Time now for our Wall Street Week daily segment, the host of Wall Street Week.
David Westin joining us as he does every day at this time.
And we want to continue our extended coverage of what's going on in the labor
space, your strikes in Hollywood, strikes in the leg space, and of course,
obviously the big autoworkers strike going on right now.
Yeah, We'll move from Hollywood, Virginia, over to Detroit, because
obviously there was a big development today as an expanded strikes for
Stellantis, as well as for General Motors, with Ford getting a pass, at
least for now. And we sat down next, actually, Steven
Rattner, he, as you know, supervised the restructuring the auto industry under
President Obama. And he was there when they really
created some of the things that the unions are complaining about now.
And we asked him just how bad this is. This is Steven Rattner.
He's the chair of Willing Advisors. They invest the philanthropic and
personal assets of Michael Bloomberg, our founder and majority shareholder.
It does certainly look tougher than I've ever seen in any of these contract
negotiations. First of all, the UAW demands or even by
the standard of opening demands, pretty extreme.
Secondly, they're conducting this negotiation largely in public, which
makes it harder for the union in particular to back off their positions
if and when they need to. But all that said, there's never been a
strike that I know of that hasn't gotten resolved one way or another.
And it's not hard to see a resolution here.
But I think the mood is that it's going to take a good while.
You have written in The New York Times that you certainly can understand why
there needs to be more wages for autoworkers.
They've lagged behind for various reasons, inflation, but also the
contract that they had. At the same time, it's about more than
just money, is it not? Because the autoworkers say you're going
to electric vehicles will acquire fewer of us.
And the other side, the auto industry says we have to go to electric vehicles
or we're not going to be in business anymore.
Look, the classic Harvard Business School case, is that a company or an
industry that tries to protect and protect an old business model when
there's a new one coming ends up failing.
There's if the Detroit companies want to be competitive, if we as a country want
to have a viable domestic auto industry. We and by the way, it is the
government's policy to encourage electric vehicles, then we have to
welcome this change and there will be displacements and we have to deal with
those. I guess I'm asking how much of this do
you think in the end is about money, about how much of a raise people get
because everyone agrees they're going to get a significant raise?
And how much of that is more fundamental things about the way the companies
actually run their businesses? I think it's mostly about money or money
related things. I think, yes, there's a lot of concern
about the future number of jobs and so on and so forth.
But I'm sympathetic to the union in the sense that if you look at the last 15
years of autoworkers as a whole in this country have basically stayed flat after
inflation, whereas other workers have gotten some after inflation, real income
increases. And they're good reasons for good
reasons. There are reasons for that, which is the
fundamental competitiveness of the auto industry on a global scale.
But nonetheless, in a world of 3.8% unemployment and one and a half jobs for
every American, I can understand why these workers feel like it's time for
them to get a bigger share. Last week, President Biden weighed in on
the issue, and at least in my hearing, weighed in pretty heavily on the UAW
side, saying there had been record profits out of the car industry and
there should be a record deal. I think he called it.
Basically, is he making the situation better or worse in the port situation?
I don't recall him weighing in that heavily on the worker side.
I think that's fair. I think we are closer to an election.
I think we're talking about the Midwest, which are swing states.
I don't think California is ever going to be a swing state.
And I but I have to say, I don't think it's overly helpful for him to put his
finger on the scale. Look, the politics are what they are,
and I get that. But but this is a tough situation.
And I think there are equities on both sides.
Whenever we have a very large conflict like this, in my experience, at least,
there are unintended consequences. They're the principal players and who
does well? Who doesn't?
But there are people around the side I can think of people like Tesla, other
automakers around the world. Certain states that are right to work
states. What are the unintended consequences you
think perhaps, of this dispute? Look, the unintended consequences of
what happened is the number of jobs, not the price paid for each job.
The yin and the yang of this and it's a tough one, is that the more the auto
workers get paid and I'm in favor of them getting paid more, the fewer jobs
they're going to be. That's just the inevitable result of
this. If you look, for example, back since
2009 at the number of jobs that are moved to Mexico and the fact that there
are now more auto jobs in Mexico than there are on the United States, it tells
you something about how capitalism and free enterprise works and finds the
lowest cost locale that can meet its needs.
Other potential consequences for the transition to EVs.
I mean, I think most people think we're going to make the transition, but could
it slow it down? I don't think on an overall basis it
slows it down because there are so many players in the EV market.
I think it affects who the winners and the losers are.
I think for the Detroit companies to be winners in TV, they they need help from
the unions, They need cooperation from the unions.
And we'll have to see how that unfolds. But if the unions make it tougher for
them to produce EVs on some economically rational basis, then the Detroit
companies are going to end up being the losers in the race.
Tesla, thus far at least as a winner they do not have unions, is the last I
recall. In fact, President Biden has been
somewhat critical of Tesla at various times that very thing.
The Tesla already is doing pretty well, as far as I can tell in EVs.
Does this give them yet another head of steam?
Well, it's not just Tesla. Remember the automakers in the south?
Most of them foreign imports, transplants, Honda, Toyota, the German
companies and so forth. They don't have unions either.
And so it's not just Tesla, but, yes, the cost differential, the more it
becomes a differential, the better it is for Tesla, the worst of this of the
Detroit companies. I do think it is fair to say, though,
that. Labor costs are not the biggest cost of
a car. There are four or five or 6% depending,
I think, depending upon whose numbers you believe.
But these are also companies that operate in very thin profit margins.
And so you do still have to be careful. But I don't think this contract
necessarily is going to determine the future of EVs.
Among the Detroit companies.