A Breaking Point for the U.S. Auto Industry

from New York Times I'm Michael abaro. this is the daily. [Music]. later this week as many as 150. 000 U.S Auto Workers May begin a. historic strike against their employers. car makers collectively known as The Big. Three. today my colleague Neil beaudette on the.

Tangled decades-long Dynamic that. explains why such a walkout looks. increasingly likely. [Music]. [Applause]. number 12. [Music]. Neil we are here to talk with you about. a very big potential strike and it.

occurs to me that this has already been. a summer of uniquely intense labor. activism in the United States it has. it's been quite a summer the Hollywood. writers went out on strike they were. followed by the Hollywood actors they're. still on strike the teamsters and ups. were negotiating a contract there was a. threat of a strike there in the end they. did come up with a contract there's a. local hotel strike in Los Angeles so. it's been a really busy summer in terms.

of Labor movement and now we're coming. to what could be the biggest labor. conflict of the year and that's a. potential strike between Ford GM and. stalantis which is the parent of. Chrysler on one side and the United Auto. Workers on the other side and why might. this be the biggest because the Auto. industry is a big piece of the US. economy it's the largest manufacturing. sector it employs 150 000 UAW workers.

and the union is threatening to strike. all three companies at the same time. it's never done that before and the. impact would be significant it would. cost the automakers billions of dollars. in Lost revenue and profit there would. be a ripple effect among their hundreds. of suppliers and in the Midwestern. states it could bring local economies to. a halt. and is a strike likely Neil I think a.

strike is almost certain you have these. two sides the United Auto Workers and. the three companies that have a long and. fraught history with each other it's. kind of like a marriage that has had its. ups and downs and its trauma and pain. and it is all coming to a head in these. contract talks that are coming down to. the wire. well they'll tell us about the history.

the trauma and the pain. of this long complicated marriage. between the big three automakers and the. UAW this Union that represents their. workers and why in your mind it might. result in a strike that could shake the. economy what's that backstory. so if we go back to the 1960s The Big. Three automakers were practically the. entire U.S Auto industry they made nine. out of every 10 cars that were sold in. the United States and because of that.

the union had a great deal of power if. they went out on strike they could shut. down a whole chunk of the U.S Auto. industry and in fact that happened in. 1970. go on the Detroit little hope of. averting a strike and a more than half a. dozen General Motors plants in the. United States and Canada we feel that we. work hard in the shop building these. good cars for General Motors and for the. customers and we feel that if this is a. way that we have to do we have to strike.

then we're going to hit the street they. were on strike against GM for 67 days. General Motors has been on strike for. more than two weeks now and in Flint. Michigan a GM strike takes eight million. dollars a week out of the economy and it. really shook the U.S economy and brought. most of the Auto industry to a halt. good evening General Motors and the. United Auto Workers have announced. tentative agreement on a new three-year. contract an agreement that would end the. strike which has now threatened the.

nation's economy and that win in 1970. was just one of a series of Victories. for the Union in contract negotiations. the new contract calls for a three-year. increase in wages and fringe benefits. which would give the Auto Workers an. extra dollar eighty an hour and would. cost GM in the third year an extra. billion and a half dollars they got. increased wages and increasingly richer. benefits their health care is almost. totally covered by the companies so what.

happened was the Auto Workers were able. to live a very comfortable middle class. life they could send their kids to. college have a cottage on the lake in a. boat and it really set the standard for. middle-class people in the United States. and and helped lift the wages of of. non-union workers and other unionized. workers in different Industries.

it feels like in a sense everybody was. winning at this stage of the marriage. right I mean the big three are selling. almost every car being bought in the US. they're doing well and because of the. leverage that it has the union and its. workers are doing very well themselves. everybody's kind of winning. yes but then that starts to change these. people all have one thing in common. besides a happy smile they all own. Dependable Toyota Corollas.

