tag:theconversation.com,2011:/ca/topics/general-motors-21998/articlesGeneral Motors – The Conversation2024-03-27T23:28:32Ztag:theconversation.com,2011:article/2267242024-03-27T23:28:32Z2024-03-27T23:28:32ZAustralia must wean itself from monster utes – and the federal government’s weakening of vehicle emissions rules won’t help one bit<figure><img src="https://images.theconversation.com/files/584679/original/file-20240327-24-tmdd5x.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5810%2C3867&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The federal government has bowed to pressure from the car industry, announcing it will relax proposed emissions rules for utes and vans and delay enforcement of the new standards by six months.</p>
<p>The legislation was introduced to parliament on Wednesday. The government <a href="https://minister.infrastructure.gov.au/c-king/media-release/new-vehicle-efficiency-standard-tailored-australia">says</a> the new rules give Australian motorists a greater choice of electric vehicle models and insists the policy is “good for the environment”. </p>
<p>But on the latter point, the government is mistaken. The amended rules will slow the reduction in emissions from Australia’s polluting road transport sector. And they reflect domestic and international trends that, taken together, increase the risk Australia, and the world, will fail to achieve net-zero emissions by 2050. </p>
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Read more:
<a href="https://theconversation.com/australian-passenger-vehicle-emission-rates-are-50-higher-than-the-rest-of-the-world-and-its-getting-worse-222398">Australian passenger vehicle emission rates are 50% higher than the rest of the world – and it's getting worse</a>
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<h2>What are the changes?</h2>
<p>Vehicle emissions standards set a limit on grams of CO₂ that can be emitted for each kilometre driven, averaged across all new cars sold. Carmakers failing to meet the standards will incur financial penalties.</p>
<p>The federal government released its <a href="https://www.infrastructure.gov.au/department/media/publications/cleaner-cheaper-run-cars-australian-new-vehicle-efficiency-standard-consultation-impact-analysis">initial version</a> of proposed vehicle emissions standards in February.</p>
<p>Under the changes announced this week, some 4WD wagons – such as the Toyota LandCruiser and Nissan Patrol – will be reclassified from “passenger car” to “light commercial vehicle”. The change means less stringent emissions standards will apply to those models.</p>
<p>In a <a href="https://minister.infrastructure.gov.au/c-king/media-release/new-vehicle-efficiency-standard-tailored-australia">statement</a>, the government justified the change by saying some off-road wagons have a similar chassis and towing capacity to vehicles in the light-commercial category, and so should be subject to the same standards.</p>
<p>The government will also give more favourable treatment to heavier vehicles. And manufacturers will not be penalised under the scheme until July 2025 – six months later than the government originally proposed. </p>
<h2>The global picture</h2>
<p>The government’s decision to weaken the standards is a response to pressure from the domestic vehicle industry, and a concession to the Opposition which falsely claims the new standards are a “<a href="https://www.abc.net.au/news/2024-03-15/fact-check-vehicle-missions-standard-ute-family-car-tax/103587622">ute tax</a>”.</p>
<p>But the watering-down also reflects a broader international trend in which the legacy vehicle industry is backing away from its <a href="https://media.ford.com/content/fordmedia/fna/us/en/news/2021/09/27/ford-to-lead-americas-shift-to-electric-vehicles.html">earlier</a> <a href="https://www.gm.com/commitments/electrification">commitments</a> to a rapid transition to electric vehicles. </p>
<p>For example, in the United States Ford and GM have both cut back production of some models, <a href="https://www.axios.com/2024/01/19/ev-cars-ford-lightning-gm-chevy-blazer-cuts">reportedly due to</a> lower-than-expected consumer demand.</p>
<p>Also in the US, carmakers this month <a href="https://www.politico.com/news/2024/03/20/bidens-regulators-poised-to-issue-rule-meant-to-drive-electric-car-sales-00148019">secured a relaxation</a> of the Biden administration’s fuel efficiency targets for new vehicle sales.</p>
<p>US politicians are also pushing for <a href="https://www.hawley.senate.gov/hawley-introduces-new-bill-raise-tariffs-chinese-evs-protect-american-autoworkers">increased tariff protection</a> from imports, already taxed at 27.5%. This would make US producers even more competitive against big Chinese electric vehicle brands such as BYD.</p>
<p>Toyota, the world’s largest car maker, has gone all-in on hybrid electric vehicles, beginning with the highly successful Prius. But as the global market has shifted to fully electric cars, Toyota has <a href="https://electrek.co/2023/10/30/why-is-toyota-anti-ev-it-lost-the-race-to-compete-ev-council/">fought against</a> further tightening of standards. </p>
<figure class="align-center ">
<img alt="three large utes under US flag and Ford sign" src="https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">US carmakers secured a relaxation on fuel efficiency targets.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Pressures in Australia</h2>
<p>Australia no longer has a domestic car manufacturing industry. But global carmakers continue to exert powerful influence through the Federated Chamber of Automotive Industries, Australia’s peak industry body for manufacturers and importers of passenger and light-commercial vehicles. The chamber has consistently <a href="https://www.smh.com.au/national/inside-the-car-industry-s-climate-lobbying-push-20230522-p5da61.html">lobbied against</a> effective climate action. </p>
<p>The government’s agreement to weaken standards also reflects the prevailing assumption, apparently shared by both major parties, that tradespeople comprise the majority of the “working class” voters for whom they are vying.</p>
<p>But it’s an out-of-date assumption. In the 1980s, the occupations fitting a broad interpretation this term (trades and technical workers, machinery operators and labourers) <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release">accounted for 40%</a> of all employed workers, and a majority of full-time non-managerial workers. </p>
<p>But today, <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release">only 28%</a> of workers fit this description. Workers with professional qualifications, such as teachers and nurses, <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release">outnumber</a> trades and technical workers two to one. But their concerns are frequently dismissed by some politicians as those of a woke, inner-city minority. </p>
<h2>Utes are changing</h2>
<p>The shift from substance to symbol in regards to the working class is mirrored in the transformation of utes themselves. </p>
<p>Until relatively recently – and as the name implies – utes were utilitarian vehicles designed for the practical tasks of carrying a farming couple “<a href="https://hidrive.com.au/a-brief-history-of-the-ute/#:%7E:text=In%20one%20version%20of%20the,pigs%20to%20market%20on%20Mondays.">to church on Sundays and the pigs to market on Mondays</a>”. But over time, this has been replaced by various forms of cosplay. </p>
<p>Utes have been tricked out with sports bars and fancy wheels, metallic paint and so on. More recently, the traditional ute has been replaced by US-style pickups, typically sold in dual-cab configurations. </p>
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Read more:
<a href="https://theconversation.com/labors-fuel-efficiency-standards-may-settle-the-ute-dispute-but-there-are-still-hazards-on-the-road-222875">Labor's fuel-efficiency standards may settle the ute dispute – but there are still hazards on the road</a>
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<p>Most models of the market-leading Ford Ranger <a href="https://www.ford.com.au/showroom/trucks-and-vans/ranger/specs/">don’t even offer</a> a single-cab version, though such versions are sold overseas.</p>
<p>These vehicles are massive, but many have far less carrying capacity than a traditional ute. For example, the Ram 1500 has a tub length of <a href="https://www.news.com.au/technology/motoring/motoring-news/2023-ram-1500-big-horn-has-arrived-in-australia/news-story/f84366c4e20c57d6a25201cc52440062">1.7 metres</a>, compared to about 2.4 metres for the tray of a standard single-cab ute. </p>
<p>Unless the growth in the size of passenger vehicles is stopped and reversed, Australia’s task of meeting our net-zero target will be even more difficult.</p>
<p>It’s unlikely the two big parties will act on this issue any time soon. But as climate change worsens, the need to wean ourselves from monster cars and internal-combustion engines will demand the attention of our political leaders.</p><img src="https://counter.theconversation.com/content/226724/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin is a former Member of the Climate Change Authority, which recommended fuel efficiency standards in 2014</span></em></p>The amended rules will slow the reduction in emissions from Australia’s polluting road transport sector and reflect alarming trends, here and abroad.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2170642023-11-27T19:34:04Z2023-11-27T19:34:04ZNext on the United Auto Workers’ to-do list: Adding more members who currently work at nonunion factories to its ranks<figure><img src="https://images.theconversation.com/files/560571/original/file-20231121-24-oer4wu.jpg?ixlib=rb-1.1.0&rect=106%2C152%2C4872%2C3109&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will Tesla's workers be the next to approve a UAW contract?</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EarnsTesla/8d2415b3d23949aca5513ecd9c47f8ec/photo?Query=tesla&mediaType=photo,video,graphic,audio&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=3150&currentItemNo=65">AP Photo/Godofredo A. Vásquez</a></span></figcaption></figure><p>Having negotiated “<a href="https://theconversation.com/united-auto-workers-union-hails-strike-ending-deals-with-automakers-that-would-raise-top-assembly-plant-hourly-pay-to-more-than-40-as-record-contracts-216432">record contracts</a>” with the Big Three – and seen the bulk of its <a href="https://finance.yahoo.com/news/1-uaw-says-64-workers-150358604.html">rank-and-file members approve them</a> – the United Auto Workers says its work isn’t done.</p>
<p>The union intends to <a href="https://www.axios.com/2023/10/20/uaw-strike-organizing-automakers">try once more</a> to persuade the rest of the U.S. auto industry’s workers to <a href="https://labornotes.org/2019/06/why-uaw-lost-again-chattanooga">join the union</a>.</p>
<p>“We’re going to organize like we’ve never organized before,” <a href="https://www.cnbc.com/2023/11/03/tesla-toyota-in-uaws-sights-for-organizing-after-big-3-wins.html">said UAW President Shawn Fain</a>.</p>
<p>As <a href="https://scholar.google.com/citations?user=TcpezG4AAAAJ&hl=en&oi=ao">labor scholars</a> who have <a href="https://scholar.google.com/citations?user=EQEoODAAAAAJ&hl=en&oi=sra">studied union finances</a>, we believe this is a formidable objective. On top of the <a href="https://apnews.com/article/technology-buffalo-new-york-business-826b91456748c7167fe977d458aaba2d">intense corporate resistance</a> from the <a href="https://www.cnbc.com/2023/11/03/tesla-toyota-in-uaws-sights-for-organizing-after-big-3-wins.html">likes of Tesla CEO Elon Musk</a>, there’s the high cost of waging expensive campaigns in states like <a href="https://www.npr.org/2023/09/22/1200875078/south-non-union-uaw-strike-foreign-automakers">Tennessee and Alabama</a>, which have “<a href="https://doi.org/10.1080/12265934.2021.1919183">right-to-work</a>” laws designed <a href="https://www.ncsl.org/labor-and-employment/right-to-work-resources">to discourage labor organizing</a>. </p>
<p>But the United Auto Workers appears to have the money, know-how and institutional infrastructure to launch these organizing campaigns.</p>
<h2>The other 57%</h2>
<p>About 146,000 UAW members are employed by General Motors, Ford and Stellantis, the global company that makes Chrysler, Dodge and Ram vehicles in North America. That’s down from <a href="https://money.cnn.com/1999/06/14/companies/uaw/">407,000 in 1999</a>.</p>
<p>So far, none of the autoworkers employed by the Big Three’s <a href="https://www.nytimes.com/2023/10/29/business/uaw-ford-contract.html">foreign-based competitors</a> or the <a href="https://www.nytimes.com/2022/12/09/business/economy/ev-battery-union.html">U.S.-based electric vehicle manufacturers</a> belong to a union. Each of the Big Three has joint ventures with various foreign-based companies to produce batteries. The workers at <a href="https://www.cnbc.com/2022/12/09/gm-lg-ev-battery-plant-uaw-union-vote.html">only one of these joint venture plants</a> have voted to join the UAW.</p>
<p>Today, the UAW represents <a href="https://www.bls.gov/iag/tgs/iagauto.htm">43% of the U.S. automotive workforce</a> in vehicle manufacturing. The other 57%, roughly 190,000 workers, are employed by Toyota, Honda and other foreign companies, and Tesla or another <a href="https://evmagazine.com/top10/top-10-pure-play-ev-companies">domestic electric vehicle manufacturer</a>. Nonetheless, in comparison to other industries, the degree of unionization in the automotive industry remains about <a href="https://www.bls.gov/news.release/pdf/union2.pdf">four times as high as for the workforce as a whole</a>.</p>
<p>Intermittent campaigns to persuade autoworkers at nonunion factories in places like <a href="https://www.theguardian.com/technology/2018/sep/10/tesla-workers-union-elon-musk">Fremont, California</a>, and <a href="https://www.npr.org/2019/06/15/733074989/tennessee-workers-reject-union-at-volkswagen-plant-again">Chattanooga, Tennessee</a>, have <a href="https://www.wardsauto.com/industry-news/if-uaw-doesn-t-change-it-s-toast">failed over the past four decades</a>.</p>
<h2>Employer obstacles</h2>
<p>Many U.S. employers have a long <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315499093-11/human-resource-management-practices-worker-desires-union-representation-jack-fiorito">history of attempting to avoid unionization</a>.</p>
<p>One such tactic is providing nonunion employees with some of the benefits of belonging to a union, such as raises or better benefits, without the payment of union dues. <a href="https://apnews.com/article/hyundai-honda-toyota-wage-increase-united-auto-workers-1349059944c75d7372f53d1ee6cf5cb2">Toyota, Honda, Hyundai</a>, <a href="https://www.reuters.com/business/autos-transportation/subaru-raise-us-plant-worker-wages-light-uaw-deals-with-detroit-automakers-ceo-2023-11-16/">Subaru</a> and <a href="https://www.reuters.com/business/autos-transportation/nissan-motor-hiking-wages-us-auto-plants-after-uaw-deal-2023-11-20/">Nissan all announced plans to increase</a> pay for their U.S. employees soon after the 2023 UAW strike concluded.</p>
<p>Fain calls this wave of raises for nonunion automotive workers the “<a href="https://youtu.be/V3bengdSGjY'">UAW bump</a>,” joking that UAW stands for “you are welcome.” His joke has two meanings: It’s a response to the thanks owed for the increased pay and it’s an invitation for workers employed by those companies to join the union he leads.</p>
<p>The UAW leader also quips that when the union’s new contracts expire in April 2028, it will be negotiating with “<a href="https://www.axios.com/2023/10/30/uaw-ford-shawn-fain-contract-deal">the Big Five or Big Six</a>” instead of just GM, Ford and Stellantis. In other words, he is predicting that the UAW will have won organizing campaigns by then with two or three more of the <a href="https://www.storagecafe.com/blog/top-10-largest-car-manufacturers-in-the-us/">automakers producing the most vehicles in the U.S.</a> – such as Toyota, Honda and Nissan.</p>
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<figcaption><span class="caption">This UAW video features media coverage of union president Shawn Fain testifying in Congress and a string of raises for nonunion U.S. autoworkers.</span></figcaption>
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<h2>UAW’s financial status</h2>
<p>In our book, “<a href="https://www.taylorfrancis.com/books/mono/10.4324/9781003335474/trade-union-finance-marick-masters-raymond-gibney">Trade Union Finance: How Labor Organizations Raise and Spend Money</a>,” we explain that unions remained in relatively strong financial shape from 2006 through 2019 – a period that included the economic upheaval of the Great Recession.</p>
<p>For example, among the sample of 53 national unions whose finances we studied, 49 saw their member-based income from dues and other sources grow by more than 33% during this period.</p>
<p>The UAW’s shrinking ranks led it to raise its dues by 25% in 2014 to <a href="https://www.nbcnews.com/business/autos/united-auto-workers-union-raises-dues-first-time-47-years-n121586">offset declining member-based income</a>.</p>
<p>The UAW has yet to disclose what it spent on the 2023 strike against the Detroit Three. Based on reported striker numbers and dates, we estimate that it cost the union approximately US$86 million just in payments to workers eligible for <a href="https://theconversation.com/what-are-strike-funds-a-labor-management-relations-expert-explains-213212">$500 weekly payments from its strike fund</a>.</p>
