United Auto Workers launches a historic strike against all Big 3 automakers
npr.orgIn case anybody else was wondering who the Big 3 are: the article talks about the Detroit 3, which are Ford, General Motors, and Stellantis (the merger of Fiat-Chrysler and Peugeot with Dutch headquarter).
Oh, I used to work in the automotive instry but somehow missed that Stellantis regrouping and rebranding. Hope they can find some synergies between Dodge and Citroen.
There has been no rebrand, Stellantis is just the group name for the former FCA and PSA groups. All previously existing brands will continue to exist as before, just now based on common platforms and targeting different markets, same as before, just on a bigger scale. E.g. PSA bought Opel from GM (and did a massive turnaround making it profitable in 2 years while it was loss making for decades before) to have a German brand known for quality to target markets where French brands were known as unreliable. An Alfa Romeo SUV, a Jeep SUV and a Peugeot SUV are targeting entirely different markets, even if the underlying vehicle is pretty much the same.
> Hope they can find some synergies between Dodge and Citroen
They probably will, the CEO is very good, and as mentioned earlier, PSA (he was CEO there before FCA lost their own hero CEO and decided to merge with PSA) managed to turn around Opel quite quickly.
That would be a hell of a Frankencar, though!
Boston 3?
Fixed, that's what I get for not drinking enough coffee
Tea Party Trifecta?
Economically this seems like a ripe time for striking.
US wants to onshore/friend shore production, so there is a demand for US workers at any cost. Barring automation replacements.
Agreed. One note.
The auto industry in the US is just about as automated as possible, given current tech, economics, etc.
I have strong doubt about that. I grew up in an automotive family and went to a heavily automotive school.
You basically have three major hold backs:
* Parts requiring manual assembly. My first summer job was at an auto supplier. It involved running 3 wires though a piece of conduit and wrapping it with electrical tape. It was a connector for some sedan brake light. Family friend. They still run the business the same way. Parts change too frequently and are too hard to automate.
* automation still requires maintenance. This isn’t just replacing parts on machines. This is also the entire supply of parts that go into fixing machines. Lines going down is incredibly expensive. Parts aren’t always readily available. There’s a whole industry of small “tool and die” shops that have the capability to build a part from specs next day.
* plants are huge and expensive., you don’t retool unless you have good justification. Typically, this happens with a model refresh.
These 3 bullet points are exactly correct and serve to support the claim in the comment I wrote which you are replying to.
For these reasons you highlight, auto plants in the US are generally as automated as is makes sense to do.
There's always room for more automation. Tesla, for example, is much more automated in many areas.
> Tesla, for example, is much more automated in many areas
By out-sourcing jobs to China.
> According to new figures released by the CPCA, Giga Shanghai was responsible for the production of 710,865 vehicles in 2022. And given Tesla sold 1,313,851 cars last year, that means 54.1 percent came from the Chinese plant
(I've worked on some automation projects for them)
They actually shoot themselves in the foot often.
They often over automate from the beginning, force too much, figure out it won't work, then just end up doing it how Ford does.
The closest I've seen to Tesla using more automation was just Musk spouting off random bullshit. Actual deep dives have shown that the automation tesla was trying to do isn't ready and they spent as long or longer fixing every car, often meaning they had lower output and more human involvement than competitors.
By what metric? The numbers I've seen indicates the opposite, although against European peers. But I don't know how reliable the numbers are, as the real data is probably a trade secret. The differences were really small however, and you might be able to slice them differently for a different result.
Their build quality issues and problems producing CyberTruck aren't exactly great advertisements for excessive automation.
Onshore production already mostly happens, and it’s for superior non Big 3 vehicles like Toyota and Tesla. To me, it looks like the Big 3 autos are floundering severely, are the only ones unionized, and this strike / 40% pay increase demand is only going to further cripple the big 3’s ability to compete in the market. Ford and GM have already completely ceded sedans while Chrysler is a hollow shell
As stated in the article the labor cost is less than 5%. It won't matter except for shareholder revenue.
Where in the article does it say that?
I'm not sure I'd call Tesla "superior" to the "Big 3"
Pointing out the endless flaws in Tesla cars that have rolled off the line (joints that don't quite align, slight blemishes etc) are a running joke for many of its detractors
Not to mention the absolute clown fiesta of Elmo's "Cybertruck"
It is far superior in number of cars sold to the Big 3, which is what matters. (The Big 3 barely sell more "vehicles," but that's mostly trucks, not cars — Tesla beats them in every category in which it competes.)
