Final Thoughts

Final Thoughts

Written by Michael Cowden

We’re just a week away from a potential United Auto Workers (UAW) strike against one, or potentially all three, union-represented automakers.

The latest turn of the screw: UAW President Shawn Fain said an offer from Detroit-based General Motors was “insulting.”

UAW Rejects GM Offer

GM in a letter to its manufacturing team on Thursday said its offer included, among other things, a 10% wage increase – a number the company says would effectively amount to 16% after accounting for two lump-sum payments.

The automaker said it also offered UAW members a $5,500 ratification bonus and a one-time “inflation-recognition payment” of $6,000.

But a 16% increase is a far cry from the 40% or more wage increase the union has demanded. And a one-time payment to account for inflation is a long way from the cost-of-living adjustments (COLA) the UAW wants to see restored.

Yes, Fain has said the UAW would consider a strike against all three automakers – GM, Ford, and Stellantis – a huge departure from the union’s practice of targeting one company. Fain has also said he recognizes the need to negotiate.

So perhaps a last-minute deal is still possible? That said, the union also has a strike fund of $825 million – which would give union members significant leeway to endure a work stoppage.

It’s also worth noting that the UAW represents nearly 150,000 workers at GM, Ford, and Stellantis – meaning a strike could have an impact on the broader economy.

And let’s not forget that negotiations are ongoing in Canada as well. Unifor, which represents Canadian autoworkers, has taken the more traditional approach of targeting one company: Dearborn, Mich.-based Ford.

I think we all know the date that the UAW contract expires: Thursday, Sept. 14, at 11:59 pm ET. It’s also worth keeping the expiration date for Unifor’s contract in mind: Monday, Sept. 18, at 11:59 pm ET.

The stakes in Canada are not as high. Unifor represents only 18,000 auto workers there. Nonetheless, I can’t recall a time when so much steel consumption, on both sides of the border, was in such a vulnerable position.

Imports Lose Their Luster

It’s hard to sugarcoat a potential UAW strike. That said, it might have contributed – along with increased domestic capacity – to a complete reversal of the price dynamics we saw for much of the first half of the year.

Recall that in early 2023, US prices were high and domestic lead times were long. That made it a no-brainer for some buyers to order more offshore steel.

The result: The US imported 2.53 million metric tons in June, 15% above a monthly average of 2.21 million metric tons over the last five years, according to Commerce Department figures.

Since then, however, imports have dipped below that level. And, as Laura Miller notes, import data for August indicates that foreign steel arrivals are at their lowest point of the year.

It’s worth considering whether that trend might prove durable. As David Schollaert reports, domestic hot-rolled coil prices remain below overseas HRC prices once freight and other costs are accounted for.

And judging from what some of you have told me, that trend is hardly confined to hot band. I’ve been told that Galvalume ordered now from Vietnam, for example, might not arrive until January. Domestic material, meanwhile, might be available for a similar or lower all-in price (including freight and extras) and at your door in late October.

Typically, US sheet prices don’t remain at or below import prices for very long. Could this time be different? Could we see more US exports to destinations beyond Canada and Mexico – which account for the vast bulk of US exports? Probably not. But it’s fun to think about the possibility.

SMU Steel Summit 2024

Some of you have been asking (already!) when SMU Steel Summit will be next year. It’s Aug. 26-28, 2024. Save the date! We’ll again be at the Georgia International Convention Center in Atlanta.

In the meantime, don’t miss out on the Tampa Steel Conference, our next big event. That’s Jan. 28-30, 2024. Registration is here.

Michael Cowden

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