The Automotive news in America, at this time of writing, is being dominated by the United Auto Worker’s (UAW) strike against Ford, GM, and Stellantis.
Stellantis is a conglomerate of brands under one banner and includes Abarth, Alfa Romeo, Chrysler, Citroen, Dodge, DS, Fiat, Jeep, Lancia, Maserati, Opel, Peugeot, Ram and Vauxhall.
In the past the UAW has picked one company as its target during contract and wage negotiations, but this year the union has taken on all three companies at once.
It’s being described in the media as the battle over EV’s. In reality all carmakers are anxious to keep their costs down as they focus more and more on EV manufacturing. Of course, auto workers want to preserve their jobs as the industry shifts to batteries and the higher material, not labour costs of EV manufacture. It’s being described as a one in a hundred-year technological upheaval that brings risks for both the companies and the auto workers.
The drivetrain in an internal combustion engine car has many parts. The drivetrain in an EV has less than a dozen. EV’s are simpler to manufacture, which means fewer workers are needed.
The UAW members can see into the future, and they know the EV revolution brings with it massive changes in the way cars are made, changes that may eliminate many of the jobs auto workers now hold. How will they pay their mortgages, rent and feed their families if those jobs are eliminated?
According to the US Bureau of Labour Statistics, measured in 2023 US dollars, wages in the private sector have risen about 19% since 1990, while wages for autoworkers have declined 30% since 2003. Meanwhile, inflation has diluted the buying power of those wages for all workers.
If people wonder why Americans workers are so angry, they need to look no further than how the economic policies have hollowed out the American middle class while enriching the so-called elite. In the 1960s, corporate executives earned about 20 times the hourly wage rate of US auto workers.
Today the ratio is closer to 400 times. The manufacturers are aghast that the UAW is demanding a 40% wage increase and do not see the irony that Mary Barra, CEO of General Motors, has seen her fiscal compensation increase by that amount in the past 4 years.
The automotive industry is surely going through many gear shift challenges. There are many disruptions coming, even apart from the striking action from the auto workers.
There continues to be the global disruption with chip manufacture, technological advances, and the changing consumer behaviours that are altering the auto industry on many levels all at the same time.
The traditional business model of designing, manufacturing, selling, servicing, and financing vehicles continues. Yet at the same time, the automotive industry is racing toward a new world, driven by sustainability, and changing consumer behaviour, encompassing electric vehicles, connected cars, mobility fleet sharing, onboard sensors, new business models, and always-on connectedness.
Automotive companies need to innovate and develop solutions quickly in order to react fast to changing customer demands and market opportunities. In the digital world, innovation must become an integral part of each department and discipline, so the entire enterprise contributes to generating the best outcomes for their consumers, workers, shareholders and any other sustainable improvements that come from best practise.
Are these current auto companies in a place to be able to handle the challenge or will some begin to drop by the wayside?
October 2023
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