread across the country as much, right right, Yeah, but you know you've got on Tennessee. GM's got a plant in Tennessee. I mean there

there's a lot of plants that they could go to, and I'm wondering if that's not going to be the union strategy. Yeah, it's the different first

a Lantis though, You're right, Kaylee, because uh, you know most of their plants are in Michigan. That's what I thought. Yeah, I

don't see them coming out tomorrow and picking three plants in Michigan for sure.

I don't think that they will do that, because I do think that's got to be part of the strategy. Right. No, it look, if

they picked Michigan again, Governor Whitmer is going to be hoppin Mad, hoppin Mad. To their point, if it's Atlantis, that's probably going to be

a Michigan plant, unless it's a power train plant. Well, what if

they don't hit one of each again? Right? What if somebody's making more

progress in their union negotiations and they hit somebody who's not right, Well, it seems to me Ford's making more progress. Like I said, they've already

agreed to Kola. They've already agreed to get rid of the tears they're talking.

I can't remember the exact number, but a significant cash increase in payment.

So is this Ford? Is it more of the union's good graces than

the others. Well, it's clear to me that GM is not. Given

the recent op op eds and they Detroit Free Press by GM president Mark Royce defending the company, and then today the union vice president Might Booth responding to him. It seems that they are both pretty far apart, and Ford signed.

Ford has made an agreement with uniform Right now, so the Ford seems to be on a roll that seems to put more pressure on the u A W Right that Ford seemingly, I mean, have they signed an agreement.

We know that now it's got to go to membership right and get voted on.

But if if they approve it and all the uniform officers are saying, hey, this is a great deal and blah blah blah, you know they're not saying, wow, we sort of got a good deal. O.

There they see, But that's that puts pressure on the UAW. I would

think, Yeah, the uniform seems to be very happy the deal that they got with Ford. And uh, you've got to think that the UAW was

hoping for help in Canada for them to go on strike just to put pressure on everybody. Yeah, this is how enriched the deal is. Right,

That's one expert I talked to you. He's you know, the auto workers

and Canada are definitely watching what's happening with the UAW and they see how militant, you know, Sean Fayne is and how direct he is and what they want and they will be looking at that deal to see if they got more than you know, what they've received in this whatever is in this TA So yeah, I've been told it's really good. So one of the things that

the Canadians were asking for, we're pensions. Do you think they got that?

Sam? The whole pension thing is a problem. Just you know,

I don't know how finances work in Canada, but you know, the Canadians have better healthcare. There are a lot of things that they don't have that

we have in our contracts. But uh uh, you know, pensions are

the thing that they've worked so hard to take off their books and to put something back on there. It's everything is focused on the stockholder and stockholder value

and when you when you tax yourself like that, it just brings down all the work that you've done over the last decade. Yeah. Hey, look

we're almost at the half hour point. Let's take a quick commercial break,

very brief. We'll be back and we got a lot more to talk about

yet. Howdy 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 Bridgetown and we're back talking all

about the UAW and what's going on there. I'd like to get your guys

input on how the automakers have been handling. And Kaylie, I'm going to

start with you again because you were just talking about this the op ed that Mark Royce and then Mike Booth had in the Detroit Free Press. No disparaging

intended here, but did did anybody under forty years old read the newspaper?

Did anybody under fifty? You know? Here, here's Sean Fayne live streaming

on Facebook, live streaming on YouTube. They're using all kinds of social media.

And I don't know if you saw the video that GM put up with Mark Royce and Gerald Johnson. Yeah, it was so stilted, it was

so scripted. I mean, the points they made were fine for GM,

but I bet you virtually nobody watched it. Yeah, I mean, I

don't want to give my opinion of their strategy, but it is quite different from the GM strategy. You know, how they're releasing the information is definitely

quite different from me, which is a very You're right, they're using social media. There's a new video every day. And this morning we were all

laughing a little bit because Shawn Fayne tweeted a bunch of different movies of people saying TikTok, TikTok, and it's just you know, it kind of gets people excited and they're paying attention to it because it's funny. I think they're

really trying to have direct engagement with their members, but then they're also trying to make this interesting for everybody to want to watch, right. So yeah,

they definitely have different strategies, and I think it's worth evaluating and maybe a story will come out of the Detroit News down the line of how they're handling their messaging on both sides. So I think that some of what Sean

