The UAW Is Preparing For War

A UAW member with a Ford F-150.
Photo: AP
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The UAW is gearing up for a contract fight, Elon Musk argues that he shouldn’t be held in contempt of court, and the Renault-Mitsubishi-Nissan partnership might not be dead. All that and more for The Morning Shift this Tuesday, March 12, 2019.

1st Gear: The UAW Is Making Noises Ahead of Its Next Contract Fight

The UAW’s contract is up later this year, when they will also negotiate a new one. And in a timely move, strike pay is going up for members, UAW president Gary Jones announced yesterday.

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Members will get $250 per week if they go on strike through the end of this year, up from $200 a week. It will increase to $275 per week next year. This doesn’t mean a strike will necessarily happen, but it is a warning to the Big Three automakers, Ford, GM, and Fiat Chrysler. (Volvo, BMW, Mercedes, Nissan, and other foreign automakers with plants in the U.S. are not unionized.)

The strike pay increase is an escalation, one of the first of which we will probably be seeing much more of.

From Bloomberg:

“No one goes to the bargaining table expecting to strike,” Jones said. “But the UAW goes to the bargaining table prepared to strike if our members need to strike. We don’t fear it. Raising the strike fund is an important symbol that we have their backs.”

The union last went on strike in 2007, when workers briefly walked out on both GM and what was then DaimlerChrysler.

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The UAW is a complicated beast, and its own recent corruption scandals don’t really help its case, either with automakers or the public. Still, you should be on its side here, shitty leadership be damned. Ultimately this is about labor, which deserves everything that it creates.

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Also, management is making its own noises. Today, for instance, a completely random story (also in Bloomberg) appeared. Ford, which is hugely profitable, said that its healthcare costs for employees would top $1 billion in 2020, for the first time ever. I’m sure the timing of this news has absolutely nothing to do with the contract negotiations. (Reminder: Ford made $3.7 billion last year.)

More:

Those mounting health-care costs represent a potential sticking point in this year’s contract talks between the United Auto Workers and the three U.S. automakers that tried and failed four years ago to address an expanding outlay that threatens profits and jobs. At Ford, General Motors Co. and Fiat Chrysler Automobiles NV, the tab for health insurance topped $2 billion in 2015 and has only grown since.

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It’s an honest-to-god tragedy that in America healthcare is largely tied to your employment, but Ford and the other two can still fuck off. The situation is what it is and Ford owes its workers a fair contract. Pushing a line in the press that the company’s healthcare costs will soon be $1 billion (a nice big fat number everyone can easily understand) as opposed to say $999 million could be a rounding error and is in any case both anti-labor propaganda and an admission that our healthcare system is fundamentally broken.

2nd Gear: Anyway, Tesla

A former Tesla employee says that people at the company knew about and “doubted” efforts to take the company private before CEO Elon Musk made his tweet about the subject, which got him into trouble with the Securities and Exchange Commission.

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From Bloomberg:

Sean Gouthro, the former head of Tesla’s global security operations center and investigations, made the allegation in a tip to the U.S. Securities and Exchange Commission, according to a statement from the law firm he retained. The company said it terminated him after about one year for poor performance.

“Gouthro noted in his submission that the purported planned transaction to take Tesla private at that price was known and discussed internally by many at Tesla days before the subject tweet, and that many were suspect of the purported deal’s legitimacy,” Stuart Meissner, a New York-based attorney, said in the statement.

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Musk’s tweet, in other words, did not come out of nowhere. The upshot here isn’t much, other than that Elon never disappoints, or stops being Elon. He’s also still arguing with the SEC about it, per The Verge, as the court system processes the case:

Elon Musk says he shouldn’t be held in contempt of court over a recent tweet about Tesla because he didn’t violate his settlement agreement, and “there is no basis to issue contempt sanctions against him,” according to a new court filing. The filing says Musk “correctly used his discretion to determine” that a tweet on February 19th “did not contain information that could reasonably be considered material” to Tesla.

The tweets in question are better understood as “proud and optimistic restatement of publicly disclosed information,” the filing says. The filing also notes that Musk’s tweets about yearly Tesla production came after the close of market. Further, Musk has attempted to comply with the settlement by tweeting less — showing that he’s taken it seriously. Musk’s lawyers also argue that the SEC’s interpretation of the settlement agreement “raise serious First Amendment issues.”

