Week 3: Strikes

Another busy week for General Motors! Last week I predicted that contract negotiations between the UAW and GM would “be a story to watch in the coming days and weeks.” By Monday of this week, stories came out that UAW workers at General Motors plants, “went on a nationwide strike early Monday morning in the United Auto Workers’ largest work stoppage in more than a decade,” as reported by Nora Naughton and Mike Colias of the Wall Street Journal. Around 46,000 workers at 31 GM plants were instructed to strike, one of the, “biggest walkouts at a private sector employer in years.” (WSJ)

The contract negotiations are made more difficult by the federal investigation into the UAW for corruption, previously blogged about here. The investigation undermines confidence in the union from its members, so the union must appear tough and win big at the negotiating table to gain this confidence back. The union is also, “weakened by decades of dwindling membership” (Naughton, Colias). On the other side of the table, GM looks to, “show Wall Street that today’s GM is leaner and more assertive than the one that collapsed into bankruptcy a decade ago,” (WSJ). Both sides are attempting to save face, which could cause a long, protracted period of negotiation. However, time may not be on General Motors’ side. As Naughton and Colias report, “Analysts estimate [the strike] is costing GM $50 million to $100 million a day in lost profits.”

Adding fuel to the fire is the closure of several GM factories despite the auto industry experiencing a historic run. The move was lauded by analysts, “saying GM was taking steps to guard against a downturn,” but UAW workers, on the other hand felt, “betrayed … to be pummeled by closures … when the company is posting some of its strongest profits in history” (WSJ). At this point, the UAW and GM have diverging interests. GM looks to continue its profitable run, without regressing, while the UAW looks for job security, higher wages, and benefits for its members. It is often cheaper for manufacturers in the United States to outsource manufacturing jobs to foreign countries, where it easy to pay workers lower wages, which means these two goals may be impossible to reconcile.

One outside factor that could play a major role in this conflict is President Trump. It is no secret that the President wants to keep manufacturing jobs in the United States, in order to Make America Great Again. When the strikes were announced, he tweeted, “Here we go again with General Motors and the United Auto Workers. Get together and make a deal!” When GM announced plans in November 2018 to close factories down, the President blasted GM in an interview with the Wall Street Journal, saying, “They better damn well open a new plant there very quickly.” It would not be unprecedented for the President to step in if the strike gets out of hand and begins to negatively affect the economy, see Theodore Roosevelt and Harry Truman. Although previous federal interventions were to prevent disruptions in essential services, especially during war times, blue-collar workers, especially in swing states such as Michigan, are an important group for Mr. Trump in the upcoming election, so his involvement in the strike will be something to monitor in the coming days.

Sources:

https://www.wsj.com/articles/united-auto-workers-union-to-strike-gms-u-s-factories-11568560131

https://www.wsj.com/articles/gm-strikes-dont-pack-the-same-economic-punch-they-did-in-the-90s-11568722899

https://www.wsj.com/articles/behind-the-gm-uaw-strike-two-combatants-with-something-to-prove-11568937301

https://www.wsj.com/articles/gm-says-it-will-cut-15-of-salaried-workforce-in-north-america-1543246232?mod=article_inline

Week 2: Busy Week for General Motors

General Motors found themselves in the news several times this week for a few reasons. Let’s take a look:

On Wednesday, Mike Colias of the Wall Street Journal reported that General Motors has issued a recall on around 3.5 million trucks and SUVs for faulty brakes. He writes, “a mechanical vacuum pump that assists in braking may lose output over time, reducing the vehicle’s brake-assist function.” The issue was brought to the attention of the National Highway Traffic Safety Administration by reports from drivers that included nine accidents and two injuries. Car models affected by the recall include several brands: “Chevrolet Silverado and GMC Sierra pickup trucks, as well as Chevy Tahoe and Suburban SUVs, GMC Yukon SUVs and Cadillac Escalade SUVs” (WSJ). In an act of corporate integrity, the faulty software module will be reprogrammed at no cost to the customer.