Fame is doing with social media is like into what Elon must does or Donald Trump, right, And we've seen witness over the last five years that leveraging marketing and social media that attracts is something that the younger generation watches and cares about. And like you said, it's fun, it's interesting. Yeah,

we can get people to watch it, and our traditional OEMs have not gone into that realm of communication at that level. So you know, some would

say it's marketing genius. Right. Yeah, they've definitely stayed more. I

don't know if professionals the word, but they've you know, stayed this kind of stuffy messaging that they're not really trying to appeal to other crowds beyond the ones that they already have. So GM is the most state of the three.

You know, the executives there are are the way they have been for decades. You know, you look at any story of General Motors and they

fit that mold of the corporate person. And so it makes sense that they

would go the old school route of of hitting a newspaper as opposed to going on Twitter or Facebook or where have you. Yeah, but you know,

look, I can understand the executives thinking that way, but they hire some of the best communication people that they can get their hands on. And I've

been appalled at how they've tried to counter Sean's messaging there. They're they're not

even in his league. I think, Look, I'm a communications guy.

I mean, if there's one thing I understand more than anything is how to communicate and don't know what they're doing or what they're doing is incredibly ineffective.

Not not the the TikTok TikTok video that you just mentioned, Kaylee, but the one before that. The last I looked at had seventy thousand views on

on face on YouTube. You know, GM put it's it's video on its

on its media website. I don't know if they put it on YouTube,

but that's that's where I found it. You know, I'll bet it has

next to no views on It's certainly not anywhere close to it to what Sean Fayne is And I mean, these guys got to wake up. I mean,

Sean Fayne has defined what the issues are, not not just to his membership, but to the and to the American public. He is driving the

narrative of what this strike is about, and the automakers are losing in the court of public opinion. I was hoping you'd show there the trash can.

Uh, the trash can was so effective, it was brilliant. Look,

I stand in awe of Sean Fayne's communication skills, and I'm sure he didn't come up with this. I understand he's got a bunch of people from the

Obama campaign who really know what they're doing, and it really shows. And

I'm stunned that these these car companies are just left floundering. You know,

Ford has communicated to me, but I'm I'm sure to you two Kaylee and maybe Sam and Laura, you two, and they send out these good bullet points and everything like that, but they're relying on us in the media to carry their message. And even heard peep from Stilantis. Nothing zero communication.

Now, I mean, maybe they just ignore me and they don't care what I have to say whatsoever. But I haven't heard from them. GM has

given me good background information, really good background information. But again they're relying

on the media, you know, to get their message out there, which I don't want them to cut them off from giving this great background info.

What I'm saying is they better wake up because they're kicked. To give GM

some credit. They did go on I can't remember which day that was now,

but Mary went on a media blitz. I think it was Friday morning.

It was Friday Good Morning America with Michael Strahan. That's a good interview.

While she went on there was she also on the Today Show. She

was on I think CNBC. So you're right, I mean, they're not

taking to TikTok, they're not taking to the Twitter, but they are.

They're going to the media and they're going to the big names. I think

she was also on CNN. I can't remember. It was so many I

had to cover each one, and she was pretty direct in what she said is that she was very frustrated and correct me if I'm wrong. But I

don't like in the past, we haven't really seen the executives come out and speak directly to how they're feeling in the talks like that. So I guess

from GM's point of view, at least she is getting out there in front of CNN and saying that. So she's also arguably the most prominent of all

the executives of the Detroit three, so she should be out there. There

has been some talk from Ford from when they saw that the wave was going the wrong direction, But like you said, the Stillantis has been quiet.

Yeah, and GM and Ford should have been even louder than they have been.