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3rd Gear: The Renault-Mitsubishi-Nissan Alliance Isn’t Dead

When Carlos Ghosn was arrested in Japan roughly 10 million years ago, many people assumed it would spell bad things for the Renault-Mitsubishi-Nissan alliance, since Ghosn, then the CEO of Nissan, was the biggest cheerleader of the partnership. But others within Nissan felt that it was an unequal grouping, and that was likely part of the reason Ghosn was whacked.

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Still, Automotive News reports this morning that the partnership has a lifeline.

Renault, which has a controlling stake in Nissan, said it would not seek the chairmanship of Nissan, while also agreeing to a consensus-based alliance governing board as alliance leaders sought to defuse the tension that has threatened to derail the world’s largest auto group.

In their first joint address since Ghosn’s Nov. 19 arrest, Renault CEO Thierry Bollore, Nissan CEO Hiroto Saikawa and Mitsubishi CEO Osamu Masuko announced a new four-member Alliance Operating Board to oversee all operations at the 20-year-old partnership.

The board will include the three CEOs and be chaired by Renault Chairman Jean-Dominique Senard, who took the helm of Renault in January following Ghosn’s resignation. Senard also attended the news conference on Tuesday at Nissan’s global headquarters here south of Tokyo.

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Staying together probably makes the most sense when all is said and done, as the auto world is increasingly competitive (technically demanding, with tightening regulations and ballooning costs) and Nissan, Renault, and Mitsubishi would be small fish going it alone. Still, I’m a bit surprised, as it was looking dark there for a bit.

4th Gear: Ford Is Playing Tariff Games

Trump’s trade war is stupid and ongoing but nothing about it is really new, and automakers have for decades tried to skirt the rules of imports and exports. Ford did a similar thing recently, infamously importing Transit Connects with seats, only to remove those seats here and sell the vans as cargo vans. The difference matters because cargo vans and passengers have hugely different import tariffs and, predictably, it all ended up in court.

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Per Bloomberg:

Trade attorneys are closely watching a case playing out in federal court involving Ford Motor Co. The automaker imported passenger vans, then removed a row of seats and sold the vehicles as cargo vans. In doing so, Ford paid a 2.5 percent import duty on the vans, because they were classified at the border as passenger vehicles, rather than the 25 percent tariff on light trucks that includes cargo vans.

U.S. Customs challenged the practice, accusing Ford of improperly masking its intentions. The Court of International Trade ruled in Ford’s favor in 2017, but the government has appealed, and the U.S. Court of Appeals for the Federal Circuit heard oral arguments Monday.

The decision could impact how Customs rules in other duty cases, complicating the ability of companies to avoid U.S. tariffs imposed by the Trump administration since last year, said Suzanne Kane, an attorney at Akin Gump Strauss Hauer & Feld. “It’s even higher stakes now,’’ Kane said.

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5th Gear: Volkswagen’s Electric Vehicle Output Has Gotten Even More Ambitious

Volkswagen is going pretty big on EVs being the future, partial atonement for Dieselgate. This morning, Automotive News says the company will launch 70 new electric models in the coming years. We’d previously heard that it would be 15. Seventy!

The 12-brand group, which includes Audi, Porsche and Bentley, now plans to launch 70 full-electric models over the next decade, accounting for 22 million battery-powered vehicles. Previously, Volkswagen had said it planned to build up to 15 million battery-electric vehicles globally by 2025 across 50 models.

VW Group CEO Herbert Diess committed the automaker to a “fully CO2-neutral balance” in all areas from fleet to production to administration by 2050.

“Volkswagen is taking on responsibility with regard to the key trends of the future — particularly in connection with climate protection. The targets of the Paris Agreement are our yardstick,” Diess said in a statement at the automaker’s annual press conference here on Tuesday.

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That’s a lot of damn vehicles, but I’m assuming many of these will be built on the same platform, done with little variations between brands. This is the nice part about having, say, Seat, Skoda, and VW all selling basically the same car. Impressive nonetheless, though now VW has to deliver.

Reverse: A Fiat Scion Is Born

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Neutral: Can the UAW Pull This Off?

Recent corruption scandals aside, do you think the UAW can get a good deal on its next contract? Or even strike if necessary? U.S. auto jobs are increasingly hard to come by, and I wonder if the UAW’s membership has the appetite.

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About the author

Erik Shilling

News Editor at Jalopnik. 2008 Honda Fit Sport.