UAW President Shawn Fain Is Playing With Dynamite

I’m not a betting person, but I’m willing to bet that the UAW will go on strike this fall against General Motors or Ford or Stellantis. There’s even a chance that the union will take all three down by targeting key powertrain and stamping plants. That would be an easy way to cripple all three automakers without depleting the union’s strike fund, since only the workers at those strategic plants would go on strike. Then, as the car companies closed down, the rest of them would just file for unemployment. Let the taxpayer pick up the tab.

Shawn Fain, the new president of the union, is really ramping up the anti-automaker rhetoric. In the press and on social media he accuses auto executives of being greedy. He calls them the enemy. He tells his members they have to prepare to go to war. One of his vice presidents even said they need to punch management in the mouth. In my 40-plus years of covering the automotive industry, I’ve never seen the union’s leadership adopt such a confrontational approach. It’s pretty clear they’re itching for a fight.

The UAW is rolling out a litany of demands and complaints against the automakers. But they all boil down to one simple message: the greedy execs want to screw their workers so they can make more profits. That’s one of Fain’s favorite attacks: the Detroit Three have been raking in record profits while his poor members have seen their incomes shrink. Except that it’s not true.

Let’s take those “record profits,” for example. Yes, it’s true that the automakers have greatly improved their bottom lines since coming out of bankruptcy, but that’s not saying much. Last year Ford actually lost $2.1 billion. GM’s net profit was a paltry 6%, while Stellantis only made 9%. Those aren’t very good returns, which is why the stock prices of those companies continue to go nowhere. Who wants to invest in companies that aren’t very profitable?

Fain only cites their North American profits, which are better, but the executives running these corporations have to look at their total global operations, not just one region. Besides, there were Canadian and Mexican workers who contributed to those North American profits and you’ll never hear the UAW point out that its members get profit sharing checks that were partly generated by Canadian and Mexican workers – who don’t get profit sharing, by the way.  

The UAW justifies its new demands partly because of the sacrifices its members made as GM and Chrysler went through bankruptcy. And it’s true that UAW workers had to make sacrifices to help the automakers get back on their feet. But they made far fewer sacrifices than the other stakeholders who were involved.

GM and Chrysler shareholders were completely wiped out. They lost everything. Bondholders only got pennies on the dollar. White-collar workers gave up far more than blue-collar workers. And thousands of dealers had their businesses shut down by the Obama Admin.’s Automotive Task Force. In comparison to that, the UAW got off relatively easy.

This is not to minimize the sacrifice that UAW workers had to make. But let’s put things in perspective: The average UAW labor costs for the Detroit Three are about $64 an hour, including wages, benefits and profit sharing. That’s about $128,000 a year. That’s not what the workers see in their paychecks, but that’s what they cost the company. Meanwhile, foreign automakers in the U.S. pay an average of $55 an hour, and Tesla pays an estimated $50, according to info that GM and Ford provided to me. In the cutthroat automotive industry, the non-union shops have a clear labor cost advantage.

And that brings us to why I have a problem with the UAW’s scathing attacks on the Detroit Three. This rhetoric is bad for business and the industry. The public doesn’t want to buy cars from companies that “screw their workers.” And at a time when it’s so hard to get young people to take manufacturing jobs, who wants to go to work at companies run by “greedy executives” that are “the enemy?”

Shawn Fain may win the battle this fall, but he’s going to lose the war. Foreign automakers’ share of the American market exceeds 50%. And if the Detroit Three are crippled this fall by a strike, they’re going to gain even more. Fain likes to blame Mexico for a loss of UAW jobs, but the real culprits are the foreign automakers who manufacture millions of vehicles in the U.S. with tens of thousands of non-union workers. The more market share the transplants get, the fewer UAW jobs there will be.

I don’t have a problem with the union wanting to get more money for its people. I’m all for UAW workers getting good raises this fall. I’m all for reducing the time it takes for new temporary hires to transition to full-time status and get top wages. I’m even in favor of them getting more profit sharing, and I think they should be protected from inflation. Yet that should be achieved through creative but hard-nosed collective bargaining, not with attacks on the automakers in ways that can hurt them in the marketplace. 

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That’s why I’m convinced there’s going to be a strike this fall. If it lasts a couple of weeks, the damage can be contained. But if it drags on for months, the damage could be crippling, and not just for the car companies. With the approach he’s taking Shawn Fain is playing with dynamite and it could blow up in his face.

John McElroy (pictured, above left) is the President of Blue Sky Productions, which produces “Autoline Daily” and “Autoline After Hours” on www.Autoline.tv and the Autoline Network on YouTube. The podcast “The Industry” is available on most podcast platforms.