what happens is foreign competition. arrives all across the country you'll. see signs announcing the best gas. mileage car in America the Honda Civic. 1300 Toyota and Honda start selling more. and more cars in the United States and. taking market share away from The Big. Three. [Music]. and then in the 80s both Honda and. Toyota and then others start building.

their own plants in the United States. and they go to states where they can. have non-union workers. and pay lower wages and so suddenly The. Big Three go from the 60s where they. dominated the industry and were making a. lot of money to a very difficult. competitive situation where they're. losing market share they're woefully. uncompetitive in terms of cost and. especially on quality and so the balance.

in the industry starts to shift and for. GM and Chrysler are kind of reeling from. the 80s on and this I should acknowledge. is the era where I grew up in the early. and mid and late 80s and I remember my. mom. showing up at home with a light blue. Toyota Camry we had always previously. owned American cars she bought into this. Vision or her family did of the very. reliable dependable.

foreign car and from then on out we. never owned American cars that is a. really common experience for lots of. people it happened in my family my. father bought a 1980 Chevy citation. which was probably one of the worst cars. ever made it broke down so often that. then he switched to Toyota and then when. I went to buy my first car I bought a. Honda and that happened for people all. across the country and what that did was.

alienated customers from The Big Three. for almost a whole generation. so the big three are losing market share. but their workers are still doing. relatively well and I'm going to assume. that this is when the marriage starts to. fray right the workers are getting. relatively High pay and good benefits. but the big three are losing market. share and they need to downsize so the. union is concerned about well when. plants close what happens to those.

workers and they negotiate a deal in. 1984 to create something they called the. jobs bank they would close a plant but. the workers would stay on the payroll. making most of their wages that does not. sound very efficient uh it's not they. had to report for work and more or less. sit in a room and they could read books. and play board games and hang out and. the automakers thought it would just be. a temporary thing they would only do. this for a few years they'd restructure.

they'd come back better than ever they'd. regain market share and they would. reopen these plants and when they would. need these workers but in the end that. didn't happen they never really regained. their Competitive Edge and there were. thousands of these workers on the. payroll who were not producing cars and. so that put another big cost on their. books and so how do the big three deal. with this that seems extremely expensive. it is expensive so they had to find ways.

to save money elsewhere. and they had to use cheaper materials. and design cars that were less costly to. produce and so what you ended up with. was some really crappy cars and I think. if you talk to GM Executives today they. will admit back in the day they made. some really crappy cars but that was all. they could do on the budget they had and. so it just made the competitive problem. get even worse right because if you're.

already struggling to keep up with a. more dependable foreign import like. Toyota and your solution is to make. crappy cars with cheaper materials. you're not going to close that Gap. exactly okay so what happens next well. they get to the mid-2000s and they're. really struggling to make money in one. year Ford loses 12 billion dollars and. they come to the contract talks in 2007. and the automakers go to the union they. explain that they are in Dire Straits in.

danger of collapse they open their books. and the union sees how bad it is and. realize that they can't keep asking for. more they have to do something to help. these companies get back on their feet. we're learning more about the. concessions UAW workers will be asked to. make at the four Claycomo plant and. that's when you have two measures that. that really make a big impact one is the.

union agrees to let the automakers hire. new workers at about 15 an hour that's. about half of what the top Union wage. was which was 28 dollars an hour at that. time and they also create a trust fund. to cover the cost of retiree health care. so this gets for GM and Chrysler out of. the health care business and that's a. big burden off their books. now UAW leadership told our Michael.

