Will UAW Strike?

[lilranch2001]

I guess I was lucky back in 2014 to find a STX Regular cab, they are very hard to locate!

 

[Pixguy]

I wonder if many has seen their business labor costs rise 45% in the last 5 years and able to keep their product prices affordable.

 

[jyoutz]

As a sharehol

Pricing is both-and, not either-or. Money supply is definitely a factor, more supply, higher prices. The fed actions were just tapping the brake while fiscal policy created money out of nothing (see inflation). Prices are also subject to the demand side. When people decided they wanted trucks as daily drivers (especially in situations where it was more status/ego driven than utilitarian need, prices went up on trucks. (Demand-push inflation) Costs also drive prices. Companies are not going to sell at a loss (at least not for long). There are lots of other layers involved here including CAFE standards, alternative goods and profit margin. Every 'for-profit' corporation is legally obligated to maximize returns for its stockholders.

So, hypothetically, if Ford 'sets' prices they start with a bare minimum ROI they can expect. Just for fun, call it 10%. If they cut costs per vehicle by $1000 a vehicle, they could reduce prices by about that much and still make their target ROI. If demand is up, they can still sell for the original price and increase ROI. It would be fiscally irresponsible and likely illegal for them to price below market prices. They also have finite capacity in the short-run, which artificially caps supply at X. Sure, supply and demand set the top end price, but costs go up drives the denominator. The company must do whatever it can to keep costs in line. This is especially true in a competitive market. Ford has competition and people who do not like the higher prices will buy from someone else (or used, of defer buying, etc.) If the UAW got their way, prices of the 'big 3' would go up so far that Nissan, Toyota, Honda, Tesla, etc. would take additional market share based on price. The only option the OEMs would have is to cut costs...close plants, automate, move to RTW states or overseas.

As a shareholder, of course I want reasonable rate of return, but there is debate over whether companies are legally required to maximize these returns:

Corporations Don't Have to Maximize Profits - NYTimes.com

www.nytimes.com

… analysis has shown that, contrary to the commonly held belief, directors of public companies are not under a legal obligation to maximise shareholder value …Feb 26, 2023

Legislate

Do public companies need maximise shareholder value by law? - Legislate​

 

[milkman636]

If price is set via what a market can support...why does the market fail to capture what a buyers willingness to pay is.

The market includes your company, your competitors, existing customers and potential customers. How does that market set a price? Do your competitors know something you don’t know that enables them to set a price? If not, how do they do it? And if you are simply reacting to prices your competitors set, then the market isn’t setting the price, your competitors are.

Ford and GM combined sell over a million new truck a year. With Google, Apple, Facebook, government data, lender data, market analytics, feedback from dealers, etc….., I think they have figured out what we are willing to buy. On average in my area it’s a loaded up crew cab with a giant screen, lots of buttons, big shiny wheels, low profile tires, a tiny bed, and a plush ride that sacrifices payload capacity.

The most common alternatives to these are fancy, three row, all-wheel-drive SUV things. Either way we’ve been handing them notes promising to pay an amount that should be a house payment for the next 7 years. And we can do that as long as we have access to enough money to buy the vehicle we want rather than vehicles that will simply fill basic needs.

Globalization, mergers and acquisitions have also reduced things to the point that many auto companies source components from some of the same suppliers. So component cost are similar between brands that have similar volumes and buying power.

They also buy each others cars and tear them apart in the research and testing process. Early in my career I was involved in construction of a facility for ford that did just that. They would literally buy their competitors vehicles and test them rigorously before tearing them down completely.

There is so much spending in making cars that is not UAW labor. I will always remember a meeting I witnessed with about 30 suits in it where they patted themselves on the back for changing a plastic formula in a door panel and saved $0.08 on each 4-door vehicle. The model line ran around 400,000 units a year. I did the math on that as I looked around the room and thought: yep, that savings should just about cover the cost of this meeting. They did seem genuinely pleased with themselves, though.

 

[Gale Hawkins]

Ford and GM combined sell over a million new truck a year. With Google, Apple, Facebook, government data, lender data, market analytics, feedback from dealers, etc….., I think they have figured out what we are willing to buy. On average in my area it’s a loaded up crew cab with a giant screen, lots of buttons, big shiny wheels, low profile tires, a tiny bed, and a plush ride that sacrifices payload capacity.

