Demonstrators during a United Auto Workers (UAW) practice picket outside the Stellantis Mack Assembly Plant in Detroit, Michigan, US, on Wednesday, Aug. 23, 2023.
Jeff Kowalsky | Bloomberg | Getty Images
Stellantis said Saturday that its most recent proposal to the United Auto Workers includes raises of nearly 21% over the course of the contract, including an immediate 10% pay increase, and the end of wage tiers for some workers, the latest development in a historic showdown between the big three Detroit automakers and the union.
The Jeep maker’s proposal, which is in line with proposals from Ford and General Motors, would also continue to offer profit sharing to workers, according to new details on the offer released by the company Saturday.
“The teams have been very, very careful to listen, very careful for us to come up with best offers that we can do that also protect … the company,” COO Mark Stewart said on a Saturday call with reporters.
The standoff between the UAW and major automakers Stellantis, Ford and General Motors reached a fever pitch Friday, with the union starting work stoppages after an agreement wasn’t met by a Thursday night deadline. The so-called stand-up strike started with walkouts at three key plants — one for each automaker — with the possibility that the UAW can call on more of its members to join the strike if needed.
The union has been seeking 40% hourly pay increases, a reduced 32-hour workweek, a move back to traditional pensions, the elimination of compensation tiers and a restoration of cost-of-living adjustments, among other items. The UAW didn’t immediately respond to a request for comment about the proposal.
Meanwhile, Ford and GM resumed negotiations Saturday after no talks occurred between the union any of the automakers the previous day. Stellantis said it planned to pick up talks again Monday.
UAW President Shawn Fain said earlier this week that Stellantis had previously offered a 17.5% increase.
Under the new proposal, starting pay for supplemental employees would increase by $4.22, or nearly 27%, to $20 an hour.
The company also said it would cut the timeline for ascending the hourly wage scale in half to four years, meaning all full-time hourly employees would reach the top before the contract expires. Under the offer, the wage-tier system would be eliminated entirely for its Mopar division, which is known for service, parts and customer interfacing.
Stellantis also offered an inflation protection measure within compensation. The company said it has committed more than $1 billion for improvements in the pension and retirement savings plans for current employees and retirees.
Stellantis leadership also pushed back against the union’s descriptions of the automaker’s plans to close or sell 18 facilities. The company has said it aims to run parts distribution centers more efficiently and continue shifting resources toward electric vehicles. Jobs in these plants would be persevered, the company said.
The automaker also stressed its commitment to bargaining and reaching an agreement that is financially feasible, echoing concerns raised by Ford and GM leadership. Ford CEO Jim Farley said in a CNBC interview Friday that the UAW demands would force the company to “choose bankruptcy over supporting our workers.” Stellantis’ leadership noted that the company needs to stay competitive with automakers that don’t have unionized employees.
“It’s not about warfare, it’s about win-win,” Stewart said. “It’s about us finding something that is great for our folks today, able to keep a future for tomorrow … for our company to be able to continue the investment path we have for electrification, and for our U.S. operations to be strong so we can compete against the transplants and we can compete against the new entrants.”
President Joe Biden said Friday that the companies should improve their current offers to ensure a strong contract is agreed on amid a period of record profits.
— CNBC’s Michael Wayland contributed to this report.
DETROIT — The United Auto Workers strike is bringing a blue-collar versus billionaire battle to the Motor City, just as UAWPresident Shawn Fain wanted.
The outspoken union leader has weaponized striking — historically a last resort for the union — after less than 24 hours into a work stoppage arguably better than any UAW president has in modern times.
It wasn’t by accident.
Fain, a quirky yet emboldened leader, has meticulously brought the UAW back into the national spotlight after decades of near irrelevance. He wants to represent not just union members but also America’s embattled middle class, which UAW helped create.
United Auto Workers union President Shawn Fain joins UAW members who are on a strike, on the picket line at the Ford Michigan Assembly Plant in Wayne, Michigan, September 15, 2023.
Rebecca Cook | Reuters
To do so, he has leveraged a yearslong national labor movement and a growing disgust for wealthy individuals and corporations among many Americans — starting with his first time addressing the union’s more than 400,000 members during his inauguration speech in March.
“We’re here to come together to ready ourselves for the war against our only one and only true enemy, multibillion-dollar corporations and employers who refuse to give our members their fair share,” Fain said at the time. “It’s a new day in the UAW.”