Mahoney today that they are not happy at. all with this concession package. nonetheless they are urging their Rank. and file to pass the package for fear. that if they do not that they could. force Ford into bankruptcy at that time. they also agreed to finally get rid of. the jobs bank they came up with some. terms where people who were in the jobs. bank would take early retirement and. then they'd stop putting people into the. jobs bank members of the United Auto. Workers Union have ratified a package of.

concessions designed to reduce General. Motors labor costs it's a huge. inflection point for the industry. because for decades it had always been. more and more and more for the union and. this is a point where finally that stops. and the union has to take a step back. from the kind of wages and benefit gains. that they've been used to. what once seemed impossible is now all. but inevitable General Motors is. expected to officially file for.

bankruptcy tomorrow morning the next. thing that happened was the financial. crisis Chrysler will receive billions in. bailout money from the federal. government the company will enter. bankruptcy to clear its books of debt. that it couldn't bargain away they get. some more changes to their labor terms. and go through a deep restructuring and. finally these companies are freed of the. things that have been weighing them down. for so long and they're freed to go back. to focusing on making good cars and.

competing against their foreign Rivals. and does that actually happen do they. become more competitive yes they're able. to put a lot more money into design and. nicer materials so they have these plush. Interiors they develop fuel efficient. engines and new transmissions and. instead of making crappy cars they start. making really nice cars the first rule. of taking the World by surprise do. something the world will actually notice. introducing the entirely new Ford Fusion.

the Ford Fusion was redesigned and came. out and it was a real head turner it's. an entirely new idea of what a car can. be GM did the same thing with the Chevy. Malibu here's a fact Chevrolet Malibu. has better highway fuel efficiency than. Honda Accord or Toyota Camry and then. the market starts to shift to trucks and. SUVs which is really their Forte and a. blockbuster quarter for General Motors. North American prop and doubled thanks.

in part their profits take off U.S Auto. Sales posted their best month in 10. years in August 2015 or 2016 they're. making record profits this is a perfect. example of a company that is in The. Sweet Spot of the market right now in. the last five years or so GM has been. making close to or more than 10 billion. dollars a year which was just. unimaginable years ago we're finally. seeing scam fail and profitability at. General Motors the first time we've seen.

such things in all of their regions in. many many years so it becomes like this. Golden Era for the big three automakers. so the lesson here seems to be very. clear that once Unshackled from. uncompetitive labor costs and labor. contracts that provide for things like a. jobs bank that are deeply inefficient. The Big Three can plow money into their. actual products the cars they make and. they make them beautifully and high. performing and it sounds like reliable.

and people want to buy them and the. companies Thrive true. except for the workers they look at. these profits and think hey wait a. minute when are we going to get back. what we gave to the companies the. concessions that we made when are we. going to see our wages Rising as fast as. the profits are rising. and suddenly they get a new union leader. and he tells them you're right we are.

going to fight we're gonna get back what. we've given up. [Music]. we'll be right back. [Music]. Sunil tell us about this new labor boss. sure his name is Sean Fain and he comes. to power in a really interesting way.

before the union president was elected. by a group of delegates who were more or. less chosen by the union president and. his associates and it was a patronage. system you know if you do a favor for. the boss you get a good job in the union. hierarchy and it was not a democracy and. so these leaders over time were not. really responsive to what the members. wanted and you had a series of contracts. 2011 2015 2019 that didn't address what.

the rank and file were calling for and. at the same time. there was a lot of corruption in the. union well from a Lakefront house built. up north just for him to months long. stays at a Palm Springs Resort and the. FEDS say Dennis Williams didn't pay a. dime for it there were two past. presidents and other senior officials. who used Union money for golf vacations. former UAW president Gary Jones has been.

charged in the corruption Scandal that's. rocked the union they bought high-priced. Liquors all kinds of expensive apparel. expensive cigars wow and it has caused. all kinds of ripples lots of firings and. now the possibility of some major jail. time and these two presidents were. actually sent to jail and because of. this corruption there's a federal. investigation and the upshot of that is. finally We are following breaking news. from overnight as the United Auto.

