The willingness of General Motors (GM) to offer a comprehensive offer to UAW is a major long-term problem. The high costs will force the firm to sell its vehicles at a loss or break even at best.
GM’s offer will pay workers $40.39 hourly or $84,000 annually. In addition, senior workers get health care with no premiums or deductibles. GM may raise prices to realize a profit yet the economic climate is unforgiving. Consumers have lower disposable income amid high, persistent inflation. Interest rates make automotive loans prohibitively expensive.
To accommodate for higher expected wage costs, Ford’s latest management shuffling is woefully inadequate. Meanwhile, UAW expanded its strike on Oct. 11 to a major Ford truck plant in Kentucky. This is a highly profitable plant whose strike hurts Ford’s short-term prospects. Ford said the strike at this plant was irresponsible but unsurprising.
The tensions between UAW and the automotive firm will not end until the union gets an unaffordable salary for staff. Ford and GM may rely on new vehicle shortages to justify prices. Yet workers need to output vehicles, which floods the already saturated market.
Automotive demand is about to decline at a faster rate. The economy does not support high-priced vehicles.
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