The most common alternatives to these are fancy, three row, all-wheel-drive SUV things. Either way we’ve been handing them notes promising to pay an amount that should be a house payment for the next 7 years. And we can do that as long as we have access to enough money to buy the vehicle we want rather than vehicles that will simply fill basic needs.

Globalization, mergers and acquisitions have also reduced things to the point that many auto companies source components from some of the same suppliers. So component cost are similar between brands that have similar volumes and buying power.

They also buy each others cars and tear them apart in the research and testing process. Early in my career I was involved in construction of a facility for ford that did just that. They would literally buy their competitors vehicles and test them rigorously before tearing them down completely.

There is so much spending in making cars that is not UAW labor. I will always remember a meeting I witnessed with about 30 suits in it where they patted themselves on the back for changing a plastic formula in a door panel and saved $0.08 on each 4-door vehicle. The model line ran around 400,000 units a year. I did the math on that as I looked around the room and thought: yep, that savings should just about cover the cost of this meeting. They did seem genuinely pleased with themselves, though.

Your $0.08 story sounds like the penny wise pound foolish saying. I can see where Tesla is shaving pennies all over the model Y yet true to stated mission they install a high end liquid cooled Full Self Driving computer system in every flipping vehicle to push data back to the Mother Ship so AI can write the FSD code going forward. The former Big 3 seem risk reverse to investing $billows today for many billions more in a few years down the road.

I live in a Tesla vacuum and it costs me $200 per month as a FSD Beta Tester to provide area data input. I need FSD to be a better driver than I am especially as I age. Next month I am doing my first solo trip in 15 years. It's 800 miles to Austin. I need function over flashiness.

 

[hiddentacocatneddih]

Fords spending how many billion on the new ford blue city TN and kentucky ?

 

[milkman636]

Fords spending how many billion on the new ford blue city TN and kentucky ?

Exactly! It’s not the assembly line worker wages that we are feeling when we shop for a new vehicle. They are a relatively small component in the big picture.

 

[Gale Hawkins]

Fords spending how many billion on the new ford blue city TN and kentucky ?

Personally I could get excited about that effort if the year was 2013.

The former Big 3 are losing the world's largest vehicle market business or more correctly have lost the world's largest car market.

Companies that aren't efficient at making EV batteries at scale and at a profit today may have lost out to China's efforts of the past 10 years. China doesn't have unlimited access to cheap oil plus smog is killing many in the cities. Moving away from fossil fuels is also a national security issue for China as it's for most nations.

Germany cut off buying cheap Russian fossil fuels and are losing their automotive building complex to China. Volvo has been a Chinese owned for years as is the case with MG and other old car names.

 

[milkman636]

Personally I could get excited about that effort if the year was 2013.

The former Big 3 are losing the world's largest vehicle market business or more correctly have lost the world's largest car market.

Companies that aren't efficient at making EV batteries at scale and at a profit today may have lost out to China's efforts of the past 10 years. China doesn't have unlimited access to cheap oil plus smog is killing many in the cities. Moving away from fossil fuels is also a national security issue for China as it's for most nations.

Germany cut off buying cheap Russian fossil fuels and are losing their automotive building complex to China. Volvo has been a Chinese owned for years as is the case with MG and other old car names.

Yep, we’re feeding a monster that is likely to crush us one day. It’s grown tremendously since being granted it’s most-favored-nation trade status in 1997.

 

[Gale Hawkins]

Yep, we’re feeding a monster that is likely to crush us one day. It’s grown tremendously since being granted it’s most-favored-nation trade status in 1997.

Plus that time frame was when GM killed off the EV1. That woke up Nissan who has had Lithium ion battery EVs on the road starting in 1997 which was 26 years ago. Elon Musk said if GM had moved the EV1 forward he would have focused more on Mars. GM was helpful by selling Musk the Fremont car factory cheap. China needed EVs in the worst way and that is why the rest of the world is looking to China today as the the world looked to Japan 50 years ago.