Raise your hand, if, like me, until this week, you never heard of Stellantis.
Forgive the redundancy for those with fingers folded in their laps, but Stellantis is apparently the current corporate moniker of what was once Chrysler, along with, eons ago, the American Motors Corporation. Not sure what the “Stell” implies, but the Alantis portion probably, almost certainly, is a nod to its cross-oceanic presence in thirty counties. Its signature products are Italian Fiats. Rams and Jeeps, the last two of which are old-school Detroit specials. Somehow, though, its headquarters is in canal-filled Amsterdam.
Which tells you all you need to know about the modern auto industry.
In any event, Stellantis has the dubious honor of being one leg of the triple target against which the just-announced United Auto Workers strike is trained. The others are General Motors and Ford, neither of which, presumably, needs any introduction.
In solidarity with the trauma no doubt being felt on both sides of the dispute, and exclusively for the purposes of this note, I will refer to the conglomerate as St(rik)elantis.
The objectives of the job action are consistent with the normal protocols attendant to such affairs – albeit at impressive magnitudes. The demands include a 40% pay raise, a 32-hour work week, health care coverage that lasts until that inevitable, “tits up” moment (hopefully not for many years) and an assortment of other goodies.
Somewhat incongruently, I fully endorse their right to strike. Management negotiates as a single agent, and the organization of workers into a solo bargaining unit seems to me to be only fair game (tit for tat?). So, I say, man the pickets, onward to the negotiating table, and may the best economic outfit win. I’m not even terribly put out by the reality that it’s three against one – in a game wherein the smaller number has the competitive advantage. The UAW speaks in a single voice, renders its decisions collectively, whereas the three companies on the other side are deadly competitors, meaning any one of them may cave for the simple joy of sticking it to a hated rival.
But I am hacked off about the whole thing, nonetheless. Those UAW jobs are good gigs, featuring solid wages, extraordinary job security and a juicy package of bennies. Again, I stand by their right to undertake a walkout, but let no one mistake this group as being anything close to an exploited workforce.
Published estimates suggest that the fully loaded union-endorsed package would cause the labor component of domestic auto manufacturing cost to roughly double, and one wonders if, even under the premise of victory, the juice will have been worth the squeeze. It’s bound to take a bite out of demand for the products they manufacture, rendering them less affordable, and adding to allure of buying one of those sexy foreign jobs. We Americans import nearly half of our rides as it is. And a sequence of idled plants leading to higher costs that can only be passed on to consumers, could push the plurality to the Japanese, Korean, German, and Italian jalopies already widely preferred by such a large segment of our car-buying populace.
As was true 50 years ago (the last time the UAW chose to act out in such a manner, and how did that work out?), the implied lower sales will translate into a diminished supply of primo jobs, which can hardly be on the agenda of the United Auto Workers of America.
As I watched this unfold over the last several weeks, I was pretty certain that the Union would strike no matter what. And, to keep me honest, I will further prognosticate that a walkout now isolated to a few plants will quickly morph into a General Strike – with ALL manufacturing facilities idled. I base this on a hunch that what this is really all about is not small-ball worker economics but rather largescale politics. The Labor Movement, moribund for two generations (and especially since global trade reduced the leverage associated with domestic work efforts) is dying to exert itself, to show the world – once and for all – who’s boss in these here parts. They either believe that now is the time, or, at minimum, that their long pined for window is about to close.
Anyone who doubts this, however, should refer to the following chart, which plainly indicates a worker proclivity to point feet out the door:
I am not, however, not terribly optimistic on their behalf. They’ve won a couple of tactical victories of late – the UPS cave job comes to mind – but on balance have lost most of the showdowns they have forced this decade. The Teachers Unions used the lockdowns to demand not only control of education systems but large elements of social and political policy. In doing so, they accomplished very little, eroded large portions of their (finite) goodwill, and put the students which they serve through innumerable months of (irretrievably) lost time and excess agony.
Near as I can tell, nobody east of The 10 cares much about the Hollywood walkout.
But the more important lesson, particularly from a risk management perspective, is that if one is planning on undertaking an aggressive stance in a conflict resolution setting, one is best served to have a firm grasp on the leverage one brings to bear into the throwdown. And to act in accordance.
My guess is that other than the legion of politicians they carry in their pockets, the UAW has a deficiency of this vital negotiating asset. Yes, the Big Three needs workers to turn the screws on the assembly lines, but can find them anywhere on the globe – including, most notably, jurisdictions beyond the Union’s reach. Consumers can simply choose products that don’t feature the hoped for, UAW-extracted premium built into the sticker price.
Perhaps it is these conditions that caused Big Three stock prices to rise in the wake of the announced Job Action:
It is further unfortunate that the negotiations have broken down just at the point when Inflation has taken a nasty upturn.
With Crude Oil prices (you know, the stuff they put in car engines) on the threshold of one-year highs:
With the USD has surging – rendering the price to import an American car that much higher:
But I reckon when you are trying to make the world safe again from the cruelties and caprices of greedy corporations, none of this matters.
******
Come what may, the markets will trade on. After all, even if the UAW manages to remove every car from the road, we can always hop online. We survived, albeit in somewhat battered condition, a rather gruesome Rosh Hashana trading day, and won’t face the even more historically menacing Yom Kippur atonement session till Tuesday week.
Aside for a few interesting but ultimately back benching PMIs, all eyes will be on the FOMC. But my sense is that it will be anticlimactic session. Rate hikes are not on the cards, and we can project with confidence rhetoric featuring the need for continued vigilance, etc.
Yawn.
We are also staring in the face of another potential government shutdown, this time with the battle lines perhaps more acutely drawn. But I can’t bring myself to work up much agita on that score.
Maybe, instead, I’ll go car shopping – before, you know, the prices go up. I’d like to buy American; it is, after all, the patriotic thing to do.
But if I go another route, I don’t wanna hear nothing from my union buddies about stabbing them in the back. They don’t appear to be particularly concerned about my problems, so I’ll leave them to solve their own.
So, I reckon I’ll at least test drive a Fiat, in the hope that it will at least partially assuage the hurt feelings that surely pervade across the transoceanic realms of St(rik)elantis.
TIMSHEL