<p>That most likely left the union with nearly $750 million in its strike fund, which held roughly <a href="https://www.fitchratings.com/research/us-public-finance/uaw-strike-will-have-no-near-term-credit-effect-on-us-states-locals-21-09-2023">$825 million before the strike began</a>.</p>
<h2>Financing union organizing</h2>
<p>Organizing workers employed by <a href="https://www.cnn.com/2023/10/12/business/tesla-union-uaw-strike/index.html">automakers that resist unions, such as Tesla</a>, can be expensive. </p>
<p>The union has to pay organizers and cover the organizers’ expenses, and it is responsible for the costs of complying with labor law requirements associated with holding union elections. We do not know the exact costs of organizing campaigns or how much unions spend on them. </p>
<p>We do know that the United Auto Workers spent $4.4 million in 2022 to pay its organizers, or 5.6% of the union’s <a href="https://olmsapps.dol.gov/query/orgReport.do?rptId=865078&rptForm=LM2Form">total payroll</a>. This level of expenditure pales in comparison to the more than $45 million the union <a href="https://uaw.org/tag/strike/">spent on strike benefits</a> for its members who went on strike that year – none of whom were employed in the automotive industry.</p>
<p>How can the UAW finance a massive organizing campaign to win over the workers at the likes of Tesla, Honda, Nissan, Subaru, Toyota and Hyundai? We have identified three means of supplementing traditional sources of revenue from dues.</p>
<p><strong>1: Get donations from other labor groups</strong></p>
<p>Unions are free to help out each other through donations made to one another.</p>
<p>One important precedent for this is from the UAW’s earliest days. In 1936, one year after the union got its start, John Lewis, at the time the head of the Committee for Industrial Organization, <a href="https://search.worldcat.org/title/417956">gave the nascent United Auto Workers $100,000</a> – over $2.23 million adjusted for inflation – for its organizing efforts.</p>
<p>Labor unions can easily accept donations because they are <a href="https://blog.candid.org/post/unions-and-their-role-in-the-social-sector/">501(c)(5) nonprofits</a>. This designation means they <a href="https://ballotpedia.org/501(c)(5)">don’t have to pay any federal income tax</a>, although that exemption does not apply to the money they spend on electioneering and lobbying. Unlike charities, which in the U.S. are designated as 501(c)(3) organizations, <a href="https://www.irs.gov/charities-non-profits/other-non-profits/tax-treatment-of-donations-to-section-501c5-organizations">donations to unions are not tax deductible</a> for donors.</p>
<p><strong>2: Team up with other unions</strong></p>
<p>A second approach is for unions to pool their money for organizing another industrial sector. </p>
<p>We’ve found that the United Auto Workers, the United Steelworkers and the International Association of Machinists had a combined $513 million in working capital – money available for them to use as they see fit – in 2022. Some of those funds could help foot the bill for a concerted effort to persuade employees of nonunion automakers to join the union.</p>
<p>And the UAW could tap into these funds to supplement their spending on organizing personnel. </p>
<p><strong>3: Experiment with crowdfunding</strong></p>
<p>Third, rank-and-file members of the United Auto Workers, along with other manufacturing unions, could chip in to cover organizing costs through a <a href="https://theconversation.com/4-new-findings-shed-light-on-crowdfunding-for-charity-161491">crowdfunding campaign</a> by raising money online from donors.</p>
<p>Such a crowdfunding campaign might also draw donations from nonunion autoworkers who favor unionization, or anyone else who wants to see more autoworkers belonging to a union.</p>
<h2>Innovative tactics</h2>
<p>Spending more money on labor organizing will not suffice. The UAW will also need to rely on creativity and innovative thinking.</p>
<p>The challenges involved with winning over nonunion autoworkers will be far more formidable than its task in <a href="https://www.reuters.com/business/autos-transportation/uaw-pull-out-all-stops-organizing-nonunion-automakers-2023-11-08/">negotiating the 2023 contracts with the Big Three</a>. </p>
<p>We believe that the UAW would be wise to again use the <a href="https://www.npr.org/2023/10/20/1207367334/the-uaw-strike-is-not-the-first-time-a-union-weaponized-the-element-of-surprise">element of surprise</a> as it did with its 2023 strike against GM, Ford and Stellantis. One key to its success was how it threw the companies off balance by unpredictably ratcheting up the number of facilities where workers had gone on strike.</p>
<p>Fain and his allies are bound to fare better if they again, as they did with the 2023 strike against the Big Three, <a href="https://www.wilx.com/2023/10/11/how-social-media-influences-uaw-strike/">shape the narrative</a> through the deft use of social media. That tactic helped the UAW garner grassroots support and <a href="https://apnews.com/article/labor-unions-auto-workers-poll-b6f0efba4892d1f5d2a829effd514f7d">keep public opinion on its side</a>.</p><img src="https://counter.theconversation.com/content/217064/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>While Marick Masters was serving as the director of the Douglas A. Fraser Center for Workplace Issues at Wayne State University from 2009 through 2019, the Center received grants from the Detroit Three's joint training centers with the United Auto Workers to pursue education and research on unions and labor-management relations. These grants were operating strictly within the purview of the university.</span></em></p><p class="fine-print"><em><span>Ray Gibney does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Wooing those workers will be expensive and require a lot of creativity, since many of them are employed in ‘right-to-work’ states.Marick Masters, Professor of Business and Adjunct Professor of Political Science, Wayne State UniversityRay Gibney, Associate Professor of Management, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2164322023-10-29T15:04:03Z2023-10-29T15:04:03ZUnited Auto Workers union hails strike-ending deals with automakers that would raise top assembly-plant hourly pay to more than $40 as ‘record contracts’<figure><img src="https://images.theconversation.com/files/556147/original/file-20231026-29-8u6y4w.jpg?ixlib=rb-1.1.0&rect=0%2C26%2C2838%2C1684&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">About 46,000 autoworkers gradually went on strike starting in mid-September.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/new-vehicle-sits-on-a-ford-dealerships-lot-on-october-03-news-photo/1715478064?adppopup=true">Joe Raedle/Getty Images</a></span></figcaption></figure><p><em>The United Auto Workers union agreed on a <a href="https://finance.yahoo.com/news/gm-reaches-tentative-deal-uaw-131907642.html">tentative new contract with General Motors on Oct. 30, 2023</a>, days after landing similar deals <a href="https://apnews.com/article/auto-workers-strikes-ford-general-motors-stellantis-08a81503d72e44d4efa40549f684d5a2">with Ford Motor Co.</a> on Oct. 25 and <a href="https://apnews.com/article/uaw-stellantis-tentative-contract-agreement-d32cb38791730c4c92a8b2112c205e59">Stellantis, the global automaker that makes Chrysler, Dodge and Ram vehicles in North America</a>, on Oct. 28. The pending agreements have halted the <a href="https://www.cnn.com/2023/10/28/business/uaw-stellantis-deal/index.html">industry’s longest strike in 25 years</a>. It <a href="https://theconversation.com/us-autoworkers-launch-historic-strike-3-questions-answered-213518">began on Sept. 15</a>, when the UAW’s prior contracts with all three automakers expired, and lasted more than six weeks. After gradually ramping up, the strike eventually included about 46,000 workers – roughly one-third of the union’s 146,000 members at the three companies.</em></p>
<p><em><a href="https://media.ford.com/content/fordmedia/fna/us/en/news/2023/10/25/ford-confirms-tentative-agreement-with-uaw.html">Ford released a statement in which it said it was “pleased</a>” to have reached a deal and “focused on restarting Kentucky Truck Plant, Michigan Assembly Plant and Chicago Assembly Plant.” <a href="https://www.detroitnews.com/story/business/autos/chrysler/2023/10/28/stellantis-strike-uaw-deal/71360452007/">Stellantis</a>, likewise, looks forward to “resuming operations,” as one of its executives said in a statement. General Motors initially made no public statements.</em></p>
<p><em>The Conversation asked Marick Masters, a Wayne State University <a href="https://scholar.google.com/citations?user=TcpezG4AAAAJ&hl=en&oi=ao">scholar of labor and business issues</a>, to explain what’s in these contracts and their significance.</em></p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1717337144572662025"}"></div></p>
<h2>What are the terms of the contract?</h2>
<p>According to several media reports and the union’s own announcements, <a href="https://www.wsj.com/business/uaw-stellantis-reach-tentative-agreement-on-new-four-year-labor-contract-1bc9c9f5">Ford’s tentative labor agreement</a> includes a 25% wage increase over the next 4½ years, as well as the restoration of a cost-of-living allowance the UAW lost in 2009.</p>
<p>In addition, the tentative agreements also will convert many temporary workers to full-time status, higher pay for temps, the right to go on strike over plant closures and significant increases in contributions to retirement plans.</p>
<p>By the end of the period covered by the Ford, <a href="https://www.nytimes.com/2023/10/30/business/economy/gm-uaw-contract-deal.html">GM</a> <a href="https://twitter.com/UAW/status/1718394875253514341">and Stellantis contracts</a>, the top worker wage at assembly plants will be <a href="https://www.voanews.com/a/auto-workers-stellantis-reach-tentative-deal/7331209.html">more than US$40 an hour</a>. All three contracts will <a href="https://apnews.com/article/uaw-stellantis-tentative-contract-agreement-d32cb38791730c4c92a8b2112c205e59">expire on April 30, 2028</a>.</p>
<p><a href="https://apnews.com/article/uaw-stellantis-tentative-contract-agreement-d32cb38791730c4c92a8b2112c205e59">The Stellantis deal</a>, <a href="https://twitter.com/UAW/status/1718394875253514341">according to UAW officials</a>, is similar to the one reached with Ford in other ways – as, reportedly, is the one that the <a href="https://www.cnbc.com/2023/10/27/gm-uaw-labor-talks.html">UAW agreed upon with GM</a>. </p>
<p>The Stellantis agreement also has provisions regarding specific North American plants, including the plant Stellantis had <a href="https://www.reuters.com/business/autos-transportation/uaw-outline-tentative-deal-reopen-stellantis-illinois-plant-sources-2023-10-28/">idled earlier in 2023 in Belvidere, Illinois</a>, the UAW said. Stellantis has promised to add 5,000 new jobs at Belvidere and other factories over the next four years, in stark contrast to its previous intention to cut that many jobs during the same period, UAW President <a href="https://twitter.com/UAW/status/1718394875253514341">Shawn Fain said on Oct. 28</a>.</p>
<p>The Ford contract, likewise, calls for <a href="https://www.detroitnews.com/story/business/autos/ford/2023/10/29/uaw-ford-tentative-agreement-details-highlighter/71368266007/">more than $8 billion in investments in factories</a> and other facilities, according to the UAW.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="UAW members, some holding their children aloft, attend a rally." src="https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/556153/original/file-20231026-26-93sj7a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">UAW members attended a rally in support of the labor union’s strike on Oct. 7, 2023, in Chicago.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/members-attend-a-rally-in-support-of-the-labor-union-strike-news-photo/1712273041?adppopup=true">Jim Vondruska/Getty Images</a></span>
</figcaption>
</figure>
<h2>Why did workers feel the strike was necessary, and did they achieve their aims?</h2>
<p>The workers knew that the companies had enjoyed <a href="https://www.cbs58.com/news/auto-sales-are-falling-but-profits-are-surging-welcome-to-the-new-normal">big profits</a> over the past several years. GM, for example, earned <a href="https://www.axios.com/2022/07/14/automakers-production-levels-decrease-profits">$10 billion in profits in 2021</a> and <a href="https://apnews.com/article/general-motors-co-auto-industry-detroit-business-97a5db2a4e15c45915aae123e0b3d9cb">$14.5 billion in 2022</a>.</p>
<p>After having made <a href="https://upnorthlive.com/news/local/uaw-workers-set-to-strike-seek-to-regain-concessions-lost-after-2008-recession">major economic concessions</a> to help the companies survive the Great Recession, stiff international competition and the <a href="https://www.bankinfosecurity.com/its-official-gm-files-for-bankruptcy-a-1508">2009 bankruptcies of GM</a> <a href="https://www.theguardian.com/business/2009/apr/30/chrysler-verge-bankruptcy-talks-collapse">and Chrysler</a> – before the latter became a division of Stellantis – UAW members believed they deserved what they’re calling a “record contract” for having contributed to “record profits.”</p>
<p>“The days of low-wage, unstable jobs at the Big Three are coming to an end,” <a href="https://twitter.com/UAW/status/1718394875253514341">Fain said on Oct. 28</a>. “The days of the Big Three walking away from the American working class, destroying our communities, are coming to an end.”</p>
<p>To forge its militant strategy, the union tore a page from the <a href="https://theconversation.com/united-auto-workers-strike-if-it-happens-should-channel-the-legacy-of-walter-reuther-who-led-the-union-at-the-peak-of-its-power-212324">playbook of labor leader Walter Reuther</a>, who led the UAW from 1946 until his death in 1970. Reuther believed that workers deserved a fair share of corporate abundance – just like shareholders and customers.</p>
<h2>What happens next?</h2>
<p>The UAW released the full details of the Ford contract to all of its members who are Ford workers on Oct. 29, after its <a href="https://www.vox.com/2023/10/26/23933553/ford-uaw-tentative-agreement-2023-contract-highlights-gm-stellantis">leaders had signed off</a> on it. Rank-and-file members now have to ratify the deal for it to go into effect.</p>
<p>The same process will happen with Stellantis on Nov. 2. The separate deal the UAW negotiated with GM will also require ratification.</p>
<p>In the meantime, the autoworkers who went on strike will be returning to their jobs.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1718394875253514341"}"></div></p>
<h2>How will this affect the automakers’ bottom line?</h2>
<p>Some analysts have estimated that Ford’s contract, if ratified, would add <a href="https://finance.yahoo.com/news/ford-uaw-reach-tentative-deal-235436345.html?fr=sycsrp_catchall">$1.5 billion to the company’s annual labor costs</a>. Ford itself estimated that this could add up to <a href="https://www.wsj.com/business/uaw-stellantis-reach-tentative-agreement-on-new-four-year-labor-contract-1bc9c9f5?mod=business_lead_story">$900 in labor costs to each vehicle</a> rolling off its assembly lines. Ford has also estimated that the strike cost it about $1.3 billion in pretax profits.</p>
<p>To put these numbers into perspective, <a href="https://media.ford.com/content/fordmedia/fna/us/en/news/2023/10/26/third-quarter-2023-financial-results.html">Ford generated slightly more than $130 billion in revenue</a> in the first three quarters of 2023, and <a href="https://finance.yahoo.com/news/ford-motor-co-f-q3-221158213.html">almost $5 billion in profits</a>.</p>
<p><a href="https://www.cnn.com/2023/10/28/business/uaw-stellantis-deal/index.html">Stellantis</a> has not yet made public what it believes the strike has cost the company.</p>
<p>General Motors has said that the strike is costing the company more than <a href="https://www.cnbc.com/2023/10/30/gm-uaw-tentative-agreement-labor-strike.html">$800 million</a>.</p>
<p><em>This article was updated on Oct. 30, after GM and the UAW reached a tentative agreement on a new labor contract.</em></p><img src="https://counter.theconversation.com/content/216432/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>While director of the Douglas A. Fraser Center for Workplace Issues at Wayne State University from 2009 through 2019, the Center received grants from the Detroit Three's joint training centers with the United Auto Workers to pursue education and research on unions and labor-management relations. These grants were operating strictly with the purview of the university.</span></em></p>Rank-and-file union members employed by the automakers have to ratify the new contracts before they become official.Marick Masters, Professor of Business and Adjunct Professor of Political Science, Wayne State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2146792023-10-06T12:31:51Z2023-10-06T12:31:51ZWhy the UAW union’s tough bargaining strategy is working<figure><img src="https://images.theconversation.com/files/552177/original/file-20231004-27-7fq66x.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5842%2C3665&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">UAW union members picket in front of a Stellantis distribution center on Sept. 25, 2023, in Carrollton, Texas.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/PicturesoftheWeek-NorthAmerica-PhotoGallery/c1ac21c35db54e70b1f39af3b7653bc2/photo?boardId=37be9465fcce45d283d5431cccb20a6a&st=boards&mediaType=audio,photo,video,graphic&sortBy=&dateRange=Anytime&totalCount=455&currentItemNo=8">AP Photo/Tony Gutierrez</a></span></figcaption></figure><p>The United Auto Workers union isn’t backing down as it <a href="https://www.npr.org/2023/09/20/1200357955/uaw-big-3-strike-auto-shawn-fain">bargains for more compensation and better benefits</a> in its new contracts with General Motors, Ford and Stellantis. <a href="https://www.nytimes.com/2023/10/05/business/economy/shawn-fain-uaw-profile.html">Under the deft leadership</a> of its <a href="https://theconversation.com/historic-uaw-election-is-bringing-profound-union-leadership-changes-and-chances-of-more-strikes-and-higher-car-prices-200335">president, Shawn Fain</a>, and other officials elected in March 2023, the union has thrown the three companies off balance with a strike that began on Sept. 15 – the minute its prior contracts expired.</p>