You know, one of the problems with having the CEOs or the CEO and Mark Stewart's at Stillantiss standpoint is the first thing anyone's going to counter with to like Mary bar is, you make twenty eight million dollars a year, yeah, and or to Farloy you make twenty one million dollars a year, and that just cuts the legs out from under them, and so I'm not sure that you should use the CEO to take that message, because there's no way, you guys tell me if I'm wrong. There's no way in the

hell that you're going to argue that twenty eight million dollars is actually a very reasonable amount of money that any CEO should get. I'm not arguing getting on

said, I'm just saying that the American public does not think that that's right.

I don't know if you watched the CNN reporter, but she drilled Mary on that, and after that, the UAW has repeatedly mentioned what she how she responded, so I think it backfired for sure. No, you make

a good point about how much she makes, because it's going to be a point if she comes on any interview. It should be. But the problem

is if you have Sean Fayne on one side and an underling to Mary Barrow coming up on the other side, it doesn't have the same weight. No,

you're right, you're right, But you know, I would think that you pick somebody who's got the charisma, who's one layer down, that gets out there and talks very frankly, you know. So what works on YouTube,

not scripted presentations and so you know, and look, Mark Royce, I really admire the guy. I think he's terrific. And Gerald Johnson is

manufacturing guide, which is really good too. But when the video starts out,

they're they're both on camera and Mark turns to Gerald and says, hey, Gerald, how's it going? And he turns in and they shake hands

and hey, how's it going. Well, that's so stilted, that's so

scripted. You know, I don't know who put that video together, but

right off the bat, you know that that was right. What works is

sitting down in front of a camera. So yeah, and then get the

garbage can out, thank you, you know, use some props, but speak from the heart, speak from the heart and and talk about how you want to get all this resolved and you understand their issues, but that they have to understand you've got issues too, and if you agree to everything, there is no more a company. But it's a long way of me of

saying, boy, I've been stunned at their way of trying to communicate their issue. Yeah, you're you're absolutely right. It's it's it's they're not playing

on the same level. The two the two different teams are not hitting the

right mark. And uh, perhaps the writers for the GM team were supposed

to be doing a show a presentation at the Detroit Show and they were canceled because, uh there were no introductions of note there that that sounds like an old school introduction at at a Detroit Show introduction. That's right, So what

else? What else is on your mind? They're Lorie regarding thus that I

haven't brought up yet. Well, we've talked about a ton of it.

I obviously the battery electric vehicle piece of this is very significant. I mean,

I you know, they're they don't talk as much about it when they talk about wages and things, but the job security piece of this is a big deal. When when I look at the negotiations now, it's it's certainly

General Owners is leading the way with a number of plants, and and we all know it takes you know, sixty percent of the normal labor or whatever they depending on the car whatever. That is less than that with people compared

to a nice product, and that's part of it. Now, fast forward

four years from now and we start talking about better electric vehicle plants that are at a much more significant level. STILLANTIS will actually have some at that point,

they are fully dedicated. I don't think this ends in four years,

right, I mean that unless they're able to really get a lot of what they want to get now. So the better electric vehicle piece is important.

And also, I know we're talked about spars already, but you know ZF is in their own union negotiations down that they're in Tussaloosa, and they walked out yesterday. No, they didn't. In fact, you know, we

reported that in Autoline Daily, and I take full responsibility for having said that.

They did not walk out. They're on strike, but the plan is

still building axles, you know. And I thought this was going to shut

down Mercedes Benz, you know, because it's a just in time plan.

I mean, right, you know, one or two chifts and you're out of axles. But in point of fact that plant is still operating. Oh

well that's even better then. So but you know, I mean the reality

is that there's if this continues past tomorrow, we're going to see a lot more fallout, especially if what we talked about on the top of the hour, they hit a truck plant. So yeah, yeah, yeah, yeah.