Fain’s comments Friday morning as he joined UAW members and supporters picketing outside a Ford plant in Michigan — one of three facilities the company is currently striking — echoed everything he said during that first speech.
“We got to do what we got to do to get our share of economic and social justice in this strike,” Fain said outside the Ford Bronco SUV and Ranger pickup plant. “We’re going to be out here until we get our share of economic justice. And it doesn’t matter how long it takes.”
Fain’s upbringing plays into his strong unionism and religious beliefs, which he has growingly talked about with members as he emphasizes “faith” in the UAW’s cause.Two of his grandparents were UAW GM retirees, and one grandfather started at Chrysler in 1937, the year the workers joined the union. Fain, who joined the UAW in 1994, even keeps one of his grandfather’s pay stubs in his wallet as “a reminder” of where he came from.
National media and others really started paying attention to Fain when he said the union would withhold a reelection endorsement of President Joe Biden, who has called himself the “most pro-union president in history.” Fain and Biden have spoken and met, but the union leader has not shown much support for the president. In response to comments by the president Friday, Fain said: “Working people are not afraid. You know who’s afraid? The corporate media is afraid. The White House is afraid. The companies are afraid.”
While many past union leaders have talked such talk, Fain has thus far delivered on his promises to members without batting an eye — causing General Motors, Ford Motor and Stellantis to go into crisis mode this week as the UAW follows through on that promise to members.
“We’ve never seen anything like this; it’s frustrating,” Ford CEO Jim Farley told CNBC’s Phil LeBeau Thursday as he criticized Fain and the union for what he said was a lack of communication and counteroffers. “I don’t know what Shawn Fain is doing, but he’s not negotiating this contract with us, as it expires.”
In a statement Friday, Ford said that the UAW’s partial strike at its Michigan Assembly Plant has forced it to lay off about 600 workers.
“This is not a lockout,” Ford said. “This layoff is a consequence of the strike at Michigan Assembly Plant’s final assembly and paint departments, because the components built by these 600 employees use materials that must be e-coated for protection. E-coating is completed in the paint department, which is on strike.”
GM CEO Mary Barra echoed Farley’s feelings Friday morning on CNBC’s “Squawk Box.”
“I’m extremely frustrated and disappointed,” she said. “We don’t need to be on strike right now.”
Both CEOs said everything they could to indicatethey believe Fain may not be bargaining in good faith without using those exact words, which could justify a complaint with the National Labor Relations Board.
The UAW in late August filed unfair labor practice charges against GM and Stellantis with the NLRB, alleging they did not bargain with the union in good faith or a timely manner. It did not file a complaint against Ford. GM and Stellantis have denied those allegations.
Several past union leaders and company bargainers who spoke to CNBC hailed the way Fain has been able to propel the UAW into the national spotlight, including pausing bargaining for a Friday rally and march with Sen. Bernie Sanders, the progressive lawmaker from Vermont. Sanders, whose surprise 2016 Democratic presidential primary win in Michigan helped cement his national prominence, has lent support to numerous labor movements around the country as he rails against the billionaire class.
“I think they’re just doing an outstanding job,” said respected former UAW President Bob King, who cited growing support for the union among the public and the union’s own members. “Both those measurements say that UAW communications has been outstanding.”
UAW members have taken notice — especially after many of them disdained union leadership during and after a yearslong federal corruption investigation that landed two past UAW presidents and more than a dozen others in prison.
“For all the years that I’ve worked here, it’s never been this strong,” said Anthony Dobbins, a 27-year autoworker, early Friday morning while picketing the Ford plant in Michigan. “This is going to make history right here because we are trying to get what we deserve.”
Dobbins, a UAW Local 600 union representative, balked at current record offers by the automakers that have included roughly 20% pay increases, thousands of dollars in bonuses, retention of the union’s platinum health care and other sweetened benefits.
“That’s not working for us. Give us what we asked for,” Dobbins said. “That’s what we want. We have to work seven days, overtime, just to make ends meet.”
United Auto Workers President Shawn Fain, center, poses with Anthony Dobbins, right, a 27-year autoworker, and others as the union pickets a Ford plant in Wayne, Michigan, Sept. 15, 2023.