Where are the new Ford, GM, and Chrysler sedans to be found anywhere? Outcompeted. What was the best selling SUV in the US? Model Y.
Or how about the obvious future of just EV's in general? Tesla at ~350k sales, Ford MachE and GM Bolt aren't even scraping 10k.
Well, regulators in many countries and states have signaled that ICE is on the way out. If you look at market share among BEVs domestically, Tesla is very dominant, over half the market.
The big 3's profits were $250 Billion over the last 10 years. The idea that paying their workers fairly is going to cripple them is nonsense.
Let's be a bit more specific. GM made $8.9 billion last year on $157 billion of revenue, a 5.7% sliver. A large portion of the costs to earn that revenue is labor, and they are asking a 40% increase of those costs, while GM had said 20%. This is a company with $118 billion in debt, which is increasingly going to roll over to much larger interest payments from now on, due to the Fed Funds rate of 5.25%. And they're trying to reinvest those profits into the transition to EV. If they don't do that, they're dead. This is also a company that made profits before going bankrupt just 15 years ago, which our taxes had to pay for. I don't want to see employees out of jobs ("every auto job is a good job" -UAW), nor do I think UAW is entirely well meaning when they've been shown trying to weaken EPA regulations[0] so they can pump out more polluting Camaros and Cadillacs for the past decade while Tesla created EV's.
[0]https://www.reuters.com/business/autos-transportation/uaw-wa...
If they cannot pay their employees a fair wage someone else will. There is no need to cry for the rich overlords and lament their lack of more profit.
This is just nonsense, the point of capitalism is to extract value efficiently, if Big 3 cannot, then other companies will. There is no in between or buts.
No one will pay them a fair wage because there will no plants for them to work in. The US manufacturers will simply ramp up offshoring of entire vehicles to China. The new Lincoln SUV is an entirely in house design from Changan motors soup to nuts. You can fully expect this to become common for US brands.
Actually. No one else will.
UAW was unable to unionize non-big 3 factories in the US.
Past performance is not a guarantee of future results.
There's a huge wave of increased support for labor in the US right now. It's definitely not a good idea to bet on any particular area remaining un-unionized.
You’re not getting it.
There is zero chance non-us car factories unionize. There is nothing stopping them from closing the factory and moving internationally. The same isn’t true for the big 3.
Sure there is: whatever reasons led them to build factories in the US in the first place.
And for, say, German automakers, they already have unionized workforces outside the US.
This whole narrative of "we cannot possibly try to improve anything for our people, because any time we do the wealthy overlords will move their business/money/etc overseas" is demonstrably bullshit, and always has been. It doesn't hold up for raising taxes on the wealthy, it doesn't hold up for unionization, and it won't hold up for whatever the next thing people like you try to use it to argue against will be.
Thank you!
GM gave all the hourly employees a $12,750 bonus check this year because of company profits.
They big 3 currently have $354 Billion in debt.
I mean, the C-suite have had a 40% pay increase, why shouldn't the worker have the same?
Supply and demand
Hence the strike, which changes worker supply.
Because the C-suite are the people making the big decisions which resulted in the huge profits.
The worker who attaches doors to the car on the shop floor had almost zero impact on the surge in profits because they are very restricted in scope of tasks.
And yet those decisions would remain inert thought experiments without the workers, so maybe you, magic c suite geniuses aren't as unilaterally crucial as you think you are? Those workers did all the material enacting of those illustrious "big decisions". Record profits? Record wages.
Inert thought experiment is one way to cope with this reality.
How are the Detroit automakers, which are the only unionized ones meant to compete with the companies that completely ignore fair wages and don't even have unions begging for them?
I'm not against paying people fair wages but automakers aren't exactly train companies that run at a loss and for the public good (being propped up by the government)
I guess we could prop up automakers with tax funds and pay fair wages and somehow ignore all the other market forces but... Why? We already prop them up with subsidized roads and infrastructure...
Why should we subsidize auto makers with exploitative labor if they are already subsidized by roads, infrastructure, bailouts and still claim struggle?
let the market dictate their death. it's just those free market forces. and if it's a matter of national security that we make autos then it answers itself; some kind of military subsidy.