<p>As of Oct. 6, the number of UAW members on strike from their Big Three jobs <a href="https://www.clickondetroit.com/news/local/2023/10/02/uaw-strike-week-3-what-we-know-as-25k-workers-picket-big-three-talks-persist/">stood at 25,000</a> after a gradual climb – meaning that 1 in 6 of the union’s nearly 150,000 autoworkers were on the picket lines instead of going to work.</p>
<p>I’m a labor and business scholar who has studied the <a href="https://scholar.google.com/scholar?hl=en&as_sdt=0%2C23&q=marick+masters&btnG">history of UAW collective bargaining with the Detroit Three</a>. I’ve observed that the union’s bargaining strategy has three interconnected elements that match what <a href="https://www.pon.harvard.edu/daily/negotiation-training-daily/negotiating-in-three-dimensions-2/">Harvard Program on Negotiations researchers</a> recommend: an emphasis on substance, processes affecting interpersonal relations, and the setup – or context.</p>
<h2>3-part strategy</h2>
<p><a href="https://www.reuters.com/business/autos-transportation/uaw-chief-shawn-fain-disrupts-detroits-labor-tradition-2023-09-15/">Fain and his leadership</a> team have gotten the upper hand in all three regards.</p>
<p>First, it framed the negotiations by publicizing its members’ demands at the very beginning of formal talks. From the start, the union has clearly argued that the automakers’ “record profits” in recent years meant that autoworkers deserve <a href="https://www.theguardian.com/commentisfree/2023/sep/14/record-auto-profits-inequality-climate-crisis-ford-general-motors-stellantis">what it calls “record contracts”</a> to compensate them for past sacrifices, such as <a href="https://www.michiganradio.org/economy/2023-10-03/behind-the-push-to-end-tiers-a-precarious-history-of-solidarity-in-the-uaw">lowering pay and reducing benefits</a> for newer hires.</p>
<p>So far, it looks like the UAW is making real gains on the substance of its demands. For example, by Oct. 3, <a href="https://media.ford.com/content/fordmedia/fna/us/en/news/2023/10/03/ford-makes-comprehensive-offer-to-uaw--record-pay-and-benefits--.html">Ford was offering a 26% pay raise</a>, <a href="https://abcnews.go.com/Business/day-workweek-46-raise-uaw-makes-audacious-demands/story?id=102926195">up from about 15% before the strike</a>, and the restoration of annual cost-of-living adjustments to keep up with inflation.</p>
<p>And on Oct. 6, Fain applauded GM’s acceptance of a key union demand: that all <a href="https://twitter.com/AFLCIO/status/1710359460521062858">workers at their electric-vehicle battery manufacturing plants</a> have the same working conditions and compensation as those who are making vehicles with internal combustion engines and transmissions. I see this as a monumental concession that signals to the other companies that it would be advisable for them to follow suit.</p>
<p>Second, the union unilaterally changed the bargaining process, starting with its optics. The UAW dispensed with the <a href="https://www.cnbc.com/2019/10/26/with-gm-contract-set-uaw-takes-its-fight-to-ford-and-fiat-chrysler.html">traditional handshake ceremonies</a> it had previously held with auto executives to kick off contract negotiations. “There is no point in having some pomp and circumstance and some big ceremony acting like we’re working together when we’re not,” <a href="https://www.clickondetroit.com/news/local/2023/07/12/no-handshakes-uaw-leaders-visit-plants-as-high-stakes-contract-talks-begin-in-metro-detroit/">Fain told reporters in mid-July</a>.</p>
<p>Instead of participating in conciliatory photo-ops, the leadership held <a href="https://www.cnn.com/2023/07/12/cars/uaw-head-strike-big-three/index.html">meet-and-greets with rank-and-file UAW members</a> at factories belonging to Ford, General Motors and Stellantis – the global automaker that makes Chrysler, Dodge and Ram vehicles – where Fain declared that the union was ready to go on strike. </p>
<p>More significantly in terms of its processes, the UAW is on strike for the first time <a href="https://www.npr.org/2023/09/15/1199673197/uaw-strike-big-3-automakers">against all three of the automakers</a>, having abandoned its prior practice of targeting one company at a time. Bargaining simultaneously with all three companies effectively pits them against each other. </p>
<p>One way Fain is doing that is by expanding picket lines in accordance with the progress or lack thereof each of the three automakers makes in meeting the UAW’s demands. Pressure on the companies is building with rolling deadlines at which additional strike sites are announced. </p>
<p>This strategy has led the companies to make concessions, with the union barely having to reciprocate. Although the UAW is now <a href="https://www.cbsnews.com/news/uaw-strike-what-are-their-demands-detroit-big-three-detroit/">seeking a 36% increase in pay</a>, down from 46%, it has not ratcheted down many of its other demands.</p>
<p>Third, the union has successfully used social media to get its narrative across and to <a href="https://pro.morningconsult.com/analysis/uaw-strike-polling">rally public support</a> for its <a href="https://news.gallup.com/poll/510281/unions-strengthening.aspx">fight with the automakers</a>.</p>
<p>Perhaps the best evidence that the union’s outreach strategy is succeeding is that Joe Biden became the first sitting president to <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/09/26/remarks-by-president-biden-at-united-auto-workers-picket-line/">join strikers on a picket line</a> when he made a trip to Belleville, Michigan, on Sept. 26. Once there, Biden expressed support for the UAW’s cause.</p>
<p>The UAW has <a href="https://uaw.org/uaw-releases-new-video-corporate-greed-whats-really-going-auto-industry/">repeatedly accused the companies of being greedy</a>, often by pointing to what their top executives make: The CEOs of Ford, General Motors and Stellantis each received between <a href="https://www.wsj.com/business/auto-ceos-make-about-300-times-what-their-median-worker-is-paid-heres-how-that-stacks-up-cefc9a5">$21 million and $29 million in compensation</a> in 2022.</p>
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<figcaption><span class="caption">UAW President Shawn Fain has emphasized themes such as corporate greed in the union’s social media campaigns.</span></figcaption>
</figure>
<h2>Collaborative vs. adversarial</h2>
<p>Research on labor-management negotiations has underscored two basic approaches to bargaining: <a href="https://www.pon.harvard.edu/shop/getting-to-yes-negotiating-agreement-without-giving-in/">collaborative</a> and <a href="https://www.pearson.com/en-us/subject-catalog/p/mind-and-heart-of-the-negotiator-the/P200000006425/9780135641262">adversarial</a>. </p>
<p>Early on, collective bargaining in the U.S. auto industry was the latter. </p>
<p>By the late 1970s, as the <a href="https://www.wardsauto.com/news-analysis/foreign-invasion-imports-transplants-change-auto-industry-forever">Big Three lost market share</a> to foreign automakers, the UAW was forced into a concessionary bargaining mode. It compromised on pay and benefits to enable manufacturers to compete against nonunion employers – <a href="https://www.chicagofed.org/publications/blogs/chicago-fed-insights/2023/recent-uaw-contracts-ford-gm-stellantis">especially in 2007 and 2009</a> amid weak demand for new vehicles.</p>
<p>In 2023, the UAW has declared those days over.</p>
<p>The union is instead focused on what <a href="https://theconversation.com/united-auto-workers-strike-if-it-happens-should-channel-the-legacy-of-walter-reuther-who-led-the-union-at-the-peak-of-its-power-212324">Walter Reuther</a>, the UAW’s longtime leader, called “<a href="https://uaw.org/walter-reuther-quote-collection/">the sharing of economic abundance</a>.”</p>
<p>To implement its new strategy, the union is relying on several <a href="https://www.pon.harvard.edu/daily/batna/10-hardball-tactics-in-negotiation/">hard-bargaining tactics</a>: extreme demands, personal attacks, threats and warnings, rolling deadlines and holding unpredictable strikes that are the same for all three companies.</p>
<p><a href="https://abcnews.go.com/Business/day-workweek-46-raise-uaw-makes-audacious-demands/story?id=102926195">Fain himself described</a> the union’s initial demands as “audacious.” </p>
<p>On top of a roughly 46% wage increase, it sought the restoration of annual cost-of-living adjustments, retiree health care and defined-benefit pensions, the elimination of separate wage tiers for longtime and newer workers and increases in profit-sharing. The UAW also sought a 32-hour work week with pay for 40 hours of labor and the <a href="https://apnews.com/article/auto-workers-union-wage-increase-jobs-bank-b8370b11bd692191d9ee3080001ef358">restoration of jobs banks</a> – an abolished system that paid workers at closed factories who did community service.</p>
<p>Some analysts have estimated that accepting all of these conditions <a href="https://www.wsj.com/business/autos/uaw-strike-tesla-labor-costs-baf8b897">would more than double</a> labor costs for the three automakers.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="President Biden, in blue, speaking into a megaphone near several people dressed in red in front of signs saying GM and UAW." src="https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/552182/original/file-20231004-24-hjr1vh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">President Joe Biden addressed striking United Auto Workers members on the picket line outside a GM facility on Sept. 26, 2023, in Van Buren Township, Mich.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Biden/881fa5d8d9fc45b99ec615befe6f9c3f/photo?boardId=37be9465fcce45d283d5431cccb20a6a&st=boards&mediaType=audio,photo,video,graphic&sortBy=&dateRange=Anytime&totalCount=455&currentItemNo=6">AP Photo/Evan Vucci</a></span>
</figcaption>
</figure>
<h2>Signs of success</h2>
<p>I think it’s clear that the union caught the companies flat-footed in response to this unconventional approach and that the Big Three are <a href="https://www.washingtonpost.com/business/2023/10/04/uaw-strike-automaker-offers/">making significant concessions</a> in terms of raising pay for the lowest-paid workers.</p>
<p>At the same time, gaps do remain between the union’s demands and what the companies are offering, especially in terms of across-the-board pay increases.</p>
<p>For example, Ford and Stellantis have not yet agreed to the UAW’s demands regarding equal pay, benefits and job protections for <a href="https://www.axios.com/2023/09/29/uaw-strike-ford-ceo-ev-battery-plants">electric-vehicle manufacturing workers</a>. And there seems to be no progress toward shortening the work week to four days from five – which may have been more of an <a href="https://www.npr.org/2023/09/11/1198394085/uaw-big-3-automakers-4-day-work-week-shawn-fain-detroit">optimistic ask than a hard demand</a>.</p>
<p>But with a little give-and-take, I have little doubt that the parties will resolve these matters. And despite this high-stakes dispute, I believe it’s possible for the automakers to wind up with a win if they can accentuate the common interests that bind labor and management to their shared future success.</p>
<p><em>This is an updated version of an article originally published on Oct. 6, 2023, with details about a new development involving the UAW’s negotations with General Motors.</em></p><img src="https://counter.theconversation.com/content/214679/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>While director of the Douglas A. Fraser Center for Workplace Issues at Wayne State University from 2009 through 2019, the Center received grants from the Detroit Three's joint training centers with the United Auto Workers to pursue education and research on unions and labor-management relations. These grants were operating strictly with the purview of the university. </span></em></p>The companies are making more generous offers, and the union is commanding support from the general public and the president of the United States.Marick Masters, Professor of Business and Adjunct Professor of Political Science, Wayne State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2137252023-09-22T23:09:02Z2023-09-22T23:09:02ZUnion and execs need to shift gears fast once UAW strike is over – transition to EV manufacturing requires their teamwork<figure><img src="https://images.theconversation.com/files/549612/original/file-20230921-22-h1rcv0.jpg?ixlib=rb-1.1.0&rect=183%2C16%2C5369%2C3521&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">UAW members and leaders march in Detroit on Sept. 15, 2023 – the first day of the union's strike.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AutoWorkersStrike/32bf9ce4bc70471a9008efa76adaf5b4/photo?boardId=37be9465fcce45d283d5431cccb20a6a&st=boards&mediaType=audio,photo,video,graphic&sortBy=&dateRange=Anytime&totalCount=441&currentItemNo=9">AP Photo/Paul Sancya</a></span></figcaption></figure><p>The United Auto Workers union is ramping up its <a href="https://theconversation.com/us-autoworkers-launch-historic-strike-3-questions-answered-213518">strike against General Motors and Stellantis</a> – the global company that makes Chrysler, Jeep and Dodge vehicles – and getting closer to a deal with Ford.</p>
<p>About 5,600 UAW members at <a href="https://apnews.com/article/uaw-ford-stellantis-general-motors-strike-labor-4132aa222c9a4456415af480d6fafa98">38 General Motors and Stellantis</a> distribution centers for auto parts in 20 states walked off the job on Sept. 22, 2023, after an announcement by UAW President Shawn Fain.</p>
<p>Workers at the only Ford plant affected by the strike since it <a href="https://apnews.com/article/strike-auto-workers-ford-gm-stellantis-f948704cce3d6dc9ca484142c5d0d98e">began on Sept. 15</a> will remain off the job. The total number of UAW members involved in the strike stands at about 18,300. </p>
<p>Under <a href="https://www.politico.com/news/magazine/2023/09/22/uaw-strike-shawn-fain-00117091">Fain’s leadership</a>, the union is <a href="https://www.cbsnews.com/news/uaw-shawn-fain-leadership-who-is-shawn-fain/">taking an adversarial approach</a>: It’s railing against what it describes as the “poverty wages” UAW members earn while denouncing the automakers’ CEOs as “greedy” and vowing to “<a href="https://www.wane.com/top-stories/with-no-deal-uaw-vows-to-expand-strike-will-fort-wayne-workers-hit-the-picket-line/">wreck their economy</a>.”</p>
<p>As a <a href="https://scholar.google.com/citations?hl=en&user=a1wi_lQAAAAJ&view_op=list_works&sortby=pubdate">scholar of employment relations</a>, I think this strike is too narrowly focused on making up for the wages and benefits autoworkers have lost in recent years. But another big objective is ensuring that autoworkers will have good jobs once <a href="https://www.nytimes.com/2023/09/16/business/electric-vehicles-uaw-gm-ford-stellantis.html">most U.S.-made vehicles are electric-powered</a>. </p>
<p>This dispute alone will not resolve this larger objective. Rather, I believe management and labor will need to swiftly move on following the strike and work together constructively to meet that goal.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1705239662296473785"}"></div></p>
<h2>UAW’s demands</h2>
<p>The union is demanding an end to the <a href="https://www.theguardian.com/us-news/2023/sep/20/this-fight-is-for-everybody-us-autoworkers-strike-to-restore-the-middle-class">concessions it made to the three companies</a> during the financial crisis that began in 2007. Its members employed by Ford, GM and Stellantis have experienced a <a href="https://www.epi.org/blog/uaw-automakers-negotiations/">19% decline in their wages</a>, after accounting for inflation, since 2008. </p>
<p>The union also wants the automakers – sometimes called the Detroit Three – to abolish <a href="https://www.npr.org/2023/09/20/1200357955/uaw-big-3-strike-auto-shawn-fain">the tiered wage system</a>, which pays new employees far less than more experienced workers, even for the same work. The UAW initially said it was seeking a <a href="https://www.nbcnews.com/business/business-news/what-know-uaw-strike-auto-companies-ford-general-motors-rcna103725">wage increase of 40%</a> over four years and the restoration of a <a href="https://uawd.org/cola/">cost-of-living allowance</a> that would link wages to inflation.</p>