Michael Wayland / CNBC
Key demands from the union have included 40% hourly pay increases; a reduced, 32-hour, workweek; a shift back to traditional pensions; the elimination of compensation tiers; and a restoration of cost-of-living adjustments. Other items on the table include enhanced retiree benefits and better vacation and family leave benefits.
Automakers have argued such demands would cripple the companies. Farley even said the company would have “gone bankrupt by now” under the union’s current proposals and members would not have benefited from $75,000 in average profit-sharing over the last decade.
Ford sources said the automaker would have lost $14.4 billion over the last four years if the current demands had been in effect, instead of recording nearly $30 billion in profits.
Such profits are exactly what Fain has said UAW members deserve to share in. But his strategy to get workers a larger piece of the pie carries great risks.
“This is not going to be positive from an industry perspective or for GM,” Barra said Friday.
Many outside the unionbelieve if Fain pushes too hard, it could lead to long-term job losses for the union. A former high-ranking bargainer for one of the automakers told CNBC that it’s nearly guaranteed the companies cut union jobs through product allocation, plant closures or other means to offset increased labor costs.
“They’re going to have to pay up. The question is how much,” said the longtime bargainer, who agreed to speak on the condition of anonymity. “This ends up with fewer jobs. That’s how the automakers cut costs.”
Fain and other union leaders have argued that meeting the companies in the middle has led to dozens of plant closures, fewer union members and a growing divide between blue-collar workers and the wealthy.
So why not fight?
“This is about us doing what we got to do to take care of the working class,” Fain said Friday. “This isn’t just about the UAW. This is about working people everywhere in this country. No matter what you do for a living, you deserve your fair share of equity.”
Arm Holdings CEO Rene Haas poses for a photo with members of leadership before the Nasdaq opening bell at the Nasdaq MarketSite on September 14, 2023 in New York City.
Michael M. Santiago | Getty Images News | Getty Images
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The long reach of Arm Arm shares surged almost 25% on its first day of trading on New York’s Nasdaq, and a further 6.8% in extended trading. The chip designer priced its shares at $51 a piece in its initial public offering. Shares of Arm began trading at $56.10 a share and ended the day at $63.59. That gives the company a fully diluted market cap of about $68 billion, and a price-to-earnings multiple higher than Nvidia’s.
Markets rebound U.S. stocks rose Thursday, aided by Arm’s electrifying showing and promising economic data from the U.S. The Dow Jones Industrial Average, in particular, rallied 0.96% for its best day since August. Asia-Pacific markets rose Friday, cheered by China’s better-than-expected data. Japan’s Topix gained 1.25% to hit a 33-year high, as Softbank jumped around 2.7% after Arm’s impressive showing.
China’s economy picks up Finally, some positive economic data from China. Retail sales in August grew 4.6% from a year ago, beating expectations for 3% growth. Industrial production rose 4.5%, also surpassing the forecast of 3.9%. However, fixed asset investment was still weighed down by the real estate sector, and came in at 3.2%, slightly below the expected growth of 3.3%.
Screeching to a halt Thousands of members of the United Auto Workers went on strike after the union failed to reach a deal with General Motors, Ford Motor and Stellantis. Workers at three key U.S. assembly plants plan to cease work from Friday — those plants were targeted because they produce highly profitable vehicles that are still in high demand.
[PRO] Cash or stocks? In recent weeks, U.S. Treasury yields have risen to their highest levels in decades. Meanwhile, major indexes lost ground in August. That has boosted the attractiveness of keeping cash holdings as opposed to investing in stocks. But will that trend hold true for the rest of the year? Analysts from big banks weigh in on the debate between cash and stocks.
When you have a toothache, your whole body feels the pain. In the same vein, when Arm experienced a flush of wellbeing, it radiated through markets’ entire body, giving them their best day in weeks.
“The successful IPO of Arm … instills some confidence that perhaps the capital markets window is going to open again after virtually being closed for the last 18 months,” said Art Hogan, chief market strategist at B. Riley Financial.
Big banks rallied on excitement that the sleepy IPO market for tech companies might finally be stirring. (More IPOs means more dealmaking — and higher revenue — for banks.) Shares of JPMorgan Chase rosealmost 2%, Morgan Stanley gained 2.09% and Goldman Sachs popped 2.86%. Tech IPOs are particularly important to Goldman as the bank relies on investment banking more than its rivals. With Instacart and marketing firm Klaviyo set to list soon, Goldman — which has been struggling of late — might see a change in its fortunes.
