The writer, a Los Angeles freelancer and former Detroit News business reporter. He blogs at StarkmanApproved.com.
By Eric Starkman
Some unsolicited advice for Ford CEO Jim Farley, who recently issued an SOS saying the UAW was holding him hostage: Jim, if you are looking to promptly secure your freedom, it’s best not to insult and disparage your captors.
Here is the statement Ford issued after the UAW moved to strike the company’s big moneymaker truck plant in Kentucky: “The decision by the UAW to call a strike at Ford’s Kentucky Truck Plant is grossly irresponsible but unsurprising given the union leadership’s stated strategy of keeping the Detroit 3 wounded for months through ‘reputational damage’ and ‘industrial chaos.’”
Ford said it made an “outstanding offer,” apparently expecting UAW members to defer to the company’s judgement, rather than its union’s leadership. According to published reports, Ford didn’t provide a counteroffer to the UAW’s most recent proposal, and UAW president Shawn Fain felt that Ford needed some remedial education about his union’s position.
“Ford hasn’t gotten the message,” Fain said in a statement. “If they can’t understand that after four weeks, the 8,700 workers shutting down this extremely profitable plant will help them understand it.”
GM CEO Mary Barra also maligned the UAW, accusing Fain of “theatrics” and demanding the UAW return to the bargaining table to get an agreement "now," addressing union negotiators as if they were among her fawning PR and journalism minions. Notably a week later, Fain announced that GM had caved to his demand that the company’s battery plants would be included under a master agreement.
Barra, who is on the board of Disney, might leverage that company’s Hollywood influence and nominate Fain for an Oscar for best corporate theatrics. Barra was clearly moved by his performance.
Worth noting: Barra and Farley both disparaged Fain just days after President Biden made his whirlwind Michigan visit to signal his supposed support for the UAW and their demands. It appears that Barra and Farley weren’t terribly influenced by Biden’s theatrics.
I’m not sympatico with all of Fain’s tactics and demands, but it’s undeniable that on the PR front, he’s out finessed Barra and Farley and has successfully moved the media to call out their obscene compensations and the growing wealth disparity between CEOs and their rank-and-file workers. A survey released Thursday revealed most Americans are sympathetic to the UAW’s wage demands.
More Than $1 Billion
Bloomberg reported today that the 10 individuals who’ve served as chief executive officers of the Detroit 3 automakers since 2010 have collected more than $1 billion of compensation. Meanwhile, wages of U.S. auto workers — unionized or not — have declined around 17% in that time frame.
What Bloomberg overlooked is that Barra, who the UAW said has received more than $200 million in compensation since assuming the CEO position in 2014, accounted for more than 20% of the automotive CEO largesse. GM stock was trading at close to $40 when Barra assumed command; it closed Friday under $30.
By comparison, the S&P 500 gained more than 140% in the same period. Some analysts, like Garret Nelson of CFRA, have a “strong sell” on the stock, meaning they expect it to continue to fall.
Barra’s excessive compensation was despite the billions GM has sponged off U.S., Michigan, and other state taxpayers. According to Good Jobs First, which monitors corporate taxpayer handouts, GM has received $7 billion in taxpayer subsidies, trailing Ford’s $7.7 billion in subsidies. GM and Ford respectively rank No. 4 and No. 3. on Good Jobs’ corporate moocher list.
Under Barra, GM factory workers and investors have fared poorly, and it turns out even other CEOs are unhappy with her leadership. Barra also serves as chair of the Business Roundtable, an organization comprised of CEOs; Politico reported that members are displeased with Barra’s reportedly cozy relationship with President Biden, who she has visited at the White House eight times since he was elected.
Ford’s Farley has only been CEO since Oct 2020, and he inherited many of the company’s formidable problems, including shoddy engineering and manufacturing issues responsible for more than 100 safety recalls since a year ago January, some involving recalls for work done on earlier recalls. Nevertheless, despite Ford’s specious claim to the Wall Street Journal that it is “all in on America,” under Farley’s watch the company has been expanding its operations in Mexico, including relocating critical design and engineering jobs.
In his two full years on the job, Farley has received more than $44 million in compensation, which included more than $900,000 last year for personal use of private aircraft.
I’m not alone in questioning Barra’s and Farley’s disparagement of the UAW. Marick Masters, a business professor and labor scholar at Wayne State University, also has been taken aback by the attacks.
“This is an insurgent group that took over the UAW through a historic direct election, and they ran on a campaign to make the union more transparent," Masters told the Detroit News. "They took the lead in early August making their own bargaining positions, way ahead of the companies, reiterated and dominated the narrative they wanted to get out ― which was that record profits mean record contracts, they wanted a fair and just transition and they wanted to share some of the profits rather than have greedy executives.
"They echo this theme over and over. The companies were very late to get back, and they’ve done so in a harsh manner that I don’t think does them any good."
Barra and Farley likely feel compelled to disparage the UAW because their arguments about why they couldn’t afford to meet the UAW’s demands are deceptive and dishonest. They say paying the desired wages would put them at a serious competitive disadvantage, particularly in wake of the automotive industry’s transition to electric vehicles.
The Inflation Reduction Act, which president Biden has championed, incentivizes GM and Ford to build their electric vehicles in Mexico because they can still be eligible for tax breaks when sold in the U.S. Under Barra, GM has become Mexico’s biggest automotive manufacturer, where the company assembles its electric Equinox and Blazer vehicles. Ford proudly assembles the electric version of its iconic Mustang in Mexico.
GM and Ford pay their Mexican workers poverty wages, and you can rest assured that’s where they will build as many EVs as possible. Meanwhile, Toyota has announced that it will build a three-row electric SUV at its Kentucky plant, Volkswagen builds it electric ID.4 in Tennessee and plans to build electric trucks and SUVs in South Carolina, and Nissan builds its electric Leaf in Tennessee.
As well, Toyota has increased a promised $1.3 billion investment to build a battery plant in North Carolina to $6 billion and the company last week announced an agreement with LG Energy Solution for battery modules, resulting in a $3 billion investment in LG’s Michigan plant. Compare Toyota’s decisive leadership to Ford’s, which has put on hold a promise to build an electric battery plant in rural Marshall, MI, for which Gov. Gretchen Whitmer earmarked $1.7 billion in taxpayer subsidies and her economic development people destroyed fertile farmland and century old trees.
Whitmer has given GM some $2 billion to build an electric battery plant in Lansing, and residents are rightfully worried about the dangers of a lithium battery plant in their backyard. U.S. investigators on Thursday proposed $270,000 in fines for a GM and LG Energy Solution joint venture battery plant in Ohio for safety and health violations. Occupational Safety and Health Administration (OSHA) investigators examining the cause of a March explosion and fire at the Ultium Cells plant prompted the agency to issue 19 safety and health violations, 17 of them serious. One plant worker has already been killed.
Barra and Farley like to argue that foreign manufacturers operating in the U.S. and Tesla pay their workers lower wages and that increasing the gap will put them at a further disadvantage. The foreign manufacturers and Tesla will be forced to pay higher wages in the U.S. to prevent the UAW from organizing their workers. Toyota and Honda can keep unions at bay because they treat their factory workers with more dignity and respect than do GM and Ford.
Sadly, whatever the UAW can extract from GM and Ford won’t be for the very long term. If EVs are indeed the future, it’s painfully obvious that GM and Ford aren’t long for this world if Barra and Farley are allowed to remain in their jobs. Instead of trashing Fain, they’d be wise to make nice with him and seek some pointers in reputation and brand management.
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