<p>In addition to these demands, the UAW wants <a href="https://www.plansponsor.com/is-the-uaws-demand-for-return-of-pensions-a-realistic-ask/">defined-benefit pensions</a> for all workers restored, company-paid health benefits for retirees reestablished and the right to <a href="https://abcnews.go.com/Business/day-workweek-46-raise-uaw-makes-audacious-demands/story?id=102926195">strike over plant closures</a> guaranteed. Other demands include more paid time off and seeing all temporary workers made permanent. It has also called for a <a href="https://www.cnbc.com/2023/09/19/why-uaw-auto-workers-want-a-32-hour-workweek.html">32-hour work week</a> without a pay cut.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Man in a blue jacket and white t-shirt surrounded by journalists holding microphones and recording devices" src="https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/549615/original/file-20230921-26-bke2ex.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ford CEO Jim Farley speaks to reporters about the UAW contract talks on Sept. 13, 2023.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AutoWorkersCEOPay/1fbaeedd4edf4812aab98b67db0617ec/photo?boardId=37be9465fcce45d283d5431cccb20a6a&st=boards&mediaType=audio,photo,video,graphic&sortBy=&dateRange=Anytime&totalCount=441&currentItemNo=4">AP Photo/Paul Sancya</a></span>
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</figure>
<h2>Precedents for working together</h2>
<p>Although the strike has emphasized the goal of boosting future autoworker pay and benefits, I believe that workers and management can look to the past for ideas that might help them move forward. </p>
<p>GM’s Saturn partnership offers one potential model. </p>
<p>The company’s approach to its <a href="https://www.motortrend.com/features/saturn-cars-history-general-motors-feature/">Saturn brand of compact vehicles</a>, launched in 1985, was unique in many respects. Its governance structure was characterized by shared decision-making at different levels throughout the plant. The local union was a <a href="https://www.cornellpress.cornell.edu/book/9780801438738/learning-from-saturn/">full partner in virtually all business decisions</a>. </p>
<p>GM invested billions of dollars in this venture, through which it tried to compete with Japanese imports and transplants that were quickly eroding GM’s market share. Saturns were designed differently than other U.S. vehicles, but what made those vehicles special was <a href="https://apps.dtic.mil/sti/tr/pdf/ADA276889.pdf">the extent to which labor</a> <a href="https://ecommons.cornell.edu/server/api/core/bitstreams/2bc7da28-acc6-4a3d-af21-1c583b784136/content">shared the responsibility</a> for running Saturn’s main factory. </p>
<p>The Saturn partnership was hard to maintain, especially following the <a href="http://www.saturnfans.com/Company/2007/rogersmithdies.shtml">departure of Roger B. Smith</a>, the General Motors CEO who had pushed hard for it. The company <a href="https://www.wsj.com/articles/SB123500373416017943">stopped making Saturns in 2009</a>, but the former subsidiary’s overall approach of involving workers in decisions about their jobs and the manufacturing process remains as critical today as it was in its heyday.</p>
<p>I would encourage the auto industry to again invoke the spirit of the Saturn venture, which emphasized the collaboration and partnership of labor and management in the production of high-quality, world-class vehicles. Only this time, the vehicles will be EVs.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A sporty silver two-door sedan" src="https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=356&fit=crop&dpr=1 600w, https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=356&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=356&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=447&fit=crop&dpr=1 754w, https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=447&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/549828/original/file-20230922-27-tgj5gs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=447&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Two Saturn salesmen look at a Saturn Sky Roadster in San Jose, Calif., weeks before all Saturn dealerships closed in 2009.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Saturn/e85314d7d19d40ab9bf4f45683fd5c50/photo?Query=saturn%20sky&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=8&currentItemNo=0">AP Photo/Paul Sakuma</a></span>
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<p>GM offers another model for positive union-management relations.</p>
<p>About 20 years ago, its Lansing-Grand River assembly plant in Michigan began to engage in a similar example of what I call <a href="https://doi.org/10.1177/001979390906300104">joint responsibility unionism</a>. Management and the local UAW union established a contractual commitment to work together to continually improve production by systematically solving problems and increasing productivity.</p>
<p>Management and the local UAW union established a contractual commitment to work together to continually improve production by systematically solving problems and increasing productivity.</p>
<p>The local union and management hold each other accountable for keeping costs down and quality high. The plant, which assembles <a href="https://www.gm.com/company/facilities/lansing-grand-river">Cadillacs and Chevy Camaros</a>, continues this approach successfully today.</p>
<h2>Shift the focus to the future</h2>
<p>The UAW is pointing to the billions of dollars in <a href="https://www.wsws.org/en/articles/2023/07/26/swec-j26.html">profits auto companies are currently getting</a> when it demands a bigger piece of the pie. The companies counter that rapidly increasing EV production is costly.</p>
<p>GM, Ford and Stellantis already plan to invest more than <a href="https://www.atlasevhub.com/data_story/210-billion-of-announced-investments-in-electric-vehicle-manufacturing-headed-for-the-u-s/">US$100 billion in electric vehicle manufacturing</a>. As production shifts away from vehicles with internal combustion engines that burn gasoline or diesel fuel, the number of autoworkers needed to build them will decline. <a href="https://energyright.com/ev-draft/how-do-an-evs-components-compare">EVs have fewer parts</a>.</p>
<p>Ford and Volkswagen, for example, have estimated that they’ll eventually need <a href="https://www.businessinsider.com/ev-electric-car-auto-industry-jobs-layoffs-employment-ford-2022-8">30% less labor due to the EV transition</a>.</p>
<p><a href="https://electrek.co/2023/06/23/car-wars-ford-gm-stellantis-gain-most-us-ev-market-share/">Undergoing this transformation</a> with labor and management at loggerheads can’t possibly benefit the UAW or the auto companies. </p>
<p>Instead, they’ll need to focus on finding solutions together that <a href="https://www.businessinsider.com/ev-electric-car-auto-industry-jobs-layoffs-employment-ford-2022-8">increase productivity</a>, build a skilled workforce and efficiently convert plants that make conventional vehicles today to EV factories tomorrow. In so doing, the UAW is more likely to meet its goal of seeing those EV factories employ its members.</p><img src="https://counter.theconversation.com/content/213725/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Berg receives funding from Sloan Foundation.</span></em></p>Building an auto industry for the future that serves the needs of workers, companies and consumers alike will require innovative partnerships between the union and management.Peter Berg, Professor of Employment Relations; Director of Human Resources and Labor Relations, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2135182023-09-15T12:37:05Z2023-09-15T12:37:05ZUS autoworkers launch historic strike: 3 questions answered<figure><img src="https://images.theconversation.com/files/548348/original/file-20230914-1089-crn4qo.jpg?ixlib=rb-1.1.0&rect=0%2C4%2C2991%2C2065&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">United Auto Workers members rally after marching in the Detroit Labor Day Parade on Sept. 4, 2023. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/united-auto-workers-members-and-others-gather-for-a-rally-news-photo/1645162801">Bill Pugliano via Getty Images</a></span></figcaption></figure><p><em>The United Auto Workers union, or UAW, <a href="https://theconversation.com/us-autoworkers-may-wage-a-historic-strike-against-detroits-3-biggest-automakers-with-wages-at-ev-battery-plants-a-key-roadblock-to-agreement-210037">has told workers at three factories to go on strike</a> after failing to agree on new contracts with each of Detroit’s major automakers. The contracts expired at 11:59 p.m. on Sept. 14, 2023. By midnight, the union <a href="https://uaw.org/stand-strike-begins-big-three/">posted a strike declaration on its website</a>.</em> </p>
<p><em>The strike will force General Motors, Ford and Stellantis – the global company that builds Chrysler, Jeep, Ram and Dodge vehicles in North America – to halt some of their operations. “Tonight for the first time in our history we will strike all three of the Big Three at once,” <a href="https://www.facebook.com/uaw.union/videos/1047762633322736">UAW President Shawn Fain</a> announced about two hours before the negotiation deadline passed without a contract. The union is seeking higher pay, better benefits and assurances that large numbers of its members will work in the automakers’ <a href="https://www.washingtonpost.com/business/2023/09/14/uaw-strike-demands-negotiations/">growing number of electric-vehicle factories</a>.</em></p>
<p><em>The Conversation U.S. asked <a href="https://scholar.google.com/citations?user=0KmQgfIAAAAJ&hl=en&oi=ao">Joshua Murray</a>, a sociologist who studies the automotive industry and its workers, to discuss the UAW’s strategy and explain why this strike is significant.</em></p>
<h2>1. How important is it that this strike is affecting all three Detroit automakers?</h2>
<p>Until now, the UAW had always gone on strike against one of the companies at a time. And in recent years, all workers employed by that automaker had walked off the job. That’s what happened in the previous UAW strike. In 2019, <a href="https://www.theguardian.com/business/2019/oct/25/uaw-united-auto-workers-general-motors-strike-deal">48,000 General Motors autoworkers refused to work</a> for 40 days. The UAW used this same tactic in <a href="https://www.nytimes.com/2019/09/26/automobiles/auto-strikes-history.html">strikes against GM in 2007 and 1970</a>.</p>
<p>While holding a strike against a few key plants breaks with recent UAW practices, it’s a strategy deeply rooted in the union’s history. <a href="https://twitter.com/UAW/status/1702083943174897746">UAW President Shawn Fain has invoked</a> the 1936-37 action known as the <a href="https://press.umich.edu/Books/S/Sit-Down2">Great Flint Sit-Down Strike</a>, when workers targeted what they referred to as General Motors’ “<a href="https://www.press.uillinois.edu/books/?id=p011993">mother plants</a>.”</p>
<p>Workers took over the plants by sitting down at their work stations at the end of the day and refusing to leave. By the time the strike was over, GM had agreed to sign a contract for the first time with the UAW. The union gained hundreds of thousands of new members, and <a href="https://guides.loc.gov/this-month-in-business-history/february/flint-michigan-sit-down-strike">autoworker pay grew sharply</a> in the months that followed.</p>
<p>The <a href="https://doi.org/10.1086/682956">Flint strike demonstrated</a> that strategically targeting a few factories can maximize the pressure put on companies, while minimizing both the number of workers affected and length of time affected workers must remain idle.</p>
<p>The UAW’s use of a similar approach now will reduce the risk of the union exhausting its <a href="https://theconversation.com/what-are-strike-funds-a-labor-management-relations-expert-explains-213212">US$825 million strike fund</a>, from which it must pay $500 per week to every UAW member who walks off the job.</p>
<p>Fain is calling the new approach a “<a href="https://uaw.org/standup/">stand-up strike</a>.” </p>
<p>“This strategy will keep the companies guessing,” <a href="https://www.facebook.com/uaw.union/videos/1047762633322736">he said in livestreamed remarks</a> shortly before the strike officially began. “It will give our national negotiators maximum leverage and flexibility in bargaining.”</p>
<p>Although the strike is starting at just a few plants, the union may halt all production later on. “If we need to go all out, we will,” <a href="https://www.kshb.com/news/local-news/live-amid-looming-strike-uaw-president-shawn-fain-provides-updates-on-negotiations-with-detroit-3">Fain said</a>. “Everything is on the table.”</p>
<p>About 13,000 UAW workers at three sites – a GM assembly plant in Wentzville, Missouri; a Stellantis assembly plant in Toledo, Ohio, and <a href="https://apnews.com/article/auto-workers-targeted-strikes-general-motors-stellantis-ford-a0b4b8b66e2001230fda0f2114ef78a0">a Ford plant in Wayne, Michigan</a> – are the first to participate in this strike.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="In a black-and-white photo, several striking autoworkers read newspapers, sitting on car seats placed on the ground like sofas. They ignore the unfinished chassis behind them." src="https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=445&fit=crop&dpr=1 600w, https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=445&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=445&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=560&fit=crop&dpr=1 754w, https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=560&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/548549/original/file-20230915-17-5v4z7k.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=560&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Sit-down strikers lounge at a General Motors plant in Flint, Michigan, in 1937.</span>
<span class="attribution"><span class="source">Dick Shelton/U.S. Farm Security Administration via Library of Congress</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>2. How would you define success or failure for the UAW’s new strategy?</h2>
<p>To understand why the union chose this strategy over a full-out work stoppage, it’s important to understand the nature of strikes and what makes them successful.</p>
<p>In the book “<a href="https://www.russellsage.org/publications/wrecked">Wrecked: How the American Automobile Industry Destroyed Its Capacity to Compete</a>,” sociologist Michael Schwartz and I analyzed the history of labor relations and production systems in the U.S. and Japanese auto industries to better understand the decline of Detroit’s Big Three automakers. In the process, we learned what determined the level of success of previous auto strikes. </p>
<p>A strike is essentially a <a href="https://economics.fandom.com/wiki/Chicken_game">game of chicken</a> between workers and management. Workers threaten the company’s viability by withholding their labor, going without paychecks to halt production. Companies protect themselves from strikes by stockpiling inventory so they can keep sales going. Workers protect themselves via their strike funds. </p>
<p>Generally, <a href="https://theconversation.com/united-auto-workers-strike-if-it-happens-should-channel-the-legacy-of-walter-reuther-who-led-the-union-at-the-peak-of-its-power-212324">strikes succeed</a> when they hurt a company’s bottom line so much that executives decide it makes financial sense to give in to the workers’ demands.</p>
<p>Strikes fail when workers can’t create enough disruption to pressure the company to give in before strike funds run out. They also fail when workers give in before securing a contract in line with their demands, <a href="https://www.jstor.org/stable/j.ctv6mtdg6.15">potentially ending up worse off</a> than if they had never walked off the job.</p>
<p><a href="https://www.npr.org/2023/04/04/1167902956/united-auto-workers-president-shawn-fain">Fain, who was elected UAW president in March 2023</a>, and the rest of his new leadership team seem to recognize the importance of surprising management and picking strategic targets in a way that many of the union’s <a href="https://theconversation.com/why-the-united-auto-workers-gm-strike-is-headed-for-failure-123945">previous leaders did not</a>. I believe that the UAW is likely to ultimately have more success with this strike than it has had in decades.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1702539628002119861"}"></div></p>
<h2>3. Is this strike likely to be historically significant?</h2>
<p>No doubt about it. No <a href="https://www.cnn.com/2023/09/14/business/deadline-uaw-strike-negotiations/index.html">Ford workers had gone on strike in the U.S. since 1978</a>. Chrysler workers, who are now employed by Stellantis, <a href="https://money.cnn.com/2007/10/10/news/companies/uaw_chrysler_deal/">last went on strike in 2007</a>. And U.S. autoworkers are targeting GM, Ford and Stellantis simultaneously for the first time in the union’s <a href="https://uaw.org/members/uaw-through-the-decades/">88-year history</a>.</p>
<p>But it’s not yet clear how historically significant it will be. </p>