Goldman and JPMorgan are big components of the Dow. That helped the blue-chip index rise 0.96%, its best day since Aug. 7, giving it a closing level above its 50-day moving average for the first time since Sept. 1. The S&P 500 advanced 0.84%, its best showing in around two weeks, and the Nasdaq Composite gained 0.81%.
Meanwhile, a tame core PPI reading for August assuaged worries after core consumer price index was higher than expected. But because CPI is a lagging indicator, while PPI is considered a leading indicator — that is, it predicts the future state of the economy — markets found solace in the idea that things aren’t as bad as consumer inflation appeared to portray.
And August retail sales jumped 0.6% against the 0.1% expected. Taken together with the PPI report, that suggests the U.S. economy, supported by an indefatigable consumer, might skirt a recession even as inflation gradually cools.
“You’ve got the perfect framework of inflation heading in the right direction, but the economy not falling apart,” Hogan said. “And that really paints the picture that the Fed has done the right thing and we may well be orchestrating that elusive soft landing.”
But the economy is infamously volatile. Hence Hogan’s all-important caveat: “At least that’s the impression we get this week.” Still, after markets ended in the red last week, any reprieve, however temporary, will be welcome.
Members of the United Auto Workers union hold a rally and practice picket near a Stellantis plant in Detroit, Aug. 23, 2023.
Michael Wayland / CNBC
DETROIT – Thousands of members of the United Auto Workers went on strike at three U.S. assembly plants of General Motors, Ford Motor and Stellantis, after the union and the automakers failed to reach a deal on a new labor contract Thursday night.
“The UAW Stand Up Strike begins at all three of the Big Three,” the union said in a post on X, the site formerly known as Twitter, just after midnight Friday.
The facilities are GM’s midsize truck and full-size van plant in Wentzville, Missouri; Ford’s Ranger midsize pickup and Bronco SUV plant in Wayne, Michigan; and Stellantis’ Jeep Wrangler and Gladiator plant in Toledo, Ohio. For Ford, UAW President Shawn Fain said only workers in paint and final assembly will be on strike.
“We got to do what we got to do to get our share of economic and social justice in this this strike,” Fain said outside the Ford facility in Wayne, minutes after the strike began. “We’re going to be out here until we get our share of economic justice. And it doesn’t matter how long it takes.”
The selected plants produce highly profitable vehicles for the automakers that largely continue to be in high-demand. About 12,700 workers – 5,800 at Stellantis, 3,600 at GM and 3,300 at Ford – will be on strike at the plants in total, the union said. The UAW represents about 146,000 workers across Ford, GM and Stellantis.
UAW President Shawn Fain, center, talks to reporters as union members strike outside a Ford plant in Wayne, Michigan, Sept. 15, 2023.
CNBC | Michael Wayland
“If they come to the pump and they take care of their workers, we’ll be back to work,” Fain said early Friday, referring to the automakers. “But if they don’t, we’ll keep amping it up.”
The union selected the plants as part of targeted strike plans initially announced Wednesday night by Fain, who has unconventionally been negotiating with all three automakers at once and has been reluctant to compromise much on the union’s demands.
“For the first time in our history, we will strike all three of the ‘Big Three’ at once,” Fain said just after 10 p.m. Thursday in live remarks streamed on Facebook and YouTube. “We are using a new strategy, the ‘stand-up’ strike. We will call on select facilities, locals or units to stand up and go on strike.”
Fain has referred to the union’s plans as a “stand-up strike,” a nod to historic “sit-down” strikes by the UAW in the 1930s.
Key proposals from the union have included 40% hourly pay increases, a reduced 32-hour work week, a shift back to traditional pensions, the elimination of compensation tiers and a restoration of cost-of-living adjustments (COLA), among other items on the table including enhanced retiree benefits and enhanced vacation and family leave benefits.
By late Thursday, it was clear there wouldn’t be a deal, even as President Joe Biden got involved. The White House said Biden, who boasts of his blue collar background and support for organized labor, talked with Fain and the leaders of the Detroit automakers.
Ford, in a statement Thursday night, said the UAW presented its “first substantive counterproposal” to four of the company’s offers, but it “showed little movement from the union’s initial demands.”
