A former leader of Ford Motor Co. recently spoke out on the potential for a United Auto Workers (UAW) strike at the Big Three Detroit automakers.
On Tuesday, Aug. 8, CNBC interviewed Mark Fields, who served as Ford’s CEO from 2014 to 2017. He led the company through labor negotiations with the UAW back in 2015. With that background, Fields provided some insight into what the automakers could be thinking about the union’s big list of demands.
It’s no secret that the UAW is asking for a lot this year. Fields predicted the main areas union leadership will focus on are wage increases, job securities, and the transition to electrical vehicles (EVs).
Some of the other of the union’s demands, such as pensions, are less likely to be met considering their huge structural costs. Lessons were learned from the Great Recession and the bankruptcies of General Motors and Chrysler, Fields said.
“They want to call back all of the benefits they had prior to the bankruptcy of GM and Chrysler. It’s almost going back to the 20th century benefits they had. But we live in a very different world now,” Fields said in the interview.
He noted the reduced market share of the Detroit 3 (now about 40% vs 60% in the past), as well as the large amount of competitors now in the market, particularly on the EV side.
“I think on the automakers’ side, there is no appetite, zero appetite to add some of these structural costs like pension and healthcare benefit improvements and things of that nature,” he said, as those were hard lessons learned back in 2008 and 2009.
A resumption of those benefits could lead to history repeating itself, he cautioned. The OEMs must remain competitive vs. their foreign-owned, non-union competitors, he said. He also referenced Tesla, which has a low, all-in wage rate.
Fields said “the only reason a strike will occur is if the UAW pushes its demands. Pensions – that would add billions to the cost structure of the automakers and they will push back very hard on that,” he predicted.
“At the end of the day, if the OEMs are actually forced through a strike to add some of the structural costs, they’re just going to be forced to take some of their product and move it to some places like Mexico and that would just hasten the shrinkage of the UAW membership,” he said.
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