<p>If the UAW’s “stand-up” strike strategy succeeds, I think it’s likely that other labor organizers will embrace it too – potentially improving the leverage other workers have in their contract negotiations and strikes.</p><img src="https://counter.theconversation.com/content/213518/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joshua Murray has received funding from the Russell Sage Foundation. </span></em></p>A work stoppage hitting the three largest American automakers at the same time is unprecedented.Joshua Murray, Assistant Professor of Sociology, Vanderbilt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2123242023-08-31T13:56:29Z2023-08-31T13:56:29ZUnited Auto Workers strike – if it happens – should channel the legacy of Walter Reuther, who led the union at the peak of its power<figure><img src="https://images.theconversation.com/files/545293/original/file-20230829-27-rgt0fi.jpg?ixlib=rb-1.1.0&rect=905%2C555%2C3260%2C2298&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">UAW President Walter Reuther, center, shakes hands with a Ford executive after agreeing on a three-year contract in 1967.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/after-announcement-that-agreement-had-been-reached-by-the-news-photo/517772622?adppopup=true">Bettmann via Getty Images</a></span></figcaption></figure><p>The United Auto Workers are engaged in high-stakes labor negotiations that could lead to the union’s first simultaneous strike against all of Detroit’s Big Three automakers: <a href="https://www.axios.com/2023/08/21/electric-vehicle-jobs-uaw-strike-biden">General Motors, Ford and Stellantis</a>, the company that owns Chrysler.</p>
<p>After <a href="https://www.washingtonpost.com/business/2023/08/25/uaw-strike-authorization-vote/">decades of making concessions</a> to their employers, the union’s <a href="https://www.freep.com/story/money/cars/chrysler/2023/08/12/uaw-negotiations-stellantis-leader-pushes-back/70581896007/">demands for pay increases</a> and better benefits exceed what some <a href="https://gmauthority.com/blog/2023/08/potential-uaw-strike-would-cost-billions-analysis-shows/">automotive industry executives say are reasonable</a>. Unless the two sides reach an agreement by midnight on Sept. 14, 2023, <a href="https://uaw.org/97-uaws-big-three-members-vote-yes-authorize-strike/">97% of the 150,000 UAW members</a> employed by the three companies have authorized their leaders to call a strike.</p>
<p>It would be the industry’s first walkout since a <a href="https://www.apnews.com/83b9a7d6f2b04d0da468c97ccf39b095">monthlong GM strike in 2019</a>. <a href="https://www.theguardian.com/business/2023/aug/21/uaw-big-three-automakers-union-contract-negotiations">UAW President Shawn Fain</a>, elected in March 2023, and other new UAW leaders have a decidedly more militant approach than their recent predecessors – some of whom <a href="https://www.justice.gov/usao-edmi/pr/former-uaw-official-sentenced-57-months-prison-embezzling-over-2-million-union-funds">landed in prison</a> after being <a href="https://www.justice.gov/usao-edmi/pr/former-international-uaw-president-gary-jones-sentenced-prison-embezzling-union-funds">convicted of embezzling</a> union funds.</p>
<p>As a labor and business scholar who has studied the <a href="https://scholar.google.com/scholar?hl=en&as_sdt=0%2C23&q=marick+masters&btnG">history of UAW collective bargaining with the Detroit Three</a>, I believe that whether or not the union does hold a strike against one or more of the automakers in the near future, it would benefit from heeding some lessons from its own past. In particular, it should consider the legacy of <a href="https://www.press.uillinois.edu/books/?id=p066269">Walter Reuther</a>, the labor leader who served as the UAW’s president from 1946 until his death in 1970. By balancing his vision and aspirations with pragmatism, Reuther showed that bold labor leaders can score big wins.</p>
<h2>Miscalculations can be costly for workers</h2>
<p>Although strikes can lead to victories, <a href="https://doi.org/10.1093/acrefore/9780199329175.013.867">workers can end up worse off</a> than they would have been had they not walked off the job. People who go on strike can even end up unemployed. That means unions must carefully calculate whether the risk of going on strike is worth taking.</p>
<p><a href="https://jacobin.com/2021/08/reagan-patco-1981-strike-legacy-air-traffic-controllers-union-public-sector-strikebreaking">Strikes that fail to meet their objectives</a>, often due to miscalculations by unions of their power to win concessions from employers, litter U.S. labor history. </p>
<p>These <a href="https://doi.org/10.1353/sof.2006.0140">failures were particularly common in the 1980s and 1990s</a>, as companies and other employers demanded concessions and replaced workers during and after strikes.</p>
<p>That trend began with the ill-fated strike by 11,500 air traffic controllers in August 1981. Soon after <a href="https://www.washingtonpost.com/national/robert-poli-who-led-air-traffic-controllers-union-in-1981-strike-dies-at-78/2014/09/23/8ccd0e44-4267-11e4-b47c-f5889e061e5f_story.html">Robert E. Poli assumed its presidency</a>, the Professional Air Traffic Controllers went on strike. The union, known as PATCO, underestimated President Ronald Reagan’s resolve and <a href="https://inthesetimes.com/article/the-patco-strike-reagan-and-the-roots-of-labors-decline">overestimated its members own irreplaceability</a>.</p>
<p>Reagan’s swift termination of the striking workers and his success in replacing them with new employees destroyed PATCO and normalized the replacement of strikers by employers.</p>
<p>More strikes would lead to similar failures, including one by <a href="https://doi.org/10.2307/j.ctv6mtdg6.15">Hormel meatpackers in Austin, Minnesota</a>, which lasted 13 months starting in August 1985. A <a href="https://www.worldcat.org/title/1100889856">15-month walkout by International Paper workers</a> at several plants in 1987 and 1988 was also disastrous for the strikers.</p>
<p>In both cases, the local union leaders launched prolonged strikes over corporate demands for wage cuts and other givebacks to compete with their lower-cost nonunion rivals. The unions underestimated management’s resolve and proved incapable of conducting effective publicity campaigns or <a href="https://doi.org/10.2307/j.ctv6mtdg6.15">applying other kinds of pressure to combat the companies</a>. </p>
<p>The companies fired strikers, <a href="https://www.washingtonpost.com/archive/opinions/1986/02/16/the-hormel-strike-was-doomed/eaf87a1c-b393-44d7-aedd-6316cd8078e9/">replacing them permanently</a> with other workers.</p>
<h2>Lessons from Walter Reuther</h2>
<p>A UAW strike today could also miss the mark, given that Detroit’s Big Three face <a href="https://www.carpro.com/blog/full-year-2021-sales-report-with-most-brands-reporting">relentless competition from foreign automakers</a>, along with <a href="https://evadoption.com/ev-sales/evs-percent-of-vehicle-sales-by-brand/">Tesla and newer U.S.-based companies that only manufacture electric vehicles</a>. What’s more, <a href="https://www.cnbc.com/2022/11/13/ford-vs-gm-same-industry-two-increasingly-different-companies.html">GM, Ford</a> and <a href="https://www.stellantis.com/en/news/press-releases/2023/february/stellantis-announces-155-million-investment-in-three-indiana-plants-to-support-north-american-electrification-goals">Stellantis are spending billions</a> to phase in large-scale EV production.</p>
<p>Here are three lessons that I believe Fain and other UAW leaders should draw from Reuther’s legacy:</p>
<p><strong>1: Articulate a clear vision</strong></p>
<p>In 1945, a year before he became the UAW’s longest-serving president, Reuther led <a href="https://www.apnews.com/83b9a7d6f2b04d0da468c97ccf39b095">320,000 GM workers on a 113-day strike</a> that ended with pay raises, overtime compensation and paid vacation days. The way he spelled out the <a href="https://www.worldcat.org/title/26295254">philosophy behind the strike</a> helped inspire the workers’ confidence.</p>
<p>After <a href="https://jamesteneyck.com/walter-reuther/">autoworkers had done their part to win World War II</a>, Reuther later said, they struck for “the right of a worker to share – not as a matter of collective bargaining muscle, but as a matter of right – to share in the fruits of advancing technology.” </p>
<p>Like <a href="https://uaw.org/walter-reuther-quote-collection/">many of Reuther’s poignant comments</a>, those words still resonate today as technology upends the automotive industry.</p>
<p><strong>2: Recognize the limits of what’s within reach</strong></p>
<p>In 1950, following a <a href="https://origins.osu.edu/connecting-history/strikes-lordstown-haymarket-pullman-shirtwaist-uaw-ufw-afl?language_content_entity=en">102-day strike by 95,000 Chrysler workers</a>, Reuther negotiated breakthrough agreements with GM, Ford and Chrysler known collectively as the “<a href="https://jacobin.com/2016/06/uaw-academic-workers-colleges-union-walter-reuther-treaty-detroit/">Treaty of Detroit</a>.” The pacts included big increases in wages, health care benefits and retirement pensions. </p>
<p>But pragmatism tempered Reuther’s determination to achieve all the union’s objectives. He knew when to strike and when to settle. Reuther understood the union’s capacity to hold a strike and how much harm it could inflict upon a company before the costs became prohibitive for both sides.</p>
<p>He used strikes strategically, knew which company to target – and when. Reuther knew to settle when the union’s ability to push a company for further concessions had reached a ceiling beyond which the losses on both sides exceed any possible future gains.</p>
<p>And he realized that worker priorities that could not be won in a current round of bargaining could be pushed to the next. Reuther understood that autoworkers and their employers depended on each other to make progress. </p>
<p><strong>3: Balance competing interests</strong></p>
<p>Reuther also understood the limits of the UAW’s power, and he knew how to bargain for a contract that both autoworkers and automotive executives could accept.</p>
<p>In a speech he made on Labor Day in 1958, <a href="http://reuther100.wayne.edu/pdf/Labor_Day_Address.pdf">Reuther defined
labor’s task</a> as “to cooperate in creating and sharing abundance … [which] requires working out a proper balance between competing equities of workers, stockholders and consumers.”</p>
<h2>New reality</h2>
<p>Reuther’s reign coincided with Detroit’s dominance. <a href="https://www.aei.org/carpe-diem/animated-chart-of-the-day-market-shares-of-us-auto-sales-1961-to-2016/">At least 85% of the vehicles U.S. drivers bought</a> through the mid-1960s were made by the Big Three automakers.</p>
<p>Those companies’ total U.S. market share is less than half of that now – a total of about 41%, with <a href="https://investor.gm.com/news-releases/news-release-details/gm-continued-gain-us-market-share-and-extended-its-truck">16% for GM</a>, <a href="https://www.cascade.app/studies/ford-strategy-study">14% for Ford</a> and <a href="https://www.stellantis.com/content/dam/stellantis-corporate/investors/events-and-presentations/presentations/Stellantis_FY_22_Results_Presentation.pdf">11% for Stellantis</a>. </p>
<p>Autoworkers also wield less power today than they did back then.</p>
<p>UAW membership has dwindled to fewer than 400,000 members, including the 150,0000 people directly employed by GM, Ford and Stellantis who may soon go on strike. Some <a href="https://www.nbcnews.com/business/autos/united-auto-workers-union-raises-dues-first-time-47-years-n121586">1.5 million workers belonged to the union</a> at its 1979 peak. Unions represent <a href="https://auto.economictimes.indiatimes.com/news/industry/united-auto-workers-union-membership-rose-3-in-2022-to-383000/">only 16% of the workers employed in the U.S. motor vehicle and parts industry</a> in 2022, down from nearly 60% in 1983.</p>
<p>GM, Ford and Stellantis have <a href="https://www.freep.com/story/money/cars/ford/2023/08/17/ford-salaried-workers-parts-warehouses-depot-uaw-strike-jobs/70601006007/">vowed to resist any demands they deem unreasonable</a>. Both labor and management could incur potentially substantial losses in a strike, which would compound over time. Even a 10-day strike could cause an estimated <a href="https://www.andersoneconomicgroup.com/10-day-uaw-strike-against-big-three-could-cause-economic-losses-exceeding-5-billion/">US$5 billion in economic damage</a> or more, according to the Anderson Economic Group consulting firm.</p>
<p>I believe that the path to a settlement requires understanding how an avoidable strike would put both sides behind, while their competitors move forward.</p>
<p>And I keep on wondering what Walter Reuther would do – and whether Shawn Fain is doing that too.</p><img src="https://counter.theconversation.com/content/212324/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marick Masters is the director of Labor@Wayne at Wayne State University. The university has received contributions from the joint training funds from the UAW and the Big Three to support education in labor-management relations. These contributions were used strictly for this purpose.</span></em></p>Reuther was both ambitious and pragmatic, scoring many victories for autoworkers.Marick Masters, Professor of Business and Adjunct Professor of Political Science, Wayne State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2100372023-08-07T12:41:03Z2023-08-07T12:41:03ZUS autoworkers may wage a historic strike against Detroit’s 3 biggest automakers − with wages at EV battery plants a key roadblock to agreement<figure><img src="https://images.theconversation.com/files/538558/original/file-20230720-19-obsn7t.jpg?ixlib=rb-1.1.0&rect=26%2C139%2C2236%2C1850&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">UAW President Shawn Fain speaks with General Motors workers on July 12, 2023, in Detroit.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/united-auto-workers-president-shawn-fain-speaks-with-and-news-photo/1528218013?adppopup=true">Bill Pugliano/Getty Images</a></span></figcaption></figure><p>The United Auto Workers union, which represents nearly <a href="https://www.cnn.com/2023/07/24/business/stellantis-samsung-battery-plant-uaw/index.html">150,000 employees of companies that manufacture U.S.-made vehicles</a>, has been engaged since July 2023 in the labor negotiations it undergoes every four years with the three main unionized automakers.</p>
<p>By late August, it still wasn’t clear that the UAW would agree to a new contract with <a href="https://www.investopedia.com/terms/b/bigthree.asp">Ford, General Motors and Stellantis</a> – the automaker that manufactures Chrysler and 13 other vehicle brands – <a href="https://www.reuters.com/business/autos-transportation/uaw-will-open-contract-talks-with-detroit-three-automakers-2023-07-10/">by their impending deadline</a>. The <a href="https://apnews.com/article/auto-workers-union-wage-increase-jobs-bank-b8370b11bd692191d9ee3080001ef358">contracts expire at 11:59 p.m. Sept. 14</a>.</p>
<p>The union’s leaders skipped the <a href="https://www.usatoday.com/story/money/cars/2023/07/13/uaw-detroit-three-handshake-tradition-shawn-fain/70407842007/">traditional handshake ceremonies</a> it usually holds with these automakers, which are often called the Big Three or Detroit Three. The union instead held grassroots photo-ops: UAW leaders greeted rank-and-file members at one Ford, one GM and one Stellantis factory. On Aug. 25, the UAW announced that <a href="https://uaw.org/97-uaws-big-three-members-vote-yes-authorize-strike/">97% of its members had authorized a strike</a> “if the Big Three refuse to reach a fair deal.” It’s a major milestone.</p>
<p>I’m a labor scholar who has studied the <a href="https://scholar.google.com/scholar?hl=en&as_sdt=0%2C23&q=marick+masters&btnG">history of UAW collective bargaining with the Detroit Three</a>. Given that the UAW is <a href="https://uaw.org/president-fain-facebook-live-big-threes-record-profits-mean-record-contracts">making major demands</a> at a time of <a href="https://www.washingtonpost.com/business/2023/08/03/strikes-2023-summer-unions/">rising union assertiveness and ambition</a>, I believe it’s reasonable to wonder whether U.S. automakers will be the next industry to face a strike.</p>
<p>In 2023, there have been <a href="https://www.nbcnews.com/pop-culture/pop-culture-news/emmys-postponed-due-writer-actor-strikes-rcna96803">strikes by screenwriters, actors</a>, <a href="https://www.beckershospitalreview.com/hr/us-healthcare-workers-walk-off-the-job-7-strikes-in-2023.html">health care workers</a> and <a href="https://apnews.com/article/taylor-swift-los-angeles-hotel-strike-ff26bbef8cbf37c82469a446ff29f919">hotel staff</a>, as well as vigorous organizing by workers for <a href="https://labornotes.org/2023/07/reform-caucus-rises-sues-elections-amazon-labor-union">warehouse and delivery services</a> at <a href="https://labornotes.org/2023/07/amazon-teamsters-rolling-pickets-hit-facilities-nationwide">Amazon</a>, <a href="https://theconversation.com/ups-and-teamsters-agree-on-new-contract-averting-costly-strike-that-could-have-delayed-deliveries-for-consumers-and-retailers-210431">UPS</a> and <a href="https://www.cnn.com/2023/07/24/business/fedex-pilots-union-vote/index.html">FedEx</a>.</p>
<h2>Strike could stall Detroit GM, Ford and Stellantis</h2>
<p>All three automakers with expiring contracts have amassed nearly <a href="https://uaw.org/new-uaw-video-highlights-big-3s-massive-profits-makes-clear-can-easily-afford-unions-contract-demands/">US$250 billion in reported profits</a> in their North American operations over the past decade.</p>
<p>And <a href="https://uaw.org/new-uaw-video-highlights-big-3s-massive-profits-makes-clear-can-easily-afford-unions-contract-demands/">UAW leaders have pledged</a> to garner what they see as their members’ fair share of those profits through higher wages and stronger job security.</p>
<p>The UAW’s newly elected president, Shawn Fain, frequently denounces corporate greed and has proclaimed the union’s willingness to go on strike. In the past, the union has <a href="https://www.nytimes.com/2019/09/26/automobiles/auto-strikes-history.html">held strikes against one automaker at a time</a>, most recently in <a href="https://www.vox.com/identities/2019/10/25/20930350/gm-workers-vote-end-strike">2019 against GM</a>. </p>