“If implemented, the proposal would more than double Ford’s current UAW-related labor costs, which are already significantly higher than the labor costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilize non-union-represented labor,” Ford said. “The union made clear that unless we agreed to its unsustainable terms, it plans a work stoppage at 11:59 p.m. eastern.”
The automakers have made record proposals that address some of the UAW’s ambitious demands but not all of them. Specifically, the companies have offered wage increases of roughly 20%, COLA, altered profit-sharing bonuses; and enhanced vacation and family leave enhancements that the union has found inadequate.
Targeted strikes typically focus on key plants that can then cause other plants to cease production due to a lack of parts. They are not unprecedented, but the way Fain plans to conduct the work stoppages is not typical. They include initiating targeted strikes at select plants and then potentially increasing the number of strikes based on the status of the negotiations. Selecting assembly plants for such strikes is also unique.
UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC
DETROIT – The United Auto Workers has filed unfair labor practice charges against automakers General Motors and Stellantis to the National Labor Relations Board for not bargaining with the union in good faith or a timely manner, UAW President Shawn Fain said Thursday night.
The Thursday filings followed the companies not responding to the union’s demands in a timely matter, Fain said. The union did not file a complaint against Ford Motor, as Fain said the company responded to the UAW’s demands with a counterproposal.
However, Fain heavily criticized Ford’s proposal that he said included a 9% wage increase over the four-year term of the deal; one-time lump-sum bonuses; and unlimited use of temporary workers who are paid less and don’t have the same benefits. The company also rejected “all of the” union’s job security proposals and “quality of life proposals” such as additional paid holidays and a shorter work week, Fain said.
Spokespeople with the automakers did not immediately respond for comment. The union and NLRB also did not immediately respond for additional details of the filings.
This is breaking news. Please check back for additional updates.
Morgan Stanley named a raft of European stocks with strong balance sheets, lots of cash or high shareholder returns. The bank said the latest quarterly results showed a slowdown in revenue, earnings and cash flow “as companies brace for higher interest rates and a less certain macro environment,” but it identified several that appear to be bucking the trend in a research note seen by CNBC on Wednesday. The bank analyzed more than 400 companies that trade on the MSCI Europe index to create several stock screens. On a list of stocks with strong balance sheets, Morgan Stanley included retailers Next , H & M and JD Sports , as well as pharmaceutical firm Sanofi and biotech company Genmab . It also named aerospace companies Airbus and MTU Aero Engines , software company SAP and semiconductor firm STMicroelectronics . “We searched for companies with strong balance sheets and sufficient liquidity that are generating a return over their cost of capital,” the bank stated. The bank said these firms also have an expected free cash flow growth of more than 5% over the next two years. High cash flow and shareholder returns The bank also screened for companies with “resilient high free cash flow.” “Self-financing companies should be better able to weather any prolonged macroeconomic weakness, deploying capital effectively and seizing opportunities that come along the way,” Morgan Stanley said. Its list included oil companies BP and TotalEnergies and utilities firm Centrica , as well as advertising groups WPP and Publicis Groupe . Also on the list are automaker Stellantis and steel supplier Tenaris . “Cash-rich companies with high free cash flow yields should also have better downside protection, while providing upside potential if management is able to deploy its cash effectively,” the bank said. Morgan Stanley also screened for stocks with the highest total shareholder returns, naming InterContinental Hotels , materials company Holcim , fashion firm Burberry and jewelry business Pandora among its picks. Those firms also have “positive free cash flow and net income growth expected over the next 2 years,” the bank said. — CNBC’s Michael Bloom contributed to this report.
UAW Vice President Rich Boyer addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC
WARREN, Mich. – Automaker Stellantis has threatened to move production of the current Ram 1500 pickup truck from a factory in suburban Detroit to Mexico, a union leader said Sunday.
United Auto Workers Vice President Rich Boyer, who heads the union’s Stellantis unit, said the automaker has discussed the move during ongoing contract negotiations that are occurring simultaneously but separately between the UAW and General Motors, Stellantis and Ford Motor.
Boyer said the company’s plans would include producing a new all-electric Ram pickup truck at the Sterling Heights Assembly Plant, which currently produces most of the Ram light-duty pickups.
Such a move would likely receive some political pushback. It also would potentially impact the union’s membership, as EVs require fewer workers to produce them. There’s also no guarantee that an all-electric pickup would be as successful as the current internal combustion engine (ICE) model, meaning less job security for members.
