How profit sharing became a key issue for United Auto Workers strikes
MARY LOUISE KELLY, HOST:
The past decade has been very good for American carmakers. Profits for the Big Three - that would be Ford, GM and Stellantis - rose 92% from 2013 to 2022. They are expected to make another $32 billion this year alone. Now, where those profits go - back into workers' pockets or developing electric vehicles, for example - this is at the heart of the current strike by United Auto Workers against the Big Three. Let's parse the numbers now with someone who has covered the auto industry for decades. Micheline Maynard is a journalist and author of the book "The End Of Detroit: How The Big Three Lost Their Grip On The American Car Market." Welcome.
MICHELINE MAYNARD: Mary Louise, I'm happy to be here.
KELLY: So let's start just with the big picture with profits. Why are profits up so much?
MAYNARD: There are a couple of factors here. One is that the car companies are selling an enormous number of pickup trucks and SUVs. Those vehicles now make up 80% of car sales. Back about 20 years ago, it was 50-50 - so 50% cars, 50% trucks. Now it's 80-20. The average price of a vehicle is now about $48,000, which just - you know, that's probably what our parents paid for houses...
MAYNARD: ...And maybe even less than that. So car prices are up. Profits are up. And on the surface, it does very much look like car companies can afford to give the union the raises that they want.
KELLY: Just before I move on from these insane-sounding profits, how surprising is it, given it was not so many years ago that there were all these predictions for the death of the American car industry, the death of Detroit?
MAYNARD: Well, we did see two of the carmakers go into bankruptcy in 2009, and Ford Motor Company had to basically mortgage everything that it owned. But one of the things that happened when we did the bailouts was that they took away a lot of the debt that those companies had. So the car companies are leaner. And when you're leaner, you can make more money.
KELLY: So the big disrupter lurking in the background of all this is, of course, the push for electric vehicles. And I want to look at this from both sides - first, from the automakers' side. We hear a lot about costs. How much is this going to cost the Big Three? Does it also present opportunity for higher profits?
MAYNARD: The whole electric vehicle push is a global push. And I have seen numbers that this will be a trillion dollars - trillion with a T - type of investment for all the carmakers around the world. In the United States, we're seeing numbers in the billions. One of the rules of thumb in the auto industry is that you introduce a new vehicle, and it costs at least a billion dollars to develop a new vehicle, if not more. And you're not going to recover that for the first few years that the vehicle is on sale. So with electric vehicles, there's a huge hurdle because a lot of people are still not ready to buy a vehicle that plugs into an outlet. They're not sure that they'll be able to charge it up. They're not sure they're going to be able to drive up north to their cabin, which is a real concern here in Michigan 'cause a lot of people go up to the Upper Peninsula.
KELLY: You're speaking to how many things are in play and that decision to buy a car, which, of course, feeds into the bottom line for the auto industry. I want to ask about the other side of the table - the union's take on the transition to EVs. What are they demanding as their bosses, as the automakers, transition to electric vehicles, which, by the way, will require fewer people to manufacture?
MAYNARD: Exactly, because you don't put engines in electric vehicles. You put batteries in electric vehicles. And you don't put the batteries together yourself on the assembly line. They come in on a truck, and they're dropped into the vehicle. So there will - I am sure there will be job losses. And I think what the UAW is trying to do is make sure that the people who are working now are getting paid more and that they get better benefits. And this other issue that people might hear is about COLA, which is not something you drink. It's a cost-of-living allowance. When the bankruptcies took place, COLA went away. It had been part of union contracts for years. So Shawn Fain is saying, I want COLA back. I want the workers...
KELLY: Shawn Fain, the UAW president, yeah.
MAYNARD: Exactly. Shawn Fain is saying, I want COLA back. I want my workers protected from inflation, because inflation has been a real issue over the last few years. And if you're only making $14 an hour and you get hit with inflation - I've heard of UAW members who are taking second jobs and even third jobs to be able to support their families.
KELLY: One more thing, and this is big picture, but you nodded to the fact that the auto industry is globalized. Manufacturers can look overseas for cheap labor. Many companies here in the U.S. are producing cars with non-union workers. How much leverage do these workers ultimately have?
MAYNARD: There are so many fewer workers now. If you look at General Motors years ago, they had 400,000 workers. They basically have less than a quarter of that now. So the strikes are hurting the car companies, but you don't have the breadth of workers that you once did. So I think they have leverage. But in the long term, there's other competition and there's other places to go. And I think what Shawn Fain is trying to do is get as much for his workers now, knowing that, you know, there might be some dark days ahead.
KELLY: Micheline Maynard - she covers the car industry and is based in Michigan. Thank you.
MAYNARD: My pleasure. Transcript provided by NPR, Copyright NPR.
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