UAW’s Fain May Be Fighting a Domestic ‘War.’ Auto Makers Are Battling Overseas.

Fain on Friday said that GM agreed to place electric battery plant workers into the master labor contract that governs all UAW workers at GM. That was a wow moment for Fain. The UAW can unionize any group of workers and it was very likely that battery plant workers in Ohio and Michigan would be unionized by the UAW. But what contract they would work under, and if the workers would be treated as suppliers to GM or as workers at GM was an open question.

“Negotiations remain ongoing, and we will continue to work towards finding solutions to address outstanding issues,” GM said Friday when asked to confirm the claim. “Our goal remains to reach an agreement that rewards our employees and allows GM to be successful into the future.”

Fain spoke at a rally in Chicago on Saturday. He sounded happy with the progress: “For months, [auto makers] said that a just transition with the EV industry was impossible…we said hell no!”

Faid added: “We’ve outsmarted, we’ve outorganized corporate America…and we’re going to keep going until we win social and economic justice at the Big Three and beyond.”

The UAW didn’t respond to a request for comment about what social and economic social justice means for Fain.

Fain continued: “Our union is again building the arsenal of democracy, but this war is not against some foreign power. The front lines are right here in our homes. It’s a class war on humanity. It’s a war of the working class versus the billionaire class and corporate greed.”

He might not be fighting a foreign war, but the auto makers are. Fain also returned to a line used frequently about the quarter trillion in profits made by the Big Three over the past 10 years. The auto makers have made money. But you have to make money to compete and the question of how much is enough rarely comes up. Neither does how competitors are doing.

Fain is actually understating when he says a quarter-trillion. Using the 10-year span from 2013 to 2023, using Wall Street’s estimates for the rest of 2023, GM, Ford, and Stellantis generated about $315 billion in operating profit, according to FactSet.

But sales total some $4.8 trillion so the spending is $4.5 trillion. That’s a lot of spending on labor, parts, commercials, platform development, and everything else that goes into a car.

The profit margin amounts to about 6.6%. Is that enough? Comparing it with others can help answer that.

The three largest auto makers in the U.S. that are not the Detroit Three are
Toyota Motor
(TYO: 7201),
Hyundai Motor
(005380.Korea), and
Honda Motor
(HMC). Over the comparable span, they generated about $5.2 trillion in sales, and spent about $4.8 trillion to generate some $377 billion in operating profit for a margin of 7.2%. Every number is bigger or better those of the Detroit Three.

The union might want to think about the comparison, too, and make sure the Detroit Three can compete effectively in the long run.

Along with battery concessions, GM, according to statements from the union and GM, is offering wage increases in the range of 20% over the life of the contract with inflation protection and a big wage increase in year one of the contract to offset recent inflation.

Coming into Monday trading, Ford and GM shares are down 21% over the past three months. The
S&P 500
is down about 2%. Stellantis shares are up about 11%.

Stellantis is a more global company, less impacted by what happens in the U.S. It’s also a cheaper stock, trading for less than four times estimated 2024 earnings. GM trades for less than five times. Ford trades for less than seven times.

Write to Al Root at [email protected]