Boyer, speaking to hundreds of union members during a “Sunday Solidarity” rally, didn’t hold back his displeasure about the potential plans, calling out Stellantis CEO Carlos Tavares for not caring about U.S. auto workers.
“He don’t give a s*** about the American auto worker,” Boyer said wearing a red UAW shirt with “UNITED WE STAND DIVIDED WE FALL.” “They have said they want to take the Ram 1500 ICE and send it to Mexico.”
Workers build 2019 Ram pickup trucks on ‘Vertical Adjusting Carriers’ at the Fiat Chrysler Automobiles (FCA) Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.
Rebecca Cook | Reuters
Stellantis, which already produces some Ram pickups in Mexico, did not confirm nor deny the potential move, saying in a statement: “Product allocation for our U.S. plants will depend on the outcome of these negotiations as well as a plant’s ability to meet specific performance metrics including improving quality, reducing absenteeism and addressing overall cost.
“As these decisions are fluid and part of the discussions at the bargaining table, we will not comment further.”
UAW President Shawn Fain said he believes relocating the truck production would “be a huge mistake on the part of Stellantis to try it.”
“Those are our jobs and that’s our vehicle. We expect to keep that work,” he said.
Speaking with CNBC after the event, UAW’s Boyer described the ongoing negotiations with Stellantis as “slow and confrontational.”
Fain, who began leading the union earlier this year and has taken a more confrontational tone with the negotiations, said he would like to reach tentative agreements with the companies in the coming weeks ahead of the deals expiring at 11:59 p.m. ET, Sept. 14.
UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC
‘When Labor Day hits, we better have agreements. If we don’t, there’s going to be problems,” Fain said, declining to predict the likelihood of a strike against one or all three of the automakers. “We’re not married to anything right now.”
Fain earlier this month publicly threw a recent proposal from Stellantis into a trash bin during a Facebook Live event with members.
Contract talks between the union and automakers usually begin in earnest in July ahead of mid-September expirations of the previous four-year agreements. Typically, one of the three automakers is the lead, or target, company that the union selects to negotiate with first and the others extend their deadlines. However, Fain has said this year may be different, without going into specific details.
UAW President Shawn Fain chairs the 2023 Special Elections Collective Bargaining Convention in Detroit, March 27, 2023.
Rebecca Cook | Reuters
United Auto Workers (UAW) President Shawn Fain said on Tuesday the union was seeking ambitious benefit increases in contract talks with the Detroit Three automakers, including double-digit pay rises and defined-benefit pensions for all workers.
The UAW presented its economic demands to Chrysler-parent Stellantis on Tuesday and will make presentations to General Motors (GM) Wednesday and Ford Thursday ahead of the Sept. 14 expiration of the current four-year contracts, Fain said.
They include proposing to make all temporary workers at the U.S. automakers permanent, placing new strict limits on the use of temporary workers and increasing paid time off.
Fain also wants increases in pension benefits for current retirees and to ensure all workers get defined-benefit pensions.
The union leader, in Facebook Live remarks, called the demands “the most audacious and ambitious list of proposals they’ve seen in decades.”
Fain said the CEOs of the Detroit Three saw their pay rise by 40% on average over the last four years.
He singled out GM CEO Mary Barra, who received $29 million of compensation in 2022, and said it would take an entry level worker at a GM joint venture battery plant 16 years to earn as much as she made in a week.
Fain listed numerous demands, including restoring retiree health care benefits and cost of living adjustments. He also said the UAW was proposing to have the right to strike over plant closures and to eliminate the two-tier wage system under which new hires earn 25% or more less than veteran employees.
He noted the Teamsters recently won an end to two-tiered wages in a new contract with UPS. “It’s wrong to make any worker a second class-worker. We can’t allow it any longer,” Fain said of the demand for the same at the Detroit Three.
Stellantis said it had a “very productive meeting” with Fain and the bargaining committee and would review the union requests to understand how they aligned with company proposals and where common ground could be found.
“We are not seeking a concessionary agreement,” Stellantis said.
GM said it would review the demands once they were received from the UAW on Wednesday.
Ford said it looked “forward to working with the UAW on creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever.”
