Workers at three major U.S. auto companies went on strike at the same time, but Musk became the biggest winner?

The U.S. auto industry’s general strike has entered its third day with no sign of resolution.

According to CCTV News, in the early morning of September 15th local time, the United Automobile Workers (UAW) officially launched a strike against the three major American car companies - General Motors, Ford Motor and Stellantis Group. This is the first time in more than 80 years since the founding of the United Auto Workers that auto workers have staged a strike against the three auto giants at the same time.

Public information shows that the UAW is one of the largest workers’ associations in the United States. It has attracted as many as 146,000 members in the “Detroit Big Three” - General Motors, Ford, and Stellantis Group, accounting for approximately 56% of all workers in the U.S. auto manufacturing industry. .

According to relevant research reports, the contracts between UAW union employees and the three major North American automakers are re-signed every four years, and the current labor contract expires at 11:59 pm on September 14. When the contract was re-signed in September 2019, the UAW led a 40-day general strike against General Motors, causing GM more than $3.6 billion in profit losses.

Separately, in related reports, the UAW is seeking a salary increase of more than 40% and defined benefit pensions for its members in negotiations with Ford, General Motors and Stellantis. If the above conditions are met, the labor costs of the “Detroit Automobile Big Three” will increase by 45 billion to 80 billion U.S. dollars (approximately RMB 329 billion to 584.9 billion yuan) every year, and threaten their future viability.

On September 18, CNN reported that the UAW’s request for a salary increase was based on the fact that the three major auto giants have increased executive salaries by 40% in the past four years, while workers’ salary increases have only been about 6%.

According to the report, it is estimated that the UAW’s series of requirements will significantly increase the direct labor costs of the three major U.S. auto companies from the current US$64 per hour to more than US$150 per hour. CNN quoted General Motors CEO Mary Barra as saying, “The UAW’s asking price is equivalent to more than 100 billion U.S. dollars, which is more than twice the company’s total market value. The union’s demands should be ‘realistic.’” Ford Motor CEO Jim Far “The UAW wants to drive us out of business instead of supporting our workers,” Leigh said.

It should be noted that the strike locations are respectively the General Motors Assembly Plant in Wentzville, Missouri, which produces Chevrolet Colorados, GMC Canyons and other models; and the Stellantis Assembly Plant in Toledo, Ohio, which produces Jeep vehicles. Wrangler models; and the Ford Assembly Plant in Wayne, Michigan, which produces the Ford Ranger and Bronco models.

Some people believe that the three factories where strikes occurred this time are all the production sites of the three major car companies’ best-selling models. Once the scale of subsequent strikes intensifies, half of the U.S.’s automobile production capacity may be affected. UAW President Shawn Fain said that a larger “general strike” has not yet been held, but said that if the labor and management cannot reach a new contract, “any option is possible.”

Marick Masters, a business professor at Wayne State University in Detroit, Michigan, the center of the U.S. auto manufacturing industry, commented that the UAW did not target these vehicles when choosing the above three strike locations. Instead of focusing on the company’s “cash cows”, namely full-size pickup trucks and large SUVs, it has chosen more factories that produce models with lower profit margins.

“They (UAW) still want to give these companies some room to maneuver and not push them into a corner.” Masters emphasized, “It is very dangerous to push an animal into a corner.”

USA Today’s analysis believes that this strike model can not only disrupt the supply chain of car companies and make companies feel “heartache” for economic losses, but will not paralyze company operations. On the other hand, this strategy also leaves room for the union - if follow-up negotiations do not go smoothly, the UAW can call on workers in other factories to “stand up and protest.” The company cannot predict how the union will choose, and it is impossible to guard against it. McCartin, a labor historian at Georgetown University in the United States, said that the strike marked a “major innovation” in the fight for labor rights. The union leadership has not only become more sophisticated, but also “more combative.”

Others believe that because the automobile industry chain is large and complex, the UAW can shut down all companies with little effort through selective strikes. “A strike at one engine or transmission plant of each car company is enough to shut down nearly three-quarters of U.S. assembly plants.” Jeff Schuster, Global Data’s global automotive business director, said.

Regarding the duration of this round of strikes, a Morgan Stanley survey showed that the vast majority of respondents (96%) expected the strike to last more than a week, and more than one-third (34%) expected the strike to last more than a month. . According to an analysis by Anderson Economic Group (AEG), the strike by nearly 150,000 UAW members at General Motors, Ford and Stellantis will cause economic losses of up to $5.6 billion in 10 days. This includes the profit losses of the three major car companies, the losses suffered by car dealers in the short and long term, and the losses of auto parts suppliers.

“Considering that the UAW strike has sufficient funds, the intensity of this strike may not be lower than that in 2019, and the strike losses of the struck automakers will also be greater. Even if the strike passes, both parties have made certain compromises. Under the new wage agreement, the three major manufacturers in North America will The labor costs of car manufacturers are also expected to rise significantly in the next four years compared with the current level.” CITIC Securities believes that we should continue to pay attention to the marginal changes in companies with relevant supply chain exposure risks in North America. Among the OEMs, the three major North American OEMs led by General Motors are at higher risk. If the OEMs go on strike and suspend production for a long time, related parts companies will also face the risk of no demand and joint production suspension.

It is worth mentioning that this strike may be a boon to Tesla. Wedbush analyst Dan Ives said in a related research report, “If a strike occurs, U.S. auto production will be affected, and Tesla will have the opportunity to benefit.”

This has been reflected in the capital market. U.S. stocks closed on September 14, local time. Affected by news of the strike, the stock prices of large U.S. car companies collectively closed down, but Tesla (TSLA.US) bucked the trend and rose 1.75%.

After the strike, Tesla CEO Musk said via personal social media, “The atmosphere in the Tesla and SpaceX factories is great. We all encourage playing music and having fun. This is very important for making people look forward to going to work!” “

“By the way, the wages I pay to workers are higher than what the UAW wants. Over the years, many technicians working on the production line in our factory have become millionaires by holding company stock options.” Musk express.