Exploitative labor seems like a silly thing to _justify_ as a free market force.
I agree we should stop subsidizing our automakers because it's clearly not working out and they are still exploiting labor and the goodwill of the government building roads etc
> Because the C-suite are the people making the big decisions which resulted in the huge profits.
They aren’t the ones making the cars, though. Your whole point is nonsense. It’s maybe an argument for paying CEOs 10 or 20 times the average worker’s salary, certainly not for the stupid 20+ millions we see.
But then who's gonna make oversized pickups?
Tesla is moving to a McDonald style system; create a few big giga-castings of the main car body parts; create modules that fit exactly into those castings, assemble the few modules and castings in a few simple steps.
these steps minimise human or eliminate human use, and encourage either robotization, or task simplification to such an extent that labour can easily be replaced with another with minimal training.
example from autoline channel, showing how simplified the assembly system can become with the casting base:
https://www.youtube.com/watch?v=lawGMl8sHzc
And Tesla is just going further with the casting
https://www.reuters.com/technology/gigacasting-20-tesla-rein...
https://youtu.be/0Ukp4tm0JkM?t=196
this means that ICE vehicle skills are becoming exceedingly irrelevant. Obviously not everything is gone, but imagine how simple it is to train or replace fast food workers; or how easy it is to assemble furniture ikea-style. A lot of ICE- skills are now not required in EVs, and these workers will have to find alternatives.
Striking just delays the inevitable.
I wonder if they'd settle for a (retroactive relatively) reduction in CEO Pay, coupled by an increase of at least the CEO's pay increase or better relative to the last contract period.
## HYPOTHETICAL EXAMPLE ##
+ Prior to contract CEO made 10,000,000 per year. Since then they (currently) make 14,000,000 per year.
+ Union is asking for 40% increase to match CEO's increase.
? Would the union accept CEO's total compensation package, including retroactive to cover the same period, decrease to E.G. 20% (CEO now makes 12,000,000 per year in this hypothetical) with a union member INCREASE of 20% or greater (possibly including a one time contract signing bonus to cover the back period)?
No. Why should it?
The article points out how union members are still affected by concessions they made in 2008 to help auto companies then. It would therefore be inappropriate to use "relative to the last contract period" as the baseline.
If it were about simple disparity, that disparity has grown for far longer than the most recent contract period. Back in the 1960s the average ratio between CEO pay and average worker pay was 20x, and now it's close to 400x.
Extending your argument to the longer baseline, if the CEO's pay were reduced by 20x and the worker pay increased to 20x, retroactive to 1970, then I'm pretty sure they would agree.
But the point isn't simply that the CEO made X% more since the last contract so union workers should get X% more too. If it were, then consider GM CEO Mary Barra, who made nearly $29 million in 2022. She could cut her income by 30% and still make good money - Ford CEO Jim Farley "only" makes $21 million.
Cutting her compensation wouldn't justify cutting the salary for everyone at GM by 30% for the next contract period.
BTW, this sort of question works better with actual numbers. From https://www.npr.org/2023/09/13/1198938942/high-ceo-pay-inequ... :
> "The Big Three CEOs saw their pay increase by 40% over the last four years, while our pay only went up by 6%," UAW President Shawn Fain said at a news conference last week.
> As of Tuesday, the UAW is proposing an approximately 40% compounded wage increase over the course of a four-year contract, a tad lower than its opening bid of 46%.
Also, as an indication of how looking only relative to the recent contract period isn't enough:
> The average hourly wage for workers manufacturing motor vehicles and parts, adjusted for inflation, has dropped by more than 20% in the past two decades, according to data from the U.S. Bureau of Labor Statistics.
0.8 * (1 + 0.4) = 1.12 so what the union wants would be about a 10% gain since 2000.
> The article points out how union members are still affected by concessions they made in 2008 to help auto companies then.
UAW were a huge reason Detroit was in such bad shape in 2008. I wouldn’t call those concessions.
Hmm, who to trust - an HN commenter or an NPR reporter.
Or the NYT reporter at https://www.nytimes.com/2008/12/04/business/04auto.html . Or the WSJ reporter at https://www.wsj.com/articles/SB122832097499675993 .