Fain also said the Detroit Three need to pay better wages for workers at battery joint venture plants and praised Democratic senators last week for urging the companies to include those workers under the master agreements.
Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE
DETROIT — General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.
The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to reduce $3 billion in expenditures compared with previous guidance of $2 billion.
GM CFO Paul Jacobson said the reductions will include sales and marketing spending, salary employment, and other costs.
GM shares were initially up in premarket trading following the results but were down nearly 3% just after the market opening.
Adjusted earnings per share: $1.91. (This is not comparable to $1.85 analysts expected due to one-time items.)
Revenue: $44.75 billion vs. $42.64 billion expected, according to Refinitiv consensus estimates
GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution. The cost is a result of the automaker sharing expenses with the companies for a recall of its Chevrolet Bolt EV models in recent years, which were previously expected to be paid by the LG companies.
Taking that charge into account, the company reported adjusted earnings before interest and taxes of $3.23 billion.
On an unadjusted basis, the company reported net income attributable to stockholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier when it earned $1.69 billion, or $1.14 per share.
Revenue during the quarter jumped 25% compared with $35.76 billion a year earlier.
For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion to $14 billion, up from a previous range of $11 billion to $13 billion. GM also increased expectations for adjusted automotive free cash flow to a range of $7 billion to $9 billion, up from $5.5 billion to $7.5 billion, and for net income attributable to stockholders of $9.3 billion to $10.7 billion, compared with the previous outlook of $8.4 billion to $9.9 billion.
Jacobson said the raise is a result of stronger-than-expected pricing, demand and capital discipline.
However, the guidance increase is contingent on GM successfully negotiating new labor agreements with the United Auto Workers and the Canadian Unifor unions this year without a work stoppage or strike. The UAW has new leadership that has publicly been far more confrontational than prior union officers. The current contracts covering roughly 150,000 union workers for the Detroit automakers are set to expire Sept. 14.
“We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM CEO Mary Barra said Tuesday in a shareholder letter. “That’s the best possible outcome for all our key stakeholders, including our team, plant communities, dealers, suppliers and investors.”
A work stoppage would add to the auto industry’s yearslong production problems resulting from the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.
During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a national 40-day strike against GM. The automaker has said the strike cost it about $3.6 billion that year.
For GM specifically, a work stoppage could cost it hundreds of millions of dollars a week and delay the production ramp-up of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, however acknowledged “it’s been a little bit challenging.”
Before reporting results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.
Shares of GM are up roughly 16% this year. They closed Monday at $39.30 per share — off from a 52-week high of $43.63 per share, notched in February.
Generic stock pictures of the Astra assembly line at Vauxhall’s plant in Ellesmere Port, Cheshire. Picture date: Tuesday July 6, 2021.
Peter Byrne – Pa Images | Pa Images | Getty Images
LONDON — Executives from Stellantis, the automaking giant behind brands including Peugeot, Chrysler and Citroën, are meeting with U.K. ministers Wednesday to warn post-Brexit trading arrangements severely risk its operations in the country.
Stellantis manufactures Vauxhall, Fiat, Opel and other vehicles across two plants in the U.K., employing more than 5,000 people. It plans to move both toward majority and then 100% EV production as it rolls out electrification across its brands.
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In a submission to a government enquiry into vehicle battery production, the company said it would be at a competitive disadvantage going forward because of tariffs due to be imposed on batteries transported between the U.K. and mainland Europe.
“If the cost of EV manufacturing in the U.K. becomes uncompetitive and unsustainable, operations will close,” it said, citing previous decisions by BMW Group to relocate electric Mini production to China, and investments by Honda in EV production in the U.S. following the closure of its U.K. site.
The EU–U.K. Trade and Cooperation Agreement gave battery and EVs a grace period before full Rules of Origin tariffs kick in, responding to these sourcing challenges. However, they will become progressively stricter in the coming years, rising to 45% and then 65% in terms of required domestic production. Automakers otherwise face 10% export duties on EVs.
Stellantis said that if it manufactures its batteries in China and mainland Europe in the coming years as currently planned, it would face “higher logistics costs” that would threaten the “sustainability of our U.K. manufacturing operations.”
The company warned the U.K. does not have a sufficient supply of the materials needed to support vehicle battery production. While this is also an issue in mainland Europe, with many supplies coming from China, Stellantis noted it had made significant investments in gigafactories in France, Germany and Italy and had a battery joint venture there.
