Week 5: A Paradigm Shift in the Auto Industry

Although the UAW strike at GM plants has entered a third week, it will still be a while before a resolution is reached. I know I am repeating myself from previous posts, so I will not say too much more on this matter. However, most recently, Nora Naughton and Ben Colias of the Wall Street Journal reported that the two parties are, “dueling over two main issues: how fast to move newer hires up to the top wage and how soon temporary workers should qualify for full employment.” The pair also noted that this is, “now the longest nationwide walkout at GM since 1970.” The good news is that the two sides have “largely settled” the issue of healthcare (WSJ). The strike and negotiations are important to GM despite the fact that labor costs are only about 5% of the cost of making a vehicle because, “it is one of the few cost components the companies can control, labor experts say” (WSJ). Once again, not much has changed in the situation since last week, but I will be sure to update you on any and all changes that occur this week.

Since I have reported the news about the strike this week, I would also like to talk about some analysis of the strike by Daron Gifford of MarketWatch.com. Since electric cars are moving to a more prominent place in America’s motor landscape, they are becoming a point of contention between car making companies and their employees. As Daron Gifford reports, “electric cars have far fewer parts, which means far fewer people are needed to put them together,” (Market Watch). As General Motors responds to the global trend toward electric cars, it will need fewer workers to build its cars. This prospect worries the UAW who is attempting to secure the jobs of its members through these negotiations. Gifford remarks that, “none of this is anyone’s fault.” However, the two sides must work together because they represent the American auto industry. Globally, foreign countries and foreign companies are adopting electric vehicles more quickly than the United States. If the United States were to fall behind in the auto market, that would be a national blow. The automobile was born here under Henry Ford. Detroit gained worldwide fame as the Motor City. Any missteps in the process would contribute to the death of what currently looks like a dying empire: the American auto industry. This strike, which, “looks like a fight for today is actually a fight for future American relevance,” (Market Watch). Hopefully, for their own sakes and the sake of the American car manufacturing sector as a whole, General Motors and the United Auto Workers can work together to solve this problem.

Unfortunately for the UAW, I believe they will have to concede a loss in this battle. The shift to electric vehicles will happen, in my eyes, regardless of the union’s recalcitrance. This shift need not lead to unemployment, it can instead lead to different jobs for the people who currently manufacture cars. Unfortunately for these people, the market changes and a willingness to learn new skills and adapt to new circumstances is the best way to secure one’s job. I hope these people do find new jobs, but I also think they need to, because no matter how hard the UAW fights, these jobs will disappear. Either they disappear over time as General Motors makes the switch to manufacturing electric vehicles, or they disappear all at once if GM is unable to adapt and thus collapses.

Sources:

https://www.marketwatch.com/story/the-gm-strike-is-really-about-the-switch-to-electric-cars-2019-10-05

https://www.wsj.com/articles/gm-uaw-duel-over-temporary-workers-new-hire-wages-11570219121

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