Would you prefer the term "sacrifice"? That's how GM described it. ("Importantly, the Plan requires considerable sacrifices from all stakeholders—unions, bondholders, dealers, suppliers, retirees, active employees and executives." - https://www.sec.gov/Archives/edgar/data/40730/00009501520900... )
Switching to GM's preferred term seems only a surface detail. Compare "Time to make up for 15 years of concessions" with "time to make up for 15 years of sacrifice".
Given the decades of "it's your fault! no it's your fault!" in the antagonistic corporate/union relationship, do you really think it can be resolved in an HN comment?
In any case, my point is the imposition of an arbitrary date means asserting without evidence that the relevant parties will accept that as a fair starting point.
You’re missing the point entirely. I said I wouldn’t call them that, and the reasoning behind that is the important part. Get your head out of the pedantic sand.
No wonder you don’t understand.
My point is that mjevans's proposal would not work.
You jumped in with a personal opinion about one word choice, in what I believe is a tangential point making a jab at the union.
That personal opinion on the matter shouldn't carry much weight as 1) many others refer to it as "concession", 2) using GM's term of "sacrifice" doesn't affect the logic behind my point, 3) you haven't explained your reasoning, making it hard for me to understand how it has anything to do with my point.
Is the CEO cut in pay to cover the costs of pay raises? The article mentions that 13,000 workers will be striking but if we round that down to 10,000 a 2 million dollar CEO pay cut would cover a 10 cent per hour pay raise for those workers. This strike is against all three major US automakers so matched between all three CEOs would be a 30 cent per hour raise. And there are 150,000 UAW members.
I imagine the workers are asking for more than a few hundred dollar in annual salary raise. A 20% pay raise of 10,000 people making $50,000 a year would cost 100 million dollars.
Not the point.
The point is, if company has enough to give thr CEO a raise, they have enough to give the average employees raises.
Further than that, they should prioritize the average employee. Meaning, if they have extra money, give it to the average employees first, then if there is leftover, give it to the management.
A rising tide raises all ships.
More my point is that the shareholders need to accept less profits.
It would cost Ford, if they had all 150,000 UAW, only 4% of their profits from last year to give out the 6 billion dollars necessary to give a 40% raise if those workers made 100,000 per year. And the CEO’s raise of 4 million is a fraction of a percentage of that.
I understand your point but the math doesn’t make sense when you talk about a few million dollars for the CEO. The 4 million dollar raise is 1% of the money necessary to give 10,000 workers 40,000. Yes the workers deserve a raise, and so that’s why they are striking. The CEO’s raise at this time is simply poor taste but not an apples to apples comparison.
If instead of a union, these companies had a codetermination model like in Germany this whole matter wouldn’t happen.
> It would cost Ford, if they had all 150,000 UAW, only 4% of their profits from last year to give out the 6 billion dollars necessary to give a 40% raise if those workers made 100,000 per year
Ford's net income (aka profit/loss) in 2022 (FY23) was ~ -$2.1B Billion [1]. The raise would effectively add an additional $6B loss.
Think about it this way - how often do you see a brand new Big 3 car? At least in the Bay Area it's not often - it's mostly Tesla, Japanese (Toyota, Lexus, Honda, Acura, Nissan), Korean (Hyundai, Kia), and German (BMW, Mercedes, Volkswagen) automakers. And I've see a similar split both across the west and east coasts.
Eg. In 2022, the big 3 represented ~40-45% of new car sales in the US, with an average of 10% decreases in sales across the board [0]. And unlike Japanese, Korean, or German players, the Big 3 are shut out or divested out of the Asian market (eg. China, India, ASEAN) meaning no growth market in the horizon.
There isn't that much money left for the Big 3 to generate profits when enough people aren't buying their products.
[0] - https://www.carpro.com/blog/full-year-2022-national-auto-sal...
[1] - https://www.macrotrends.net/stocks/charts/F/ford-motor/net-i...
According to your link the big three are 4 out of the top 5 brands being sold. Ford and GM being #2 and #3 respectively.
And by model[0], they make up 8 of the top 25, 5 of the top 10 with the F150 being the #1 selling vehicle.
Not everyone lives on the coasts. While the Japanese brands are very common here too (and I personally prefer them) my work parking lot probably has Ford trucks as the most used vehicle.