<p>That could change this time.</p>
<p>“The <a href="https://www.reuters.com/business/autos-transportation/uaw-president-says-union-prepared-strike-detroit-three-2023-07-11/">Big Three is our strike target</a>,” Fain has said. “And whether or not there’s a strike, it’s up to Ford, General Motors and Stellantis.” </p>
<p>The UAW has said it has <a href="https://www.detroitnews.com/story/business/autos/2023/06/21/bank-of-america-analysts-expect-uaw-strike-during-auto-talks-this-year/70343417007/">more than $825 million</a> in its strike fund to <a href="https://uaw.org/strike-faq-2/">help workers make do</a> without pay should they walk off the job. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Man carries a 'UAW on strike' picket sign, enveloped in an American flag." src="https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540915/original/file-20230802-15-h9ccgy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Autoworker Ray Dota picketed outside the shuttered General Motors plant in Lordstown, Ohio, on Sept. 23, 2019, during the most recent UAW strike.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/ray-dota-of-austintown-oh-pickets-outside-the-shuttered-news-photo/1178903811?adppopup=true">Craig F. Walker/The Boston Globe via Getty Images</a></span>
</figcaption>
</figure>
<h2>Fain’s leadership</h2>
<p>Fain has declared that the union will no longer maintain the somewhat cozy relationship with the Big Three that <a href="https://uaw.org/president-fain-facebook-live-big-threes-record-profits-mean-record-contracts">led to major concessions</a> in the past.</p>
<p>Many of the <a href="https://www.npr.org/2023/04/04/1167902956/united-auto-workers-president-shawn-fain">union’s other new leaders also</a> are affiliated with the UAW’s <a href="https://uawd.org/about/">Unite All Workers for Democracy</a> caucus, which launched a successful campaign to require the direct election of the union’s top officials in 2022, with runoff elections held in 2023. They want to prevent a recurrence of a massive scandal that resulted in the <a href="https://www.justice.gov/usao-edmi/pr/former-uaw-official-sentenced-57-months-prison-embezzling-over-2-million-union-funds">federal prosecution</a> of more than a dozen <a href="https://www.justice.gov/usao-edmi/pr/former-international-uaw-president-gary-jones-sentenced-prison-embezzling-union-funds">UAW leaders from 2017 to 2022</a>.</p>
<p>Two former UAW international presidents were sentenced to time in prison after being convicted of embezzling union funds. The new slate of leaders <a href="https://www.npr.org/2023/04/04/1167902956/united-auto-workers-president-shawn-fain">assumed control of the UAW under court supervision</a> in March 2023.</p>
<h2>Seeking equal pay for EV workers</h2>
<p>As part of their bolder strategy, the <a href="https://www.autonews.com/automakers-suppliers/gm-samsung-sdi-build-3b-ev-battery-plant-us">UAW’s new leaders have criticized the joint ventures</a> between the three automakers and foreign-based electric battery producers.</p>
<p>They want to see Ford, GM and Stellantis paying UAW-level wages and benefits at all joint-venture operated plants in the U.S. making batteries for their EVs. Today, workers at the joint-venture factories earn far less than their <a href="https://electrek.co/2023/06/23/car-wars-ford-gm-stellantis-gain-most-us-ev-market-share/">counterparts who produce vehicles that run on fossil fuels</a>.</p>
<p>The <a href="https://electrek.co/2022/12/09/gms-ultium-battery-plant-votes-overwhelmingly-to-unionize-with-uaw/">UAW has succeeded in organizing one of these joint ventures</a>, Ultium Cells in Lordstown, Ohio. But pay for workers at the former General Motors plant, which is now a joint EV battery venture between GM and LG Energy, <a href="https://www.reuters.com/business/autos-transportation/auto-union-harshly-criticizes-us-ford-joint-venture-battery-loan-2023-06-23/">starts at just $16.50 per hour</a>. In 2019, the year that GM ended car assembly at that factory, workers <a href="https://www.cnbc.com/2023/04/28/auto-workers-union-and-sanders-blast-gm-for-wages-at-us-battery-plant.html">earned $32 per hour</a>. </p>
<p>The UAW has several other objectives, which <a href="https://uaw.org/president-fain-facebook-live-big-threes-record-profits-mean-record-contracts">Fain first announced in a Facebook live meeting</a> on Aug. 1, 2023.</p>
<p>They include greater job security <a href="https://www.reuters.com/business/autos-transportation/uaw-seeks-double-digit-pay-hikes-detroit-three-contract-talks-2023-08-01/">and steep wage increases</a> for UAW-represented workers covered by the union’s contracts with GM, Ford and Stellantis.</p>
<p>Among other things, it also seeks to end the two-tier wage system negotiated in 2007, under which new hires make much less than veteran workers, and the restoration of cost-of-living allowances, which the UAW also conceded in 2007 to help the companies stay afloat during the Great Recession.</p>
<p><a href="https://www.abc12.com/news/business/uaw-president-lays-out-list-of-demands-for-big-three-automakers/article_3e76b288-3130-11ee-861e-2365c42aa592.html">Other UAW goals include</a> resuming company-paid retiree health care benefits, adding more paid time off and limiting the use of temporary employees. Fain also says he wants <a href="https://www.youtube.com/watch?v=K_4x-seTCvc&ab_channel=CBSNews">workweeks scaled down to 32 hours, from its current 40</a>.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1686494700331728906"}"></div></p>
<h2>Smaller ranks</h2>
<p>Union membership in the auto manufacturing industry has <a href="https://www.unionstats.com">shrunk from nearly 60% in 1983 to under 16% in 2022</a>. Nonunion competitors with U.S. locations include foreign companies such as Toyota, Honda, BMW and Volkswagen, as well as domestic-based EV rivals Tesla and Rivian.</p>
<p>In 1970, GM employed more than 400,000 workers. In 2001, the Big Three combined employed 408,000. Today, a total of only 146,000 people work for those companies – <a href="https://abcnews.go.com/US/wireStory/uaw-show-list-economic-demands-automakers-week-seek-101925455">57,000 at Ford, 46,000 at GM and 43,OOO at Stellantis</a>. </p>
<p>The Big Three’s share of the U.S. automotive market has <a href="https://www.autonews.com/article/20090601/OEM/306019739/detroit-3-domestic-brands-u-s-market-share-history">declined to about 40% from more than 90%</a> in <a href="https://datacenter.autonews.com/data-center/market-reports">the mid-1960s</a>.</p>
<p>But the UAW’s negotiations also directly affect the economic livelihood of the millions who work for the Big Three’s suppliers and in communities dependent on the <a href="https://www.autosinnovate.org/posts/press-release/new-data-on-economic-impact">$1 trillion the auto industry contributes to the U.S. economy</a>.</p>
<p>In addition, many union and nonunion employers monitor the wages and benefits of UAW-represented workforces as they set compensation for their own employees. When union members get raises and better benefits, many employers of nonunion autoworkers mirror those changes – <a href="https://www.epi.org/publication/unions-and-well-being/">raising pay too</a>. </p>
<p>The shift to electric vehicles poses several related challenges to the UAW.</p>
<p>First, it requires less labor than producing vehicles that burn fossil fuels, which means <a href="https://spectrum.ieee.org/the-ev-transition-explained-2658797703">EV manufacturing generates fewer jobs</a>.</p>
<p>Second, autoworkers employed at joint-venture EV-battery factories have to be organized by the UAW on a case-by-case basis. That can prove especially difficult at plants located in such states as Kentucky, Tennessee or Georgia – where unions have <a href="https://www.unionstats.com/">lower membership rates</a>.</p>
<p>Third, <a href="https://www.teslarati.com/tesla-tsla-median-earnings-81-percent-us-average">nonunion electric vehicle companies like Tesla</a> and <a href="https://www.wglt.org/local-news/2022-12-16/why-the-uaw-is-so-hungry-for-a-unionization-win-at-rivian">Rivian generally pay their production workers less</a> than the Detroit Three.</p>
<h2>What the automakers say</h2>
<p>Ford, GM and Stellantis have noted that they have invested heavily in U.S.-based factories to <a href="https://www.freep.com/story/opinion/contributors/2023/06/29/ford-jim-farley-uaw-contract-bargaining/70361242007">preserve UAW-represented jobs</a>. Also, the Big Three point out that they have shared their North American profits in sizable annual payments to their workers.</p>
<p>In 2022, for example, the Detroit Three combined made profit-sharing payments that averaged <a href="https://www.freep.com/story/money/cars/ford/2023/02/02/ford-uaw-hourly-workers-2022-profit-sharing/69865970007/">$36,686 per worker</a>. In addition, the companies pay higher wages and provide more benefits to U.S. autoworkers than foreign automakers, such as <a href="https://www.nytimes.com/2023/07/14/business/uaw-contract-talks.html">Toyota and Honda, or domestic EV producers</a>.</p>
<p>Ford CEO Jim Farley and <a href="https://www.freep.com/story/opinion/contributors/2023/07/12/gm-reuss-uaw-contract-talks-detroit-automakers/70401953007/">GM President Mark Ruess have published op-eds</a> in the Detroit Free Press praising their workers and expressing their commitments to do right by them.</p>
<p>“We share common goals” with the UAW, <a href="https://www.freep.com/story/opinion/contributors/2023/06/29/ford-jim-farley-uaw-contract-bargaining/70361242007/">Farley wrote in late June</a>. Both sides want to reach “a new deal that allows us to stay ahead of the changing industry landscape, protecting good-paying jobs in the U.S.”</p>
<p>But both executives have emphasized their need to be competitive.</p>
<p>After seeing the UAW’s demands, GM criticized their “breadth and scope” and said they “would threaten our ability to do what’s right for the long-term benefit of the team.” The <a href="https://www.gmnegotiations2023.com/public/us/en/negotiations/home/negotiation-updates.html">automaker also reiterated</a> its openness to what it called a “fair agreement” and to raise wages.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A very modern-looking concept-car truck beneath the Ram automotive brand name." src="https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=315&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=315&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=315&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=396&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=396&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540913/original/file-20230802-29-bfgvep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=396&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Stellantis’ Ram 1500 Revolution battery-electric concept pickup truck was on display in January 2023 at a trade show in Las Vegas.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/stellantis-ram-1500-revolution-battery-electric-concept-news-photo/1454496551?adppopup=true">Ethan Miller/Getty Images</a></span>
</figcaption>
</figure>
<h2>What may happen during a UAW strike</h2>
<p>Halting production for even one big automaker during a strike would directly harm thousands of workers and cost the company money in terms of lost sales and production. Strikers would lose out on wages that would only be partially offset by the union’s <a href="https://uaw.org/strike-faq-2/">striker benefits of $500 per week</a>. </p>
<p>And any strike could further disrupt supply chains that have not fully recovered from the shocks caused by the COVID-19 pandemic and natural disasters that have sharply <a href="https://www.cargroup.org/auto-supply-chain-update/">curtailed vehicle production</a> since 2020.</p>
<p>Financial losses can be immense for automotive companies when their workers walk off the job. The 40-day <a href="https://www.freep.com/story/money/cars/general-motors/2020/07/01/uaw-strike-fund-benefits-scandal/5353128002/">strike in 2019 cost GM a reported $3.6 billion</a>. </p>
<p>A weekslong strike would also jeopardize the UAW’s struggle to rebuild its image <a href="https://www.freep.com/story/money/cars/general-motors/2020/07/01/uaw-strike-fund-benefits-scandal/5353128002/">following a string of corruption scandals</a>. </p>
<p>I believe that it’s up to both the corporate and labor leaders involved to avoid what could turn out to be a costly miscalculation.</p>
<p><em>This article was updated on Aug. 25, 2023, to report the strike vote.</em></p><img src="https://counter.theconversation.com/content/210037/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>As Director of Labor@Wayne at Wayne State University, Marick Masters received funding from the joint training centers operated by the UAW with Ford, GM, and Fiat Chrysler. Representatives of these organizations served on the external advisory board of <a href="mailto:Labor@Wayne">Labor@Wayne</a>. All money was channeled through Wayne State University for educational purposes.</span></em></p>A strike would shake up the auto industry, even though both the union’s ranks and the share of the US automotive market controlled by GM, Ford and Stellantis have been shrinking for decades.Marick Masters, Professor of Business and Adjunct Professor of Political Science, Wayne State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2001522023-03-14T12:23:43Z2023-03-14T12:23:43ZDon’t trust the news media? That’s good<figure><img src="https://images.theconversation.com/files/514930/original/file-20230313-20-dh6jh0.jpeg?ixlib=rb-1.1.0&rect=9%2C3%2C2108%2C1406&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Approach with caution, advises a journalism scholar.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/newsreader-filming-in-press-room-royalty-free-image/694041078?phrase=news%20room&adppopup=true">simon kr/E+/Getty Images</a></span></figcaption></figure><p>Everyone seems to hate what they call “the media.” </p>
<p>Attacking journalism – even accurate and verified reporting – provides <a href="https://fivethirtyeight.com/features/why-being-anti-media-is-now-part-of-the-gop-identity/">a quick lift for politicians</a>. </p>
<p>It’s not just Donald Trump. Trump’s rival for the 2024 Republican nomination, Florida Gov. Ron DeSantis, <a href="https://www.wfla.com/news/politics/gov-ron-desantis-to-speak-in-jacksonville/">recently criticized</a> “the Lefty media” for telling “lies” and broadcasting “a hoax” about his policies.</p>
<p>Criticizing the media emerged as an effective bipartisan political tactic in the 1960s. GOP Sen. Barry Goldwater’s 1964 presidential campaign got the ball rolling by needling the so-called “<a href="https://www.cnn.com/2020/02/29/opinions/lyndon-johnson-barry-goldwater-liberal-media-bias-hemmer/index.html">Eastern liberal press</a>.” </p>
<p>Democratic President Lyndon Johnson’s lies about the Vietnam War clashed with accurate reporting, and a “credibility gap” arose – the growing public skepticism about the administration’s truthfulness – to the obvious irritation of the president. Johnson complained CBS News and NBC News were so biased he thought their reporting seemed “<a href="https://www.nytimes.com/2017/05/30/opinion/lyndon-johnson-vietnam-war.html">controlled by the Vietcong</a>.”</p>
<p>Democrats like Chicago’s Mayor Richard J. Daley, who complained bitterly about news coverage of the 1968 Democratic convention – labeling it “<a href="https://www.politico.com/magazine/story/2018/09/02/how-fake-news-was-born-at-the-1968-dnc-219627/">propaganda</a>” – and Federal Communications <a href="https://law.uiowa.edu/people/nicholas-johnson">Commissioner Nicholas Johnson</a>, who published “<a href="https://www.worldcat.org/title/59804">How to Talk Back to Your Television Set</a>” in 1970, argued that “Eastern,” “commercial” and “corporate” media interests warped or “censored” the news. </p>
<p>In 1969, Republican President Richard Nixon’s vice president, Spiro Agnew, launched a public <a href="https://theconversation.com/he-was-trump-before-trump-vp-spiro-agnew-attacked-the-news-media-50-years-ago-122980">campaign against news corporations</a> that instantly made him a conservative celebrity. </p>
<p>Agnew warned that increased concentration in news media ownership ensured control over public opinion by a “tiny and closed fraternity of privileged men, <a href="https://www.desmoinesregister.com/story/opinion/columnists/2019/11/10/fifty-years-ago-spiro-agnew-and-des-moines-speech/4166207002/">elected by no one</a>.” Similar criticism emerged from leftists, including <a href="https://www.penguinrandomhouse.com/books/78912/manufacturing-consent-by-edward-s-herman-and-noam-chomsky/">MIT linguist Noam Chomsky</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man with a receding hairline and gray hair talking into a microphone." src="https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=511&fit=crop&dpr=1 754w, https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=511&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/514934/original/file-20230313-26-hjldur.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=511&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Vice President Spiro Agnew said in 1969 that concentrated news media ownership ensured control over public opinion by a ‘tiny and closed fraternity of privileged men, elected by no one.’</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/american-politician-us-vice-president-spiro-agnew-speaks-news-photo/846059208?phrase=Spiro%20Agnew&adppopup=true">David Hume Kennerly/Getty Images</a></span>