It wants the government to negotiate with EU officials to maintain current rules until 2027.
It comes as the EU and its members ramp up focus on EV production, with the formation of the European Battery Alliance and plans to loosen state aid rules around green manufacturing, in part in response to the U.S.’s landmark Inflation Reduction Act.
Earlier this week, French President Emmanuel Macron hosted Tesla CEO Elon Musk to try to court investment in the country.
The U.K. has made some progress on EV and battery production, with a large-scale lithium refinery planned for the north of England and Nissan building a battery gigafactory alongside a Chinese partner; but also instability, with battery maker Britishvolt narrowly rescued from administration earlier this year.
The committee hearing is its attempt to lay the path for the future of EV production in the country, alongside an Automotive Transformation Fund.
“We’ve been sleeping at the wheel when it comes to bringing battery plants to the United Kingdom,” Andy Palmer, former COO of Nissan and chair of EV battery manufacturer Inobat, told the BBC Wednesday.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the rules of origin for batteries posed a “significant challenge to manufacturers on both sides of the Channel, with the prospect of tariffs and price increases which discourage consumers from buying the very vehicles needed to achieve climate change goals.”
Matthias Heck, senior credit officer at Moody’s Investors Service, told CNBC many companies are seeking to establish EV battery manufacturing facilities near their automotive plants due to the complexity of auto industry supply chains, with many parts crossing international borders, sometimes several times.
This includes the likes of Stellantis in a joint venture with Mercedes-Benz and Total, Volkswagen and Tesla, Heck said. Meanwhile EU projects are benfiting from subsidies and local government support, as well as proximity to plants in France and Germany.
“In countries where this is not possible, automakers rely on battery imports at competitive prices and logistics cost. Otherwise, they might be unable to produce battery electric vehicles at costs which are competitive to imports from other countries.”
An electric car being charged in Germany. The European Union is moving forward with plans to ramp up the number of EVs on its roads.
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The EU’s plans to phase out the sale of new diesel and gasoline cars and vans took a big step forward this week after the European Council and European Parliament came to a provisional agreement on the issue.
In a statement Thursday evening, the European Parliament said EU negotiators had agreed on a deal related to the European Commission’s proposal for “zero-emission road mobility by 2035.”
The plan seeks to slash CO2 emissions from new vans and passenger cars by 100% from 2021 levels and would constitute an effective ban on new diesel and gasoline vehicles of these types. The European Commission is the EU’s executive branch.
Read more about electric vehicles from CNBC Pro
The parliament said smaller automakers producing up to 10,000 new cars or 22,000 new vans could be granted a derogation, or exemption, until the end of 2035.
It added that “those responsible for less than 1,000 new vehicle registrations per year continue to be exempt.”
Formal approval of the deal from the European Council and European Parliament is required before it takes effect.
Thursday’s news was welcomed by Transport & Environment, a Brussels-based campaign group. “The days of the carbon spewing, pollution belching combustion engine are finally numbered,” said Julia Poliscanova, T&E’s senior director for vehicles and e-mobility.
Others commenting on the plans included the European Automobile Manufacturers’ Association. In a statement, it said it’s now urging “European policy makers to shift into higher gear to deploy the enabling conditions for zero-emission mobility.”
“This extremely far-reaching decision is without precedent,” said its chair, Oliver Zipse, who is the CEO of BMW. “It means that the European Union will now be the first and only world region to go all-electric.”
“Make no mistake, the European automobile industry is up to the challenge of providing these zero-emission cars and vans,” he added.
“However, we are now keen to see the framework conditions which are essential to meet this target reflected in EU policies.”
“These include an abundance of renewable energy, a seamless private and public charging infrastructure network, and access to raw materials.”
During an interview with CNBC earlier this month, Carlos Tavares, the CEO of Stellantis, was asked about the EU’s plans to phase out the sale of new ICE cars and vans by 2035. ICE vehicles are powered by a regular internal combustion engine.
It’s “clear that the decision to ban pure ICEs is a purely dogmatic decision,” said Tavares, who was speaking to CNBC’s Charlotte Reed at the Paris Motor Show.
He added that Europe’s political leaders should be “more pragmatic and less dogmatic.”
“I think there is the possibility — and the need — for a more pragmatic approach to manage the transition.”