The auto industry needs to pivot to survive the next few decades for sure but some sliver of profits going to the workers is only reasonable. My hypothetical was Ford having to fund a high raise for all UAW workers when they would in reality not need to.
By market share yes. Yet even at 42% market share they are operating at a loss in 2022.
All carmakers in the US saw around a 10% drop in sales in FY23. The difference is Big 3 carmakers are very US-centric, while other Japanese/Korean/German carmakers have growth markets that they can further leverage or that can cushion bad sales in the US.
The Big 3 simply don't have a strong long term outlook nor enough money to give a raise, as they are not selling enough to break even.
By model isn't a relevant enough number simply because we need to see at the macro-level how a company is actually operating.
An additional issue with the UAW strike is EV/Battery related jobs do NOT fall under the UAW's Union [0].
At the end of the day, this is just low level politicking in a few swing states (Michigan, Pennsylvania) and one former Swing State (Ohio)
[0] - https://www.politico.com/news/2023/09/13/biden-labor-ally-th...
In that case, the CEO should not have given himself a raise.
If there isn't enough money to go around, don't just give it out to yourself.
Ford’s profit in 2022 was $24 billion. $6B represents 25% of that, not 4%.
They don’t employ all 150,000 union members and a 40% raise is on average likely to be less than 40,000 but the points are still the same. Reducing the CEO’s salary to give the workers a raise of more than a few cents would require the CEO to pay hundreds of millions of dollars. So it has to come from profits or costs have to go up.
This[0] statement from Ford does align with what you are saying, I clearly misread the 150 billion number which was revenue. However they claim to have over 30 billion in cash it looks like. 2 billion of that could cover $40,000 raises for up to 50,000 employees for the next 15 years. Even splitting that by raising costs by some fraction of a percentage, taking out half a billion from the cash and then 1 billion from the profits is more mathematically sound than just saying the CEO should take a cut to cover the costs of the raise.
[0]: https://media.ford.com/content/dam/fordmedia/North%20America...
Similar to the writers strike and AI, auto workers are facing a future of electric cars that require less labor to build.
"... in the US" - that is missing in the title.
Unions: organizations whose sole purpose is to acquire a monopoly on the means of production. They’re parasites, but corporations are worse. Don’t let either ever gain the upper hand.
Is this just a final battle for the remaining scraps of money in a dying industry? Or is this a real, substantive negotiation that will push the industry to a better place?
It's not scraps of a dying industry if every time you die you get tens of billions in bailout money. [1]
1: https://knowledge.wharton.upenn.edu/podcast/knowledge-at-wha...
This only furthers the point being made.
Why are we keeping them on life support?
> Why are we keeping them on life support?
A million auto industry workers is a lot of votes.
Because Amercains bitch about "We can't build anything anymore" otherwise? Because a ready and well-practiced, upskilled workforce is important to a country, in everything to thr economy to wartime preparedness? Because Americans will continue to demand cars, and it seems pertinant to allow at least a path or two for a secure, national brand?
This is a tech forum. What happens when networking equipment only comes from other nations (that won't subsidise their industry either)? We end up having Huawei as the economic choice. A brand known for having deep ties to a political party that America is increasingly likely to enter at least a cold war with.
You're asking why supporting home-grown is bad like the last 4 decades of offshoring wasn't destroying what remains of middle Americans.
The big 3 made over $21 billion in profits in the first half of this year. This isn't about fighting over scraps, it's about fighting for a fair share of the wealth produced by workers.
That's gross profit, which doesn't mean cash.
The profit was about 4b which, okay let's give everyone in UAW a share of that and... Oh it's so small that it doesn't fix anything?
There's also exec comp, stock buybacks, dividends, etc. If you believe unions can help shift wage inequality, net profits isn't the only bucket to draw from.
The big 3 also had $354 billion in debt. Will workers pay that down too?
lots of talk of automation and Tesla - can anyone give more insight into Teslas purported new building technique and whether it’s actually innovative? https://www.theverge.com/2023/9/14/23873345/tesla-gigapress-...
It makes sense that in such a tight labor market, unions would be flexing their strength. What would really be a big deal is if union participation starts taking off, e.g. by some of the car plants in the South unionizing
Can Youtube/Twitch/etc manage to fulfill this product gap too?
Seriously though, yes... Support The Unions! Stay strong!