</figcaption>
</figure>
<p>The bipartisan popularity of news media criticism continued to grow as politicians found attacking the messengers the fastest way to avoid engaging in discussion of unpleasant realities. Turning the spotlight back on the media also helped political figures portray themselves as victims, while focusing partisan anger at specific villains.</p>
<p>Now, only 26% of Americans have a favorable opinion of the news media, according <a href="https://knightfoundation.org/reports/american-views-2023-part-2/">to a poll published in February 2023</a> by Gallup and the Knight Foundation. Americans across the political spectrum share a growing disdain for journalism – no matter how accurate, verified, professional or ethical.</p>
<p>Yet open debate over journalism ethics signals healthy governance. Such argumentation might amplify polarization, but it also facilitates the exchange of diverse opinions and encourages critical analyses of reality.</p>
<h2>Journalistic failures damaged trust</h2>
<p>Americans grew to distrust even the best news reporting because their political leadership encouraged it. But multiple failures exposed over the past several decades also further eroded journalistic credibility. </p>
<p>Long before <a href="https://www.theguardian.com/media/2005/mar/09/digitalmedia.tvnews">bloggers ended Dan Rather’s CBS News career in 2005</a>, congressional investigations, civil lawsuits and scandals revealing unethical and unprofessional behavior within even the most respected journalism outlets doomed the profession’s public reputation.</p>
<p>In 1971, CBS News aired “<a href="https://www.britannica.com/topic/The-Selling-of-the-Pentagon">The Selling of the Pentagon</a>,” an investigation that revealed the government spent tax dollars to produce pro-military domestic propaganda during the Vietnam War. </p>
<p>The program <a href="https://www.byrdcenter.org/blog/the-selling-of-the-pentagon-staggers-v-cbs">infuriated U.S. Rep. Harley Staggers</a>, who accused CBS of using “the nation’s airwaves … to deliberately deceive the public.” </p>
<p>Staggers launched an investigation and subpoenaed CBS News’ unpublished, confidential materials. CBS News President Frank Stanton <a href="https://www.nytimes.com/1971/04/10/archives/cbs-gains-support-for-defiance-of-subpoena.html">defied the subpoena</a> and was eventually vindicated by a vote of Congress. But Staggers, a West Virginia Democrat, publicly portrayed <a href="https://www.congress.gov/bound-congressional-record/1971/07/13">CBS News as biased</a> by insinuating the network had much to hide. <a href="https://content.time.com/time/subscriber/article/0,33009,904979,00.html">Many Americans agreed with him</a>. </p>
<p>“The Selling of the Pentagon” was the first of many investigations and lawsuits that damaged the credibility of journalism by exposing – or threatening to expose – the messy process of assembling news. As with the recent <a href="https://www.npr.org/2023/03/06/1161221798/if-fox-news-loses-defamation-dominion-media">embarrassing revelations about Fox News</a> exposed by the Dominion lawsuit, whenever the public gets access to the backstage behavior, private opinions and hypocritical actions of professional journalists, reputations will suffer. </p>
<p>But even the remarkable Fox News revelations shouldn’t be considered unique.</p>
<h2>Repeated lying</h2>
<p>Numerous respected news organizations have been caught lying to their audiences. Though such episodes are rare, they can be enormously damaging. </p>
<p>In 1993, General Motors <a href="https://www.nytimes.com/1993/02/10/us/nbc-settles-truck-crash-lawsuit-saying-test-was-inappropriate.html">sued NBC News</a>, accusing the network of deceiving the public by secretly attaching explosives to General Motors trucks, and then blowing them up to exaggerate a danger.</p>
<p>NBC News admitted it, settled the lawsuit and news division President Michael Gartner resigned. The case, <a href="https://www.washingtonpost.com/archive/politics/1993/02/10/nbc-apologizes-for-staged-crash-settles-with-gm/fe1d1da2-9939-4076-a7e2-8e625d7ddede/">concluded The Washington Post’s media critic</a>, “will surely be remembered as one of the most embarrassing episodes in modern television history.”</p>
<p>Additional examples abound. Intentional deception – knowingly lying by consciously publishing or broadcasting fiction as fact – <a href="https://cjc.utpjournals.press/doi/full/10.22230/cjc.2006v31n1a1595">occurs often enough in professional journalism</a> to cyclically embarrass the industry.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A screenshot of a clipping from the New York Times, July 2, 1971, about a contempt vote against CBS and its top executive." src="https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=738&fit=crop&dpr=1 600w, https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=738&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=738&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=927&fit=crop&dpr=1 754w, https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=927&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/514946/original/file-20230313-26-3kx646.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=927&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A front page story in The New York Times on July 2, 1971, with details about the conflict in Congress over the CBS documentary ‘The Selling of the Pentagon.’</span>
<span class="attribution"><a class="source" href="https://timesmachine.nytimes.com/timesmachine/1971/07/02/issue.html">New York Times archive</a></span>
</figcaption>
</figure>
<p>In cases such as <a href="https://www.cjr.org/the_feature/the_fabulist_who_changed_journalism.php">Janet Cooke and The Washington Post</a>, <a href="https://ajrarchive.org/Article.asp?id=1838">Stephen Glass and the New Republic</a>, <a href="https://www.nytimes.com/2003/05/11/us/correcting-the-record-times-reporter-who-resigned-leaves-long-trail-of-deception.html">Jayson Blair</a> and <a href="https://www.washingtonpost.com/archive/lifestyle/2002/02/22/new-york-times-feature-was-fiction/35e234a4-9cb6-47b8-8e1c-3bc95a0cb34d/">Michael Finkel</a> of The New York Times, and <a href="https://www.nytimes.com/2020/11/01/business/media/atlantic-ruth-shalit-barrett.html">Ruth Shalit Barrett and The Atlantic</a>, the publication of actual fabrications was exposed. </p>
<p>These episodes of reportorial fraudulence were not simply errors caused by sloppy fact-checking or journalists being deceived by lying sources. In each case, journalists lied to improve their careers while trying to help their employers attract larger audiences with sensational stories.</p>
<p>This self-inflicted damage to journalism is every bit equal to the attacks launched by politicians. </p>
<p>Such malfeasance undermines confidence in the news media’s ability to fulfill its constitutionally protected responsibilities. If few Americans are willing to believe even the most verified and factual reporting, then the ideal of debate grounded in shared facts may become anachronistic. It may already be.</p>
<h2>Media criticism as democratic participation</h2>
<p>The pervasive amount of news media criticism in the U.S. has intensified the erosion of trust in American journalism. </p>
<p>But such discussion can be seen as a sign of democratic health. </p>
<p>“Everyone in a democracy is <a href="https://www.hup.harvard.edu/catalog.php?isbn=9780674695870&content=toc">a certified media critic</a>, which is as it should be,” media sociologist Michael Schudson once wrote. Imagine how intimidated citizens would respond to pollsters in Russia, China or North Korea if asked whether they trusted their media. To question official media “truth” in these nations is to risk incarceration or worse. </p>
<p>Just look at Russia. As Putin’s regime censored independent media and pumped out propaganda, <a href="https://twitter.com/YaroslavConway/status/1627374815697936385">the nation’s least skeptical citizens</a> became the war’s foremost supporters.</p>
<p>As a <a href="https://cmj.umaine.edu/faculty-staff/michael-j-socolow/">media scholar and former journalist</a>, I believe more reporting on the media, and criticism of journalism, is always better than less.</p>
<p>Even that Gallup-Knight Foundation report chronicling lost trust in the media <a href="https://knightfoundation.org/reports/american-views-2023-part-2/">concluded that</a> “distrust of information or [media] institutions is not necessarily bad,” and that “some skepticism may be beneficial in today’s media environment.”</p>
<p>People choose the media they trust and criticize the media they consider less credible. Intentional deception scandals have been exposed at outlets as different as The New York Times, Fox News and NBC News. Just as the effort to demean the media has long been bipartisan, revelations of malfeasance have historically plagued media across the political spectrum. Nobody can yet know the long-term effect the <a href="https://www.documentcloud.org/documents/20527880-dominion-v-fox-news-complaint">Dominion lawsuit</a> will have on the credibility of Fox News specifically, but media scholars know the scandal will justifiably further erode the public’s trust in the media.</p>
<p>An enduring democracy will encourage rather than discourage media criticism. Attacks by politicians and exposure of unethical acts clearly lower public trust in journalism. But measured skepticism can be healthy and media criticism comprises an essential component of media literacy – and a vibrant democracy.</p><img src="https://counter.theconversation.com/content/200152/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael J. Socolow does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Journalism has been fodder for politicians’ contempt for generations. A huge percentage of the public doesn’t trust the news media either. That mistrust isn’t a bad thing in a democracy.Michael J. Socolow, Associate Professor, Communication and Journalism, University of MaineLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1993192023-02-24T17:19:45Z2023-02-24T17:19:45ZDriverless cars: what we’ve learned from experiments in San Francisco and Phoenix<figure><img src="https://images.theconversation.com/files/511448/original/file-20230221-946-rzwh9t.jpg?ixlib=rb-1.1.0&rect=199%2C175%2C3790%2C2082&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cruise, owned by General Motors, is one of the "robotaxi" companies operating in San Francisco.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/3355-19th-ave-san-francisco-ca-1576063105">Shutterstock / paulaah293</a></span></figcaption></figure><p>Residents of San Francisco and Phoenix have grown used to witnessing something that, a decade ago, would have seemed magical. In some parts of these cities, at certain times, <a href="https://www.theguardian.com/technology/2022/jun/03/california-driverless-taxi-cars-san-francisco">cars drive by with nobody behind the wheel</a>. </p>
<p><a href="https://www.bbc.co.uk/news/av/technology-63077437">Driverless “robotaxi” services pick up customers</a> and ferry them to their destinations with the help of cameras, sensors and software that uses artificial intelligence. Tests of fully driverless vehicles have been under way <a href="https://arstechnica.com/cars/2017/11/fully-driverless-cars-are-here/">in Phoenix</a> since 2017 <a href="https://www.cnbc.com/2020/12/09/gms-cruise-begins-testing-autonomous-vehicles-without-human-drivers-in-san-francisco.html">and in San Francisco</a> since 2020.</p>
<p>Excitable videos posted online show customers embracing the novelty. But new possibilities bring new questions. While these real-world experiments are limited in scope, they could help decide the future of road transport everywhere. It’s vital that lessons are learned and the results opened to scrutiny.</p>
<p>A few years ago, when hype surrounding self-driving cars was huge, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2937316">some high-profile crashes</a> brought attention to the ethics of experimenting with new technologies in public spaces. </p>
<p>US states encouraged experimentation by dropping regulatory barriers, with cities, citizens and transport policymakers having little say. After a period of testing with safety drivers, some cars are now fully driverless. </p>
<p>While the companies learn to drive safely in complex environments, San Francisco and Phoenix are learning whether the technology is <a href="https://www.nbcnews.com/tech/tech-news/san-francisco-looks-hit-brakes-self-driving-cars-rcna66204">creating more problems than it promises to solve</a>.</p>
<p>Cruise (owned by General Motors) is now operating 30 driverless cars at night in all but the busiest parts of San Francisco. Just before Christmas, the company said it wanted to add more cars, operate during the day, and move into the city’s busiest downtown area. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1521554237037023232"}"></div></p>
<p>But San Francisco’s <a href="https://www.sfmta.com/sites/default/files/reports-and-documents/2023/01/2023.01.25_ccsf_23.0125_cpuc_cruise_tier_2_advice_letter_protest_002.pdf">transportation authority raised objections</a>. In the last year, Cruise cars have been involved in a number of incidents that, while not directly life-threatening, were really annoying for a city trying to go about its business. </p>
<p>A Cruise car with nobody inside was <a href="https://gizmodo.com/san-francisco-cruise-self-driving-car-police-1848777469">pulled over by police officers</a>, who were unsure what to do. To the amusement of people filming, the car then pulled away from the confused cops. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/lnyuIHSaso8?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">A Cruise driverless taxi pulls away from police in San Francisco.</span></figcaption>
</figure>
<p>Cruise cars have also frustrated the city’s fire department by blocking fire trucks and driving towards hoses. In one case, <a href="https://www.sfmta.com/sites/default/files/reports-and-documents/2023/01/2023.01.25_ccsf_23.0125_cpuc_cruise_tier_2_advice_letter_protest_002.pdf">firefighters were forced to smash a car’s windscreen</a> to get it to stop. The cars have impeded local buses, blocked junctions and stopped in the middle of the road, sometimes in groups. </p>
<p>Some incidents would have counted as everyday snarl-ups if a human was behind the wheel, but the absence of anyone in the car to take responsibility has made it hard for city authorities to know what to do.</p>
<h2>The streets of San Francisco</h2>
<p>In almost all cases, we only know about incidents because of online videos or reports by local people. There are few duties on the companies to report performance or admit their foibles. </p>
<p>These incidents, and the absence of accountability, are clearly trying the patience of San Francisco’s transport planners. Rather than a free-for-all, they would like to see what they call “limited deployments with incremental expansions” so that impacts can be assessed carefully. </p>
<figure class="align-center ">
<img alt="Waymo car" src="https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&rect=24%2C0%2C5418%2C3634&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/511446/original/file-20230221-16-cpv20g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Self-driving car company Waymo is owned by Google.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/september-27-2018-sunnyvale-ca-usa-1190049946">Shutterstock / Sundry Photography</a></span>
</figcaption>
</figure>
<p>They would also like to keep driverless cars out of the city’s busiest downtown core – and, crucially, want to see more data-sharing. This would make the self-driving experiment more democratic, but cuts against the grain of the Silicon Valley approach to <a href="https://hbr.org/2016/04/blitzscaling">“blitzscaling”</a> – growing rapidly to establish a monopoly.</p>
<p>Self-driving car companies would argue that the more cars they have and the more complex their environments, the quicker they can learn to drive. This argument is premised on the idea that robot drivers are just like human drivers, but better. In reality, self-driving cars <a href="https://journals.sagepub.com/doi/pdf/10.1177/03063127211038752">are not “autonomous vehicles”</a>, as is often claimed. </p>
<p>They rely on digital and physical infrastructures that support their operation, as well as teams of humans behind the scenes doing the data-labelling, remote operation and customer support that is needed to make them appear “driverless”. These cars work best in car-friendly areas where pedestrians and other road users behave predictably. </p>
<h2>Changing the rules</h2>
<p>Even if driverless cars avoid the errors that humans make when drunk or distracted, they make different sorts of mistakes. New modes of transport do not just add another player to the game; they change the rules. When cars arrived in cities in the early 20th century, <a href="https://mitpress.mit.edu/9780262516129/fighting-traffic/">pedestrians were persuaded or bullied out of the way</a> and infrastructures were remade to suit the new technology. </p>
<p>In the 21st century, many cities were spooked by the rapid disruptions wrought by ride-hail companies such as Uber and Lyft. We must avoid sleepwalking into something similar. For self-driving cars, we need a clear sense of the trade-offs. </p>
<p>There may eventually be safety benefits. But in making life easier for self-driving cars and the few people likely to benefit, we might make life harder for everyone else. </p>
