Georgia Grows While the UAW and the Big Three Fight

Charlie Harper

Wednesday, September 20th, 2023

The United Auto Workers has initiated strikes against all members of “The Big Three” U.S. automobile manufacturers, asking for 40% pay raises for union members as well as a 32-hour work week, among other demands.  The path from here to the strike’s resolution is worth watching for both economic and political ramifications. 

The economic aspect of this standoff is significant, but not nearly as much as a similar strike would have been a half century ago.  Throughout the 60’s and into the 1970’s – the era of “What’s good for GM is good for America” – GM produced roughly half of the cars sold in this country by itself.  Now the market share of GM, Ford, and Chrysler’s parent Stellantis sell about 4 in 10 of autos sold in America.  With many of these cars imported from foreign manufacturing sites, not all of these cars are built with UAW labor. 

Meanwhile, union membership is not as prevalent in either the US workforce or within the auto industry.  The manufacturers that have taken the market share from the Big Three – most of whom have U.S. assembly factories – are operated with non-union labor. 

This is significant for a few reasons.  One of the fears of large pay raises within new union contracts is that they become inflationary, as non-union employers then have to bid up wages in order to attract workers.  It could be argued, however, that because union workers have had to wait through the last 2 years of inflation for their contract to expire before seeking more money, their raises may be lagging the market, not setting it. 

There is a concern that the inflationary aspect of this strike will come from supply shocks rather than from higher wages.  Used car prices have remained stubbornly high since the pandemic shutdowns of the economy, though prices have begun to ease recently with increased new car supply.  Another lack of new cars on the market would have the immediate effect of making supply more scares, and prices higher for demand to meet supply.  This lag continues as fewer cars are leased, and thus, fewer off-lease cars are available down the road to feed used car supply. 

As for the politics of the situation, the standoff is driving a wedge between a union that is a reliable source of endorsements, campaign funds, and workers for Democratic candidates, and a Democratic agenda that has moving the country to electric vehicles as a centerpiece of policy.  Workers fear they are being left behind in this transition.

Early reports prior to the strike indicated that the first plants to be targeted would be engine and transmission plants operated by each manufacturer.  The tactical nature of striking these locations would be to cripple the entire production network of each company while technically only striking a few locations. 

While this report turned out to be untrue, it also sought to highlight a problem with the transition to electric vehicles.  EV’s do not have engines nor conventional transmissions.  Both are large, complex, and labor intensive parts of cars with internal combustion engines, and consequently require a lot of labor.

EV’s, however, have motors instead of engines.  They are smaller, much lighter, and much cheaper to build.  Consequently, they require significantly fewer labor hours to produce. 

While Michigan Democrats are siding with the workers – their voters – by joining them on the picket lines, Michigan Republicans have not missed the opportunity to emphasize the contrasting priorities of their opposition party.  As quoted in the Detroit Free Press, Representative John Moolenaar said "Unfortunately, President Biden’s unworkable policies on electric vehicles have pushed automakers and autoworkers into a corner, requiring them to follow burdensome EPA rules and forcing the entire auto supply chain to become more dependent on the Chinese Communist Party,”

China currently controls many of the rare earth minerals needed to produce electric vehicles.  U.S. producers have had difficulty producing more of the lithium used in most batteries due to environmental groups blocking additional mining activities.

Georgians are mostly spectators in this standoff, unless they currently have a vehicle on order from one of the manufacturers affected or work for a dealership with soon to be shrinking inventories.  Georgia’s Hyundai plant in Bryan county continues on pace, Rivian’s factory east of Atlanta is soon to begin construction, West Point continues to churn out Kia’s at maximum capacity, and battery plants across the state are either in production or under construction to meet demand.

The differences between Georgia’s automotive operations and those under fire from the UAW are stark.  One represents the future and is thriving.  One is flailing while trying to reconcile a model that worked 50 years ago against a global economy and next generation technologies. 

About Charlie Harper

Charlie Harper is a Marietta Georgia based conservative-leaning policy and political strategist.