> During the 2008 financial crisis, the UAW made major concessions to help auto companies get back on their feet. Workers are still feeling the effects of those concessions to this day...
> Collectively, the Big Three automakers have seen their profits soar
This is why you need unions. Most businesses will happily screw over workers whenever they can to maximize profits and the workers are lucky if they get peanuts back when they're swimming in cash. Ford makes the hyperbolic claim that agreeing to UAW demands would bankrupt them as it would cost $15 billion. Their profit in the last 12 months is $25 billion. The maths is more complex than simply 25-15 but shows how companies will obviously lie to protect their shareholder profits.
No, Ford made only about $4bn in the last 12 months: https://ycharts.com/companies/F/net_income_ttmTheir profit in the last 12 months is $25 billion.You might have googled 'gross profit' which isn't the same thing, as it doesn't account for the many costs of running a capital-intensive business, like machines and stuff.
I don't understand why you are looking at net profit, taxes are computed after payroll costs are taken out. Sure there will be some interests to be paid, buy I don't see how gross is more wrong than met here.
If you want to make that argument than use earnings before taxes, not gross profit which excludes the cost of everything from operations to debt service
Operating margin is the correct pre tax number to look at. It deducts operating expenses but not interest and taxes.
No, that's 4bn net profit for the last quarter.
The table below the chart makes it abundantly clear that they are reporting quarterly numbers.
No, it's the 12 months to the end of the last quarter.
The title of the table you reference makes it clear they're reporting TTM numbers.
TTM = Trailing Twelve Months
In general, the frequency of reporting doesn't have to match the measurement period. For example, inflation is often reported monthly, even though it measures the change in the level of prices since a year ago.
Well what's the profit of the other two? Does it add up to $21 billion?
> This is why you need unions. Most businesses will happily screw over workers whenever they can to maximize profits and the workers are lucky if they get peanuts back when they're swimming in cash.
The funny thing is, they might behave this way even if the management of all the car companies actually agreed with the unions and wanted to give them a 40% increase.
Suppose, hypothetically, that most of the management are actually good people who want to share their profits, but don't know what the management of the other companies think. Here are their options:
1. Raise worker wages in line with profits. 1a. The other companies do the same. Everyone's happy, no strike. 1b. The other companies don't do the same. Your company now makes significantly less profit; it's punished by the market -- stock price goes down, meaning you're at a risk of either a hostile takeover, or the board of directors firing you and getting someone else who's more ruthless (and will punish workers even more).
2. Talk with the management at other companies and convince them to raise wages. Actually, this is illegal, and you could face really steep legal fees or consequences.
3. Keep wages the same, and hope the unions do their job and call a strike.
Basically, #3 is the least risky option.
>This is why you need unions.
What happens if the unions succeed in draining the profits, corporate has less money to invest in R&D, and a foreign efficient automaker comes in and takes all the market share away from the union-led automakers?
What happens then?
The experience of Tesla clearly shows that this is a completely inaccurate picture of what motivates R&D. For decades big automakers took steady profits but declined to spend much on R&D, preferring to make incremental refinements to a conventional product. When they were challenged by an efficient upstart with an innovative product, the threat to their steady profits suddenly made them decide that they were prepared to spend on R&D.
Except, what also allowed Tesla to grow was lack of unions and Chinese manufacturing.
Even in the US, Tesla workers make an average of $45/hr while Detroit automakers have to pay $67/hr due to the UAW.
I agree, incumbents are typically lazy and stifle innovation, however that’s not the full picture.
OP is correct. Unions are also interested in profit maximizing for their members. So a foreign competitor or upstart without union concerns is at an advantage. Even if you like unions and think they are generally good, this is an undeniable fact given the global market for consumer products.
Has this example happened?
Most union workers don't want their employment to end. Why would they want to destroy the company this way?
Most large company CEOs can retire on the wealth they've already accumulated. Why should we assume they have higher long-term interest in the success of the company?
What is an example of union-led automaker? Perhaps some small cooperatively-owned car company somewhere? Or do you mean worker representation on the board, like at BMW in Germany, or how there was once a union seat on Chrysler's board?
What happens if a global investment company buys another company, stops all R&D to focus on short-term gain, runs the company into the ground, sells what's left, and makes an overall profit?
What happens then?