To follow upon Laurie's point, the electric vehicles are the future. So

if you don't have an electric vehicle or an electrified vehicle in your plant, it's at risk in the next contract or two. So that's that's where Canada

steps up because most of their plants already have a dedicated to ev coming to their plants, so that helps the negotiations up there. But when you look

at the plants like Michigan Assembly, Michigan Assembly has at best a hybrid, so it's the ices are not going away soon, but you've got to prepare for the future so that these employees have a job in ten years. Yeah,

you know, Stamp great point because I was talking to a representative of the Canadian government who said, look, if Ford and Uniform are settled and the others fall in line, Canada is going to be the beneficiary of more investment because investors are going to say, hey, this is a much more stable situation. Let's go put our money there instead of anything that's got to

do with the uawah. And if we get the wage increases that the uaw

is asking for, then you know, Canada is not as uncompetitive as West thought they were because the US plants will be less competitive. Yeah, and

I want to go back to an issue that you raise their LORI that EV plants use less labor, because General Motors says, no, it's the same, and they're the only ones in the industry. I've heard just about everyone

else is saying you need twenty five to thirty percent less labor in an assembly plant that makes evs. Absolutely, I mean we've studied it. We've got

you know, bad studies at a study with Sam and his team too, and on beds, and there is absolutely no doubt. Just look at the

Hummer plant itself or Hummer product itself. It's got one trim level. I

don't need. I don't have all of the space issues because I don't have

all the trim issues. Now, when we reach that tipping point in ten

or twenty years, when we're driving more beds, we add back in trim levels. But just the sheer chassis line, the powertrain line. I mean,

it's fact, so we have the data. It absolutely takes less people.

I mean you've seen it from the Tesla piece, right, absolutely, So why is GM saying this just so it's workers don't get scared or to really believe it, you gotta prepare that story for the workers you have to tell them that your jobs are safe because you these factories aren't going anywhere.

But if you're looking at converting to an EV, it's going to take fewer people. If it's five percent, if it's thirty percent, it's still going

to take fewer people to assemble all those electric vehicles. Yeah, I've seen

some studies where you know, it's like the assembly process is like eighty percent of the assembly process is similar, and it's expected that over time we will see a drop in workers. But I think that from GM's perspective, the

point is that initially they won't need to because it's you're bramping up, right, So it's going to take some time. Now with the transition to like

building drive units, I understand is like does not take as much time at all as it does sitative to build a multi you know, a multi shift to transmission. So I think it's going to definitely we'll see some reductions at

power train plants, and we already have right like, look at twenty nineteen we lost GM shutdown Warrant transmission, they shut down the Baltimore operations, so and I don't know if that's a result of transitioning to electric vehicles, but there has been a reduction in those plants. So the workers. I talked

to this one worker, she did work at a power train facility. She

transferred. She was nervous about it and transferred to Factory zero because she knew

that she'd have a job there because they're gonna make electric vehicles and GM has said that's our future. So she got out of there. The folks who

work at like the big truck plants, they don't seem as nervous. They

feel like they're going to be sustained for a long time, for least at least the next decade. So oh yeah, I think one thing going for

the UAW workers probably almost any is, as you all know, it's so hard to get people right now. Everybody's complaining about it. And so when

you look at where some of these battery plants are going, the big three battery plants, you know, GM and land Saying Stilantis in Indiana, they're right next to were very nearby existing facilities. Because the idea that the strategy

is we're just going to take people from the ice facilities or the traditional plants and put them in the battery plants. Because these people want to keep their

jobs. We want to keep wet, the car companies want to keep them.

And so it's been very interesting to see where the Detroit three have been placing their battery plants, because it's it's definitely to try to keep the workforce they've got. Yeah, you look at the Ultium plant that was in Ohio

that just got organized. Those workers were making slightly more than a cashier at

the local McDonald's. So it's they needed to pay these people for what is

a good job. And so you know, the union stepping in there raised

their pay rate above you know, the person at the local ACME. Well,

you know, I would argue it was the marketplace that raised it.

Guess what GM found out and all the rest of them have found out, you can't hire workers at sixteen fifty an hour to work in a factory.

You know, they get in there, they work at day or two and they go, this sucks, I'm out of here. Yeah, and so

GM raised there those wages to twenty dollars an hour. But it wasn't to

placate the union or be a nice corporations because they couldn't get people. And

you know, look at what happened at Ford last year they took three thousand temporary workers and made them full time. Why because the turnover was horrific.