Workers are just a few votes away from. naming a new president the union has. their first direct election for a UAW. president in this Outsider Sean Fain. eventually wins in a runoff by a razor. thin margin. today we say no corruption no. concessions no tears. our job starting here and now is to. unite the UAW and get back in the fight.

this is about ending sellout unionism. and ending company control it is an. honor of a lifetime to be elected to. lead our Union and I'll never forget. that the first time the members of the. UAW were given the right to vote we. chose change we chose to fight and so. for the first time in the long 80 plus. year history of the UAW they have a. democratically elected leader chosen by. the members themselves.

so tell us about. first truly democratically elected. leader of the UAW Sean Fein Sean Fain is. 54. he is an electrician he worked at. Chrysler for many years and then he. himself got a position in the Union. administration his grandfather was also. a union worker and he he carries around. his grandfather's very first pay stub. from when he started working as a union. labor years and years ago and he carries.

that around because that's his identity. he I really identifies himself as a. working-class person with working class. values and he keeps that paced up to. remind him of that. so from the moment that he started. campaigning he promised the members that. he was going to fight if he were elected. the union would go back to their more. confrontational more aggressive ways and. he promised them he was going to get.

back what they have given up so given. that fighting spirit and that. combativeness that he promises from the. start. as this latest negotiation with the big. three gets underway over these past few. months what exactly is feign demanding. from the companies. he wants a significant increase in the. hourly wage he has made an opening bid. of 40 percent agrees yeah he points to.

the CEOs of the three companies and on. average between them their compensation. has gone up 40 over the last four years. so he says if the CEOs get 40 we deserve. forty percent he's probably not going to. get that and probably knows that but. that's what he's aiming for. he also wants to restore retiree Health. Care paid by the companies he wants to. have a new kind of jobs bank if plants. close.

and he wants to undo this wage structure. that was put in place where entry-level. workers get paid significantly less than. veteran workers. what else in one of the most contentious. things that he has raised is this idea. of. allowing workers to work four days a. week but get paid for five and what he's. really aiming at is that there are. workers in some plants who are working. six days a week seven days a week. sometimes ten hour days 12 hour days and.

what Fein says is that work-life balance. isn't just for the managerial class that. he's trying to get to a point where. these workers cannot be compelled to. work those sorts of long hours and long. weeks and give them some relief on that. front so this is a very ambitious set of. Demands not at all it sounds like what. the big three have been used to giving. their workers over the past few decades.

yes I mean the union hasn't made demands. like this in the 21 years that I've. covered the Auto industry and what are. fans tactics this fighter of a labor. boss as he is making these very. ambitious demands he uses a lot of. populist tactics we're fed up just like. all the working classes fed up with. watching these companies taking billions. in profits we've watched the CEOs raking.

millions in salaries he's been going to. rallies at plants to fire them up as we. stand here today I'm here to tell you. there's a new day in this Union and it's. time to end corporate greed. and when he makes these speeches or. these videos he's very confrontational. with the automakers UAW family I want to. be blunt everything they're looking for. in this document is about concessions. Chrysler put forward a proposal of terms.

that he didn't like so I'll tell you. what I want to do with with their. proposal I'm going to file it in its. proper place because that's where it. belongs to trash because that's what it. is and on the video he very. ceremoniously took the document and. dropped it into a waste basket and said. that's where it belongs in the trash as. we've said from day one September 14th. is a deadline not a reference point I. got a question for all of you. are you ready to.

[Applause]. ready. well to that point what specifically. have the big three said about these. ambitious demands and the fiery terms in. which they are being delivered. well all three automakers have hinted or. suggested that they know they are going. to have to pay higher wages but on the. other issues they really don't want to.

go back on the entry level wages and. there's no way they're going to agree to. a new jobs bank this idea of the four. day work week they're not going to go. along with that retiree Health Care is. another one they don't want to go back. into that business so it's a very. delicate balance they know that because. they are making such significant profits. they have to give back to their workers. and reward them. but they have to be careful not to go.

too far to put themselves back into an. uncompetitive situation they're. basically saying we don't want to go. back in time the way you're asking us to. and you know I suppose that makes some. sense given the history of this marriage. that you have told us that the big three. may still feel despite their profits. pretty scarred by the labor contracts of.