On Friday, the name General Motors appeared in the news again; this time in reference to a corruption investigation into the United Auto Workers union. The federal government has been investigating the UAW for years, yet this week was the first time a sitting union official was charged. Nora Naughton of the Wall Street Journal notes the intriguing timing of the charges: “the charges … come two days before UAW contracts with GM,” among others, expire (WSJ). This story is much more concerned with the union than with General Motors but this development will make upcoming contract negotiations much more interesting. As such, the negotiations between General Motors and the United Auto Workers will be a story to watch in the coming days and weeks.  

On a more positive note, General Motors also recently announced a partnership with Alphabet, the parent company of Google, to integrate Google’s apps more seamlessly into GM cars and their touchscreens. The move comes in response to customer comments. Mike Colias reports, “Customers have told GM they want a similar look and feel to what they experience on their smartphones and other mobile devices, said Santiago Chamorro, head of GM’s connected-car business.”

These stories are quite different but all of them mark developments worth following. It will be interesting to see how the recall affects GM’s future sales. Likewise, the UAW scandal will affect contract negotiations which are oftentimes contentious enough without federal investigation. Finally, as the internet becomes more and more pervasive the partnership between GM and Alphabet should produce exciting new technology in the cars we drive. Although the integration of cellphones into cars is questionable given the dangers of using a cellphone while driving.

Sources:

https://www.wsj.com/articles/gmturns-togooglefor-in-car-apps-voice-commands-11567692000

https://www.wsj.com/articles/gm-recalls-3-5-million-trucks-suvs-over-brake-defect-11568210253

https://www.wsj.com/articles/gm-recalls-3-5-million-trucks-suvs-over-brake-defect-11568210253

https://www.best-selling-cars.com/wp-content/uploads/2019/01/2019-Chevrolet-Silverado-Turbo-108.jpg

Introduction to General Motors

General Motors, currently headquartered in Detroit, Michigan, was incorporated in in 1908 and originally headquartered in Flint, Michigan. The company is currently under the leadership of CEO Mary T. Barra. General Motors is a widespread automobile manufacturer. Many automobile brands fall under GM’s umbrella, such as Chevrolet, Buick, GMC, and Cadillac. With such an extensive catalogue of brands, it is easy to see how General Motors is the largest American automobile manufacturer and among the largest in the world. In its own words, “General Motors has been pushing the limits of transportation and technology for over 100 years. Today, we are in the midst of a transportation revolution. And we have the ambition, the talent and the technology to realize the safer, better and more sustainable world we want. “

One reason that I chose General Motors for this project is to learn more about them. GM is a name that I have heard many times; but I know very little about them. However, I am interested in General Motors even at a time when media coverage of the automobile industry seems to be dominated by Tesla. I believe that electric cars are incredibly interesting and I would love to see them grow in popularity. I think Elon Musk has been shedding light on an important innovation in the automobile industry. As interesting as Tesla is, they do not have a monopoly on the electric car market. I find it interesting to read about what other companies are doing to advance the use of electric vehicles and to reduce our collective human impact on the environment. GM is “committed to an all-electric future,” because, ” Our future depends on responsible stewardship of the earth, and we continually seek creative and innovative solutions for the environment.” Based on this exciting vision for the future, I would want to work for General Motors. Especially in America, humans are very reliant on automobiles to get them to and from various places. Even as we become more aware of our environmental impacts, I do not see the centrality of the car to American life changing anytime soon. However, a commitment to the evolution of the automobile ensures that GM will stay relevant despite changes in consumer preference. For these reasons, I would want to invest in GM at this point.

Thank you for reading this introductory blog post. I look forward to this journey of discovery, not only of General Motors, but of the larger business world as a whole.

Sources:

https://www.gm.com/our-company/leadership.html

https://en.wikipedia.org/wiki/General_Motors#History

Quotes taken from:

https://www.gm.com/our-company/about-gm.html

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