Wave of strikes hits car companies
Biden defends workers and rails against Trump
By Roland Peters
September 16, 2023, 6:36 a.m
The UAW auto union has never gone on strike with the three US industry giants at the same time – until now. President Biden stands behind the workers: Ford, General Motors and Stellaris would have to share their record profits. A long industrial dispute could be fatal.
Things are simmering among workers in the US economy. After decades of low strike rates and unions representing fewer and fewer workers, 2023 could go down in history as an important year for industrial action. In the auto industry, for example, the collective agreement with the United Auto Workers, UAW, expired on the night of Thursday to Friday at Ford, General Motors and Stellaris. Negotiations for a new one had been unsuccessful. Now the union with 12,700 strikers in three US states wants to force higher pay and working conditions for almost 143,000 workers.
All three major US brand producers in the UAW’s labor dispute at the same time, something that has never happened before. The strikes are “targeted and limited,” said UAW chief Shawn Fain, currently focused on the most profitable manufacturing plants in Michigan, Missouri and Ohio. If it expands to include all production, the consequences could push states into recession and even impact the entire country. US President Joe Biden, who has sided with the union, also knows this. Depending on how the situation develops in the Motor City of Detroit and elsewhere, this will affect his re-election chances in 2024.
A total shutdown by nearly 460,000 U.S. workers would make 2023 one of the largest strike waves in the past four decades. Just ten days of lost production by the three car manufacturers would be one Loss of 5.6 billion dollars for companies. If a full strike lasts until the end of the year, it could push the entire US economy “to the brink of recession,” an analyst is quoted as saying in the New York Times. That would be fatal for Biden. The economy is one of the most important issues in the upcoming election campaign.
UAW boss Shawn Fain (center) spoke to Biden on the phone before the strike vote.
(Photo: AP)
The Democrat is an outspoken supporter of organized labor and calls himself the “most pro-union president ever.” Biden repeatedly calls for higher wages for the middle class and at the same time puts pressure on the auto industry to move forward more quickly with the transition to green mobility. Domestic manufacturing is primarily located in Michigan, a state that Biden will almost certainly have to win for re-election. When General Motors’ 48,000 workers stopped work at more than 50 factories for six weeks in 2019, Michigan’s economy contracted for a quarter.
Bidenomics vs. Maganomics
The Democrats call their mix of subsidies, economic restructuring and strengthening the middle class through better income distribution “Bidenomics.” Shortly before the UAW went on strike, Biden had attacked the Republicans’ significantly different plans if they won in 2024 in a budget speech: “MAGAnomics is more extreme than anything America has ever seen.” he said based on Donald Trump’s motto “Make America Great Again”. Trump is the Republicans’ favorite candidate for next year’s election.
In June, the Republicans announced their idea of the budget, which was a renewed rehash of trick down would be: Taxes for the wealthy and corporations should be reduced, social programs should be cut and the price caps for insulin and other medications should be lifted again. This is intended to stimulate investment. “That’s never worked, but now they’re making it worse,” blustered Biden. However, the majority nationwide are also dissatisfied with his economic policy, just under 60 percent according to a survey by the Wall Street Journal. When it comes to combating inflation, the figure is just over 60 percent.
According to the figures, the economy is not in bad shape and is rather on the way to improvement. Unemployment has been around 3.5 percent for a year and a half. After losses in recent years, real wages are currently rising again, inflation is significantly lower than in 2022. Banks and economic institutes are revising their outlook upwards, now expecting growth instead of recession for the whole of 2023. But Americans do not (yet) trust the upswing . High gasoline and real estate prices could be the reasons.
The current labor disputes are sensational, but harmless compared to the post-war period. In the twelve months following the end of World War II, nearly 5 million people, or 10 percent of the available workforce, went on strike in the United States; in the meat and auto industries, the film industry, steel workers and coal miners. Throughout the 1950s, an average of 1.5 million workers went on strike each year. The middle class grew in these boom years through constant income increases.
But the proportion of organized workers fell below 30 percent after 1960 and has steadily declined since then. Currently it is 6 percent. At the same time The income share of the top ten percent in the USA has increased almost continuously. When Biden talks about being in favor of unions and therefore in favor of strengthening the middle class, he is speaking from this historical experience.
Film industry is still on strike
UAW is demanding 36 percent more pay for its workers over the next four years. The companies offer half of that and argue that they need money to convert the factories to produce electric cars. General Motors boss Mary Barra was “frustrated and disappointed” that the company’s offer was “historically” good. From their point of view, the strike could be resolved “very quickly”.
This failed elsewhere: the film industry in Hollywood has been on strike for more than four months with tens of thousands of employees, both authors and actors, together for the first time since 1960. The union of the logistics service provider UPS also threatened a work stoppage by its 300,000 members. They could have disrupted supply chains, driving up production costs and inflation across the country. The workers’ representatives prevailed beforehand, and wages and occupational safety were increased. Now there is the United Auto Workers, the largest union in the auto industry.
During the industry crisis of the Great Recession, in which General Motors went bankrupt in 2009, employees accepted significant cuts. However, manufacturers are now reporting record profits: Ford $2.4 billion in the first half of the year, General Motors $5 billion, and Stellantis – which makes Chrysler, Jeep and Dodge, among others – $11.6 billion. Biden said he understands workers’ frustration. The president therefore demanded that companies improve their offerings: “Record profits that they have should be shared by record contracts for UAW.”