To: Sr K who wrote (525 ) 10/26/2019 10:30:25 AM From: Glenn Petersen Respond to Detroit's gamble on the future The big picture: GM can afford the rich contract terms negotiated with the United Auto Workers — as long as nothing goes wrong. Higher gas prices, an economic downturn or a new president with different priorities could throw off the entire equation and put GM and other domestic automakers in a financial bind.-- On top of those worries, the industry is facing the most disruptive technology shift in 100 years, leaving companies like GM awkwardly straddling the past and future Driving the news: UAW members and General Motors approved a four-year labor contract on Friday, which secured better pay and benefits for workers. The union will now turn its attention to Ford, with the GM contract as a template.-- The end of the nearly 6-week-old strike comes with a promise from UAW to not oppose GMs' plans to close four facilities across the U.S. The strike has cost GM $1.75 billion in lost profits, according to Anderson Economic Group -- GM committed to adding thousands of new jobs and said it would decrease the number of years required for workers to earn the top wage of more than $32 an hour. Union members were divided prior to the deal on whether it provided enough long-term job security. GM is more aggressive than most in the push toward the future with its majority stake in self-driving startup Cruise Automation and a plan to introduce 20 EVs by 2023.-- The automaker is sustained, however, by the fat profits from traditional pickup trucks and SUVs. GM tried to protect its flexibility in the labor agreement by trading higher wages and benefits for the ability to close a massive car factory in Ohio and two transmission plants.-- Yes, but: Detroit's total labor costs remain significantly higher than foreign-based rivals with factories here: $63 per hour at GM vs. $61 for Ford, $55 for Fiat Chrysler and $50 for the so-called transplants.But all 3 Detroit carmakers left their flank open by getting out of the traditional sedan business — effectively ceding that market to Asian competitors A new president could alter the landscape, too. Sen. Elizabeth Warren, for example, has pledged to halt fracking -- That would make those thirsty trucks and SUVs less appealing to consumers, squeezing Detroit's primary profit source. What to watch: Auto sales are already trending downward. A recession would cause them to drop 20%, Smoke tells Axios.Go deeper: 40-day GM strike ends with new labor contract axios.com