They'd hire people to train people, they'd work a while and go, addn't like this, I'm out of here. It's I'm not making enough money.

So Ford found out, and Ford told me this. It was cheaper to

make them full time and pay what much better wages than to constantly have this turnover of hiring, training and quitting. Yeah, go ahead, right,

it's a it's an eighteen to nineteen thousand dollars per person cost when you bring somebody in to to recruit, attract, you know, tract, recruit, train, and then they quit. So it's dead on that they would convert

those people. And you know, the question that goes back to what you've

been talking about in social media, John, like, what's the right number for pay for these people? I can we can all argue that whether twenty

nine millions the right number go to any other industry ge you know, Boeing, These these guys make more than Mary Barrow does. But nonetheless, what's

the right number for the worker? Because you've got supplier people in tier two

wages, you know, making seventeen eighteen bucks an hour. They would love

with the UAW is getting paid today. Yeah, yeah, look, I'd

love for them to get it. And this is what's so interesting about Sean

Fame. He is there's a whole new labor revolution going on in the United

States that was kicked off by the COVID pandemic that shut everything down. A

lot of people reassessed their lives and said, wait a minute, what am I doing here? What do I want to do? And as the labor

market got tight, anybody making minimum wage, which is one eight fifty an hour, I mean, that's a joke. They quit immediately and went and

got a twelve dollars an hour, John, And the people making twelve bucks quit and make got s and the sixteen went to twenty and so on and so forth. So what Sean Fayne has tapped into, and most of America

would agree with it. This is a battle between the one percent and everybody

else. This is between the rich and the poor. This is between people

striving to earn a decent living without having to scrape, buy, or get two or three jobs to do it. And that message really resonates with America.

So, John, what happens if they get these increases, what does this mean for USMCA and plants in Mexico and other sourcing to other regions.

Again, I'm not fighting that they need more pay, but do we think that they might OEMs might build more plants in Mexico. I don't know if

they'll build more plants in Mexico because I guess what, you can't hire people in Mexico either. You know, I was down in Monterey, Mexico earlier

this year, and you know GM's got plants there, Stillantis has got plants there. There's all kinds of supplier facilities there. Guess who just dropped is

dropping a brand new plant into Mexico. Elon Muss That's exactly where their Mexican

plant is going. And the people that I talked to down in the Monterey

area were like, oh, oh, it's already so hard to get people, and now Elon's come in and he's just sucked all the jobs out of the area they can't get. So I think Mexico may have reached saturation point.

I could be wrong on that. I could be wrong, but your

point is absolutely right, Laurie. I mean, you're on the board of

directors and or you're in top management and it's like, holy moly, we've got to spend eleven billion dollars in capital expenditures next year on all their shift to EVS, which is what Mark Royce has said at GM. On top

of that, we've got to spend another eight billion dollars just in R and D. So right off the bat, you're at eighteen billion dollars. They

don't even make that in profit, and and that's every year you've got to do that. And thank god, the market's healthy enough right now that they're

making profits. And as you all know, this is a cyclical industry,

sales will go down again and then instead of making billions, they're going to be losing billions. Yeah. So if to your point, Laurie, if

if if I've got a decision of where do I invest all my money, I'm going to try to go to the low cost area, and it's not going to be with UAW. It wasn't the original idea of NAFTA to bring

up the pay of Mexican workers so that so that they could buy our stuff, so we could send stuff from Canada in the US down to Mexico as well. As shipping them out of there. You want, you want to

bring their pay up, and all these new plants going down there is supposed to do that, taking all the people who aren't employed or underemployed, give them real pay, and suddenly they're competitive with US and Canadian workers. Well,

I don't know about competitive. Wage rates are going up in Mexico and

one of the aspects of the USMCA was to really quit pressure on these Mexican almost company unions that just agreed to whatever that management wanted. They're getting voted

out in some cases, and wages are going up, but it's still a big gap, and with the new UAW contract, it's only going to get bigger. Yeah, it doesn't us MCA start a minimum of like sixteen dollars

an hour for certain parts in the automotive industry. So so you've got to

see some of those jobs in Mexico actually getting to pay levels that are on par with some of the US plants. Yeah, well, look that would

help a lot. So would if the union could ever organize the transplants.