the 60s and 70s and 80s that they feel. left them so saddled and financially. burdened and unimaginative in their. ability to make good cars yes exactly. and one of the big reasons why they are. so careful is they are in a very. competitive situation because of. electric vehicles explain that well the. industry is making this historic shift. to electric vehicles and all the. automakers have to invest tens of.

billions of dollars to develop new. technologies new batteries new vehicles. build new plants retool the plants that. they have to make EVS right so they have. a huge investment that they have to make. they need to continue making significant. profits in order to make those. Investments so they're very careful not. to get into any kind of Labor deal that. really diminishes the amount of money.

they're able to work because they fear. down the road they'll be in another. really tough competitive situation with. a big disadvantage the way they were 20. and 30 years ago. so from what you're saying the big three. are unlikely to meet all of fans demands. so that's why I'm guessing you think. that a strike is very much in the realm. of possibility but I'm curious what. happens if the UAW gets. a lot of what it's asking for either. through negotiations that avert a strike.

or through a very costly strike that. might start in the next couple of days. well it would be a very big moment for. organized labor the union has been. shrinking over the decades and its. members have been giving up things. rather than getting things but that. could change if they deliver in terms of. higher wages and some improved benefits. it could give you know a Tailwind to. other efforts to unionize the foreign.

automakers have plants in the South that. are non-union the UAW has tried to. organize there but the workers down in. the South are like what are we going to. get from the UAW your plants are closing. you're giving back on wages if there's a. big win here for the UAW that changes. all of a sudden you know you might have. workers in the South saying hey wait a. minute you know maybe we could get. higher wages maybe we could get better. working conditions if we were part of a.

union so there's a lot hanging in the. balance here for the union and the late. movement in a broader sense and what. happens if the feign Playbook fails here. that would be a major setback for. organized labor because feign has a lot. in his favor the companies are making. big profits he has the backing of his. members they're ready to walk out and if. he can't achieve his goals in that.

situation that doesn't bode well for. other labor organizations. [Music]. and the question is if they go out on. strike how long does it last a three-day. strike or a one-week strike could be. something that the automakers can bear. and the workers can bear but if it's. something that goes on for weeks and. weeks both sides could be damaged by it. but for Sean Fain that pain is what may. be required to get what he sees as a.

fair share for the workers and a fair. contract and to get the UAW back to what. it was years ago this powerful. influential Union that got continuous. gains for its members and set a standard. for Working Class People all across the. country. well Neil thank you very much glad to be. here thank you. W's contract with the big three is set.

to expire at 11 59 pm on Thursday night. Sean Fain has said that unless the. Union's demands are met before then a. strike would begin shortly thereafter. [Music]. thank you. we'll be right back. here's what else you need 2008. on Monday the death toll from the. devastating earthquake that struck.

Morocco over the weekend grew rising to. more than 2 800 people at the same time. government officials there pushed back. against criticism that rescue operations. have been slow and uncoordinated saying. that the government's response has been. quote Swift and effective. ant. the U.S Food and Drug Administration has. approved a new round of vaccines against. covet just as infection rates begin to. rise across the country.

Federal Regulators are expected to. follow up today with a recommendation. for exactly who should receive the new. shots which will be made by Pfizer. Beyond Tech and moderna that. recommendation and the state of the. virus will be the subject of tomorrow's. daily. today's episode was produced by Diana. Nguyen Carlos Prieto Sydney Harper and. Rachelle bonja it was edited by John. Ketchum and Lisa Chao fact checked by.

Susan Lee contains original music by Dan. Powell Marion Lozano Rowan nimisto and. Diane wall and was engineered by Alyssa. Moxley our theme music is by Jim. brunberg and Ben leatherfork of wonderly. it for the Daily. I'm Michael wabaro. see you tomorrow.