Let’s Get The Government Mandates Out of The Auto Business

The UAW strike continues to linger, with various daily reports suggest some “progress” and others identifying various layoffs or additional facilities that are walking off their jobs.

Many liberal politicians posture themselves for photo ops with picketers advancing their “working class cred.” President Biden spared 12 minutes to stopover en route to a megabucks Silicon Valley fundraiser. The lunacy of government picking winners and losers is in full force. For those denying the UAW-centric posturing, where are photos of the selfies with management.

The UAW’s positioning for a 40% pay increase and a 32 hour work week gets the headlines. Crucial issues for long term competitiveness of the “Detroit 3” and workers go unaddressed. The transition to Electric Vehicles (EVs) is the generational elephant to manage. As EVs are estimated to take 20% less labor content than current models, phasing in EVs phases out jobs.

Here’s our take to provide our workers with the best long term security and financial benefits:

     • End the Electric Vehicle (EV) implementation mandates. Let the customers decide. Tesla captured the early adopters. Less than 7% of 2022 US automotive sales were EVs, with more than 60% to Tesla and about 10% to “Detroit 3”. Customers are likely wedded to internal combustion engines. Buyers could reject EVs like Bud Light’s woke branding.

     • Benchmark compensation components for similar jobs to non-unionized Tesla. Headlines want to focus on “cost per hour” when Tesla’s incentive plan is via stock options and the UAW approach is an annual profit-sharing check. In the “Detroit 3” one size fits all approach for an older workforce, pension and medical are predictably more costly.

     • What is UAW leadership really bringing to membership versus market without collective union bargaining? Let’s see what forced union dues laws are truly costing those it claims to help; and where a reimagined labor compensation structure could be more competitive and secure than historical pattern bargaining with legacy manufacturers.

     • Permanently end construction of the Marshall, MI battery plant. The pause stinks of strike posturing, with the risk of subsequent environmental issues after settlement. China’s environmental record is the worst on Planet Earth. China based technology could lead to risky supply chain disruptions if we don’t accept imports of their far cheaper EVs.

     • Consider other nations’ management labor relationships. VW, BMW, and Mercedes are deemed late adopters for implementing EVs. Notably unions hold half of VW’s board seats. Could that determine a more deliberate and enduring plan? Mexico allows unions to compete for representing workers. Could Teamsters get workers a better deal?

The government’s unforced picking of “winners and losers” has rarely had more at stake. Certainly implementing “Corporate Average Fuel Efficiency” (CAFE) mandates played a part in redesigned vehicles with less customer appeal, with volumes going to imports and transplants. The Great Recession resulted in auto industry bankruptcies. A repeat is at the door of the uncompetitive and unsuccessful, particularly as non-union carmakers look for innovative compensation approaches. The taxpayer absorbed much of the embedded pension costs of retired and active workers during the Great Recession’s bankruptcies. It might not be willing or able to do so in a second round.