Oh, right, what happens is the investment company owners make a lot of money and the ex-employees get screwed. "Vulture capital" doesn't get that name out of love, and my life was negatively affected when KKR did a leveraged buyout of the non-union company where my father worked.
If there are any profits to speak of, then clearly either already enough is spent on R&D or nothing at all.
> If there are any profits to speak of, then clearly either already enough is spent on R&D or nothing at all.
What?
If you spent more on R&D you might make more sales, even if you are already profitable. You might also still be profitable (perhaps less so) if you spent less on R&D and made fewer sales. The sales numbers determine how many workers you need to make the stuff you're selling though.
It's also a common misunderstanding that a company is sustainable as long as its profit is above zero. It's only sustainable if its profit is above the market rate of return, because otherwise investors would make more money by shutting down the company and selling off its assets. If shareholders don't get a competitive return then they don't continue to lend you their money and you don't have a company. The management of the company can't change the economics.
> What?
What part of my comment is not clear?
If you have profits, then you're not spending them on anything, like e.g. R&D, or it's already budgeted in, meaning the argument that increasing salaries hurts R&D is not sound.
You can say you can't increase salaries because you're reinvesting profits into R&D, but you can't use the same argument when there was a several year streak of profits.
> If you have profits, then you're not spending them on anything, like e.g. R&D, or it's already budgeted in, meaning the argument that increasing salaries hurts R&D is not sound.
But you are spending them on something. Convincing shareholders not to shut down the company. It's like a loan, except that the terms are they get whatever profit your company makes instead of a fixed interest rate, but can call in the loan at any time and shut you down if the company doesn't make enough money.
You can't say that you don't need that unless you also don't the continued use of the shareholders' capital. You'd need another source of money to buy land and factory equipment etc., like a bank loan, and then you'd have to pay the interest on the loan instead.
> If you have profits, then you're not spending them on anything, like e.g. R&D, or it's already budgeted in, meaning the argument that increasing salaries hurts R&D is not sound.
The assumption you're making is that the money to increase salaries can only come out of profit and not by trading off against anything else, but that's not how it works. They're still going to try to maximize profit.
Maybe they used to have 15 models but they didn't all have the same profitability. At higher salaries only 10 of them could recover their R&D expenditure, so R&D for those lines gets cut, which means those lines get cut and a third of the workers lose their jobs. Meanwhile the company still turns a profit because the remaining lines are still profitable.
But all of this depends on the circumstances of the company. It could be that only one of the lines was making a significant profit and the others were barely breakeven, so at higher salaries 93% of the workers lose their jobs.
Or maybe there is only one product line. If they make a million widgets for $1500 and sell them for $2000 then they make $500M, and spending $150M on R&D to make the product a million customers want instead of half a million caused them to net $100M: They spent $150M to get $250M. But if labor costs increase so it costs them $1800 to make a widget customers will still only pay $2000 for, the R&D would still cost $150M but only recover $100M. So they cut the R&D rather than lose $50M, which cuts sales in half and that proportion of workers lose their jobs.
Profits will fund future R&D.
> What happens then?
Under-investment is how Detroit got the way it is already.
We get more efficient companies and life goes on.
The 80s and early to mid 90s?
The "free market" takes its course and unionized labor is (sadly) replaced by labor operating in companies with far worse tracks on things that detract from profits like "human rights" or "people not commiting suicide over work" [1]
Every suicide, inside Foxconn or outside, is a tragedy.
But re: implying causation, note that the wikipedia article you cited mentions:
"ABC News[49] and The Economist[50] both conducted comparisons and found that although the number of workplace suicides at Foxconn was large in absolute terms, the suicide rate was actually lower than the overall suicide rate of China[51] or the United States."
So basically, go into protectionism mode?
I dont see how this makes the case for why unions are needed. It makes the opposite case of how ineffective unions are against the hyper efficient corporate robot class. The corporate robot is programmed to undercut labor if they cant generate revenues any other way (and some do it anyway). If the robot doesn't, it will be replaced by a robot that can. The unions cant reprogram the robots no matter what, cause they are not the programmers. The programmers are the banks and financial system.
The banks and financial system are long overdue a gigantic kick in the head. But thats not happening cuz people are so distracted and scatter focused on the wrong stuff.
unions are for what workers what HR is for the corporation. negotiating wages is only one of the things that they should be doing.