There's no denying it: Detroit's blue-collar, unionized auto workers are the clear winners of the historic American auto plant strike. Workers at Ford, General Motors and Stellantis will benefit from a wage increase of around 25% over four years, according to the agreements that put an end to the strike. The maximum worker's wage will rise to $42 (€39.50) an hour. An operator will now earn more than $80,000 a year, excluding overtime.
The automotive industry is on the verge of returning to its glory days in terms of wages: according to a survey by Washington Post. With this agreement, the hourly wage, currently $32, will return to the inflation-adjusted level in 1990, i.e. around $42. Back then, auto workers earned 80% more than other private-sector employees.
With the bankruptcy of the Detroit automakers in 2009 and the arrival of foreign groups in the non-union South, this gap narrowed to 14% today. It's on the rise again. The embodiment of this success is progressive Shawn Fain, a former Chrysler electrician (now part of Stellantis), who was elected head of the United Auto Workers (UAW) union in the spring, and who led a determined strike against the three automakers, the first since the 1930s.
The political winner of the affair is Joe Biden, who visited a picket line during the conflict, a first for a US president. The Democrat absolutely needs to win the state of Michigan, where Detroit is located, and which had made Donald Trump's victory in 2016, along with Pennsylvania and Wisconsin.
Logically, the losers are the Detroit automakers, the "Big Three," hit by rising costs as they have to turn the corner on electric vehicles. "In the past, the UAW always had a realistic respect for the needs of an automobile company to stay competitive. This time, they did not," lamented Bob Lutz, former president of Chrysler. Ford put the increase at between $850 and $900 per vehicle. The average selling price of a new vehicle in the USA is $48,000, and there is no model under $20,000.
Shareholders are feeling the pinch, even though automaker shares have rebounded slightly with the announcement of the return to work. Wall Street was infatuated with Detroit's revival in January 2021, ready to embark on the battle of the electric vehicle. Since then, Ford's share price has fallen back below $10, from $25 in January 2022. General Motors is at its lowest since 2016, if we exclude the free fall at the start of the Covid-19 crisis, and is worth half what it was a year ago. Ford and General Motors are worth $39 billion and $37 billion respectively, 16 times less than Tesla ($628 billion), whose share price has been halved in two years.
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