And that's what I when I first thought that ZEF was going out on strike and stopping production, and that would have brought the Sadi's plant to a screeching halt. I thought that was actually part of the union strategy because and in

fact, on WWJ this morning, on my report, I said that that once the strike is settled, and it will happen at some point, Sean Fayne has an obligation to try and go out and organize the transplants. And

as you all know, the union has been spectacularly unsuccessful in organizing them.

But you know, all he's going to do is make the Detroit three less competitive against the transplants. They're going to get more market share. That's going

to eliminate union jobs. Yeah, I mean beyond that, he's also going

to organize a bunch of battery plants. So yeah, definits work cut out

from Yeah, can you do it? Lorie? How how would you go

out and organize the transplants? I got to make you a union organizer.

I don't I don't think he has a chance. I mean, you and

I know the differences between running those plants, right, I mean, the Japanese do a very good job and of treating the people well right, and interestingly enough, don't have the kind of profit ship don't get the kind of profit share and that the D three two and are paying slightly less, right, but people are excited about working in those facilities, and their turnover rates are very low. When was the last time that the uaw TCHI Does anybody

remember Voltwagen was a couple of years ago, wasn't. Yeah? What about

Honda and Toyota? Honda they've made runs at in the past, but that's

quite a while ago. They've mainly gone after Nissans. Yeah. But here's

where I think the union's strategy is completely flawed. They try to make it

all about social justice, and they bring in all these social justice leaders.

And I would if I were organizing the plant, I'd go into one of those transplants and say, hey, you see how much profit sharing a god?

I got fourteen thousand dollars. Which did you get? Oh? You

got nothing? Well, you guys need a union. Let's talk about your

healthcare. You make all kinds of monthly payments and copays you do, Oh,

we can fix that for you. I think you got an appeal to

their pocketbook, to their paycheck, to their to their wallet. Forget the

social justice stuff. I'm all for social justice, right, but it hasn't

worked for forty years. Well, especially at a time when inflation is at

an all time high and interest rates are high, hit their pocketbook. It's

going to change their sentiment. So you said it earlier. That's what's got

the UAW so excited. And and again the marketing prowess of him out doing

rallies and getting people excited. You know, it's it's just like other marketing

experts. So yeah, well, hey guys, we're oh wait, we

got a question here, ambidextras K, how long do you think the strike will last? Worst case? Okay, we're going to do a round table

here and this is going to be the end of the show, Kayley.

Worst case worst case for me would be twenty twenty four January twenty twenty four.

Okay, Laurie, I think worst cases eight weeks, but I think it's gonna be closer to four. Okay, I hope you're right. Sam.

Yeah, I'm in the three to four as best case, and uh, November is worst case, but Kayley put it out there, and the potential is there for that to happen. Now I'm drutting this whole next three

months, four months. Yeah, Well, I'm just in thinking like we

had the GM. We had fifty thousand workers out for GM twenty nineteen for

forty days. If we just slowly continue to add workers, you know,

to the picket lines, I think they could take this a long time.

I just want everyone to know. Kayley called it. Yeah, all well,

I hope we're all closer to Laurie's four weeks. In fact, I

hope it's even sooner than that. My worst case is Christmas, just before

Christmas. Yeah, but anyway, with that, we're going to wrap it

up. But hey, Kaylee Hall, Lorie Harbor, Sam for Iranni,

you guys have been fantastic, great insights, and I'm gonna have to come back and watch this show again and take notes on what you said. That's

that good. Yes, thank you for having us channel. Thanks so much.

Thanks everyone, take care. I'll do online after hours. It is

brought to you by Bridgetone Tires Solutions for your Journey. If you like this

program, I would like to learn more about the automotive industry, check out our website at auto line dot tv, or look for us on YouTube on the auto Line channel

AAH #665 - Why the UAW Strike Is About to Get a Lot Worse

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