<p>Competition for roadspace in dense cities is tight. As <a href="https://www.fastcompany.com/90846919/self-driving-cars-would-be-a-climate-disaster">transport policy expert David Zipper has argued</a>, most cities want to see fewer car trips overall, and more shared transit and physically active travel such as walking and cycling. </p>
<p>Self-driving cars could be a problem for sustainability. The more we learn from real-world uses of the technology, the greater seems the mismatch between its purported solutions and the problems facing cities.</p>
<p>The UK is less in thrall to tech companies, which provides an opportunity for a more measured discussion. In 2022, I was part of a <a href="https://driverless-futures.com/2022/08/30/cdei-report-on-responsible-innovation-in-self-driving-vehicles/">team led by the Centre for Data Ethics and Innovation</a> asking what a more responsible approach to self-driving vehicle innovation would be. We advised on safety, data-sharing, transparency and ensuring that the benefits are evenly spread. </p>
<p>As self-driving cars expand to more places, the social learning that happens around them will be just as important as the machine learning that drives their computers. The experiment is taking place in public, so we must ensure that its lessons are not kept private.</p><img src="https://counter.theconversation.com/content/199319/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jack Stilgoe receives funding from the ESRC, the Turing Institute and the Centre for Data Ethics and Innovation. He is a fellow of the Turing institute and a trustee of the Royal Institution. </span></em></p>Trials in US cities of self-driving taxis could have implications for road users around the world.Jack Stilgoe, Professor of Science and Technology Policy, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1887862022-08-18T17:23:54Z2022-08-18T17:23:54ZWill the Inflation Reduction Act actually reduce inflation? How will the corporate minimum tax work? An economist has answers<figure><img src="https://images.theconversation.com/files/479917/original/file-20220818-6276-9qt389.jpg?ixlib=rb-1.1.0&rect=152%2C58%2C2842%2C1782&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Don't expect the Inflation Reduction Act to bring down prices all that much.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/ProducerPrices/e52f9db68a144f2e9822d8c2f0f06925/photo?Query=prices&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=51911&currentItemNo=52">AP Photo/David Zalubowski</a></span></figcaption></figure><p><em>The U.S. is about to <a href="https://www.nytimes.com/interactive/2022/08/13/upshot/whats-in-the-democrats-climate-health-bill.html">spend US$490 billion over 10 years</a> on reducing greenhouse gas emissions, improving health care and reducing the federal deficit. Where’s all that money coming from?</em></p>
<p><em>We asked University of Michigan economist <a href="https://www.nirupamarao.org">Nirupama Rao</a> to examine how the new law will raise enough revenue to pay for clean energy tax credits, Affordable Care Act subsidies and incentives for manufacturers to use cleaner technologies, among other initiatives. We also wanted to know, given its name, will the Inflation Reduction Act actually bring down inflation?</em></p>
<h2>What are the main revenue components in the bill?</h2>
<p>The new law funds itself primarily <a href="https://www.nytimes.com/interactive/2022/08/13/upshot/whats-in-the-democrats-climate-health-bill.html">through a mixture of tax-related measures and health care savings</a>. In fact, the revenue it’s projected to raise more than pays for the new spending, reducing the deficit by roughly a quarter of a trillion dollars over 10 years.</p>
<p>The biggest source of revenue, <a href="https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf">projected by the Joint Committee on Taxation</a> at about $222 billion, comes from a new 15% minimum corporate tax rate. Another $124 billion in net revenue is expected as a result of stepped-up tax enforcement by the Internal Revenue Service. The committee expects two other tax measures – including a 1% tax on corporate stock buybacks – would raise about $126 billion.</p>
<p>Congress is also hoping to save $265 billion through several provisions to <a href="https://theconversation.com/why-letting-medicare-negotiate-drug-prices-wont-be-the-game-changer-for-health-care-democrats-hope-it-will-be-188560?notice=Article+has+been+updated.">lower the amount of money the government spends</a> on prescription drugs through its Medicare program. </p>
<h2>How will the corporate minimum tax work?</h2>
<p>The corporate minimum tax is aimed at raising revenue from companies that report large profits to their shareholders but pay minimal taxes. </p>
<p>Though businesses can, of course, owe no tax because of perfectly legitimate uses of the tax code, seeing headlines about <a href="https://www.washingtonpost.com/business/2022/08/11/minimum-corporate-tax">successful companies</a> paying little to no tax <a href="https://www.pewresearch.org/fact-tank/2021/04/30/top-tax-frustrations-for-americans-the-feeling-that-some-corporations-wealthy-people-dont-pay-fair-share/">has been galling</a> to many Americans and can potentially undermine the public’s faith in the tax system. </p>
<p>In addition, government revenue from companies <a href="https://www.taxpolicycenter.org/statistics/corporate-income-tax-revenue-share-gdp-1934-2020">has plunged in recent years</a> as a result of the 2017 corporate tax cut and other measures. Corporate tax revenue fell by nearly half as a share of gross domestic product from 2015 to 2020. </p>
<p><iframe id="joM7r" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/joM7r/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>To be subject to the minimum tax, U.S. corporations must earn an average of at least $1 billion in adjusted book income – the earnings they report to shareholders less some adjustments – over the previous three years. It hits foreign companies too, though they need only report $100 million in U.S. income. </p>
<p>Basically, companies subject to the minimum will have to calculate their tax liability twice – once under regular corporate income tax rules and again by multiplying their adjusted book income by 15%. Their tax is whichever is greater. Theoretically, this ensures they at least pay the minimum.</p>
<p>A few important adjustments included in the bill’s final language will limit how much companies pay under the minimum tax. To prevent manufacturers from facing high minimum tax bills, for example, <a href="https://www.taxpolicycenter.org/taxvox/how-senate-approved-corporate-minimum-tax-works">companies will be able to employ</a> some of the same credits and deductions they use to reduce their regular corporate tax bills to lower the minimum tax they’ll pay as well. </p>
<p>While an earlier vision of the bill would have subjected private equity funds to the minimum tax, <a href="https://www.nytimes.com/2022/08/08/business/corporate-minimum-tax-private-equity.html">intense lobbying</a> of Arizona Sen. Kyrsten Sinema helped the industry get an exemption, along with retaining the carried interest loophole that the bill initially closed.</p>
<p>In the end, <a href="https://www.finance.senate.gov/imo/media/doc/CAMT%20JCT%20Data.pdf">fewer than 150 companies</a> – including many household names like <a href="https://www.washingtonpost.com/business/2022/08/11/minimum-corporate-tax/">Amazon, AT&T and General Motors</a> – are expected to be subject to the tax. </p>
<figure class="align-center ">
<img alt="A sign reads Internal Revenue Service in front of a large stone building" src="https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=347&fit=crop&dpr=1 600w, https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=347&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=347&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=436&fit=crop&dpr=1 754w, https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=436&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/479918/original/file-20220818-459-zgp5vk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=436&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The IRS gets a big boost in funding from the new law, which should help it beef up enforcement and bring in more revenue.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Corporations-ZeroTaxes/960af7fa6f804aa3acc39d119caf450d/photo?Query=company%20tax%20profits&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=236&currentItemNo=11">AP Photo/J. David Ake</a></span>
</figcaption>
</figure>
<h2>How will IRS enforcement generate so much revenue?</h2>
<p>The law allots $80 billion in new funding for the Internal Revenue Service. The Joint Committee on Taxation expects the investment to <a href="https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_summary.pdf">garner $204 billion in revenue over 10 years</a>, or $124 billion once you subtract the increased spending. </p>
<p>The main target of this spending is the so-called tax gap, which is currently <a href="https://home.treasury.gov/news/featured-stories/the-case-for-a-robust-attack-on-the-tax-gap">estimated at about $600 billion a year</a>. The tax gap is the difference between how much corporate or individual taxpayers owe the IRS and how much the agency is able to collect. </p>
<p>The new revenue is expected to come from increased auditing, mostly targeting high-income taxpayers. <a href="https://home.treasury.gov/system/files/136/JLY-letter-to-Commissioner-Rettig-Signed.pdf">Treasury Secretary Janet Yellen</a> and <a href="https://www.irs.gov/pub/irs-utl/commissioners-letter-to-the-senate.pdf">IRS Commissioner Charles Rettig</a> have both pledged that the investments will not lift audit rates on small businesses and households earning less than $400,000 a year.</p>
<p>Many Democrats, along with former <a href="https://www.washingtonpost.com/opinions/2021/11/17/cbo-build-back-better-irs-revenue-too-low/">Treasury Secretary Larry Summers</a>, believe this investment in the IRS will raise a lot more money than estimated because of <a href="http://jasondebacker.com/papers/DHTY_IndivAudit.pdf">better compliance</a> among taxpayers who want to avoid being audited. </p>
<p>The funding will also be used to update <a href="https://www.nextgov.com/it-modernization/2018/03/irs-system-processing-your-taxes-almost-60-years-old/146770/">antiquated technology</a> and increase the IRS’s staff. Decades-old computer systems and understaffing <a href="https://www.taxpayeradvocate.irs.gov/reports/2021-annual-report-to-congress/">prevent the IRS from answering taxpayer queries</a>, tracking funds owed and using simple analytics to guide enforcement. </p>
<p>While an $80 billion investment that returns $204 billion already sounds pretty impressive, it may be possible that it’s a conservative estimate. </p>
<h2>Will the law reduce inflation, as the name implies?</h2>
<p>Probably not much.</p>
<p>Several measures in the law, such as narrowing the deficit, lowering drug prices and making the U.S. less vulnerable to energy price spikes, should all help reduce inflation somewhat. </p>
<p>Though monetary policy is the main tool for fighting inflation, it’s also possible that the new law will convince people that Congress is functional and willing to take steps to address inflation, and that feeling <a href="https://twitter.com/WendyEdelberg/status/1555256251369635841">could lead to lower expectations</a> for future inflation, which can be a self-fulfilling prophesy. </p>
<p>However, the magnitude of the direct impact on inflation, despite the bill’s name, will likely be slight. The <a href="https://budgetmodel.wharton.upenn.edu/issues/2022/8/12/senate-passed-inflation-reduction-act">Penn-Wharton Budget Model</a>, which publishes economic analysis on the fiscal impact of public policy, suggests that the reduction in inflation of the Inflation Reduction Act “will be statistically indistinguishable from zero.” </p>
<p>That’s an economist’s way of saying, when it comes to the bill’s impact on inflation, don’t get your hopes up too much.</p><img src="https://counter.theconversation.com/content/188786/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nirupama Rao has received research support from the Center for Equitable Growth.</span></em></p>The new law will pay for increased spending in several ways, including a corporate minimum tax and funding tax code enforcement by the IRS.Nirupama Rao, Assistant Professor of Business Economics and Public Policy, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1733952021-12-08T23:51:24Z2021-12-08T23:51:24ZA century of tragedy: How the car and gas industry knew about the health risks of leaded fuel but sold it for 100 years anyway<figure><img src="https://images.theconversation.com/files/436454/original/file-20211208-104971-1bl6u5i.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5227%2C3413&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">For decades, most gas sold in the U.S. contained a lead additive.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/rusty-petrol-pumps-on-a-gas-station-royalty-free-image/74166712?adppopup=true"> Per Magnus Persson via Getty Images</a></span></figcaption></figure><p>On the frosty morning of Dec. 9, 1921, in Dayton, Ohio, researchers at a General Motors lab poured a new fuel blend into one of their test engines. Immediately, the engine began running more quietly and putting out more power. </p>
<p>The new fuel was tetraethyl lead. With vast profits in sight – and very few public health regulations at the time – General Motors Co. rushed gasoline diluted with tetraethyl lead to market despite the known health risks of lead. They named it “Ethyl” gas.</p>
<p>It has been 100 years since that pivotal day in the development of leaded gasoline. As a <a href="https://scholar.google.com/citations?view_op=search_authors&mauthors=bill+kovarik&hl=en&oi=ao">historian of media and the environment</a>, I see this anniversary as a time to reflect on the role of public health advocates and environmental journalists in preventing profit-driven tragedy.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A black and white photo of a man in an old laboratory." src="https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=353&fit=crop&dpr=1 600w, https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=353&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=353&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=444&fit=crop&dpr=1 754w, https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=444&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/436459/original/file-20211208-17-xev9b9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=444&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Scientists working for General Motors discovered that tetraethyl lead could greatly improve the efficiency and longevity of engines in the 1920s.</span>
<span class="attribution"><span class="source">Courtesy of General Motors Institute</span></span>
</figcaption>
</figure>
<h2>Lead and death</h2>
<p>By the early 1920s, <a href="https://www.biologicaldiversity.org/campaigns/get_the_lead_out/pdfs/health/Needleman_1999.pdf">the hazards of lead were well known</a> – even Charles Dickens and Benjamin Franklin had written about the dangers of lead poisoning.</p>
<p>When GM began selling leaded gasoline, public health experts <a href="https://doi.org/10.1021/om030621b">questioned its decision</a>. One called lead a serious menace to public health, and another called concentrated tetraethyl lead a “<a href="https://doi.org/10.1021/om030245v">malicious and creeping</a>” poison. </p>
<p>General Motors and Standard Oil waved the warnings aside until disaster struck in October 1924. Two dozen workers at a refinery in Bayway, New Jersey, came down with severe lead poisoning from a poorly designed GM process. At first they became disoriented, then burst into insane fury and collapsed into hysterical laughter. Many had to be wrestled into straitjackets. <a href="https://www.nytimes.com/1924/10/27/archives/odd-gas-kills-one-makes-four-insane-stricken-at-work-in-standards.html">Six died, and the rest were hospitalized</a>. Around the same time, 11 more workers died and several dozen more were disabled at similar GM and DuPont plants across the U.S.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A cartoon showing a man going insane after lead exposure." src="https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=183&fit=crop&dpr=1 600w, https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=183&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=183&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=230&fit=crop&dpr=1 754w, https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=230&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/436460/original/file-20211208-149721-820cnb.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=230&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The news media began to criticize Standard Oil and raise concerns over Ethyl gas with articles and cartoons.</span>
<span class="attribution"><span class="source">New York Evening Journal via The Library of Congress</span></span>
</figcaption>
</figure>
<h2>Fighting the media</h2>
<p>The auto and gas industries’ attitude toward the media was hostile from the beginning. At Standard Oil’s first press conference about the 1924 Ethyl disaster, a spokesman claimed he had no idea what had happened while advising the media that “<a href="https://www.nytimes.com/1924/10/27/archives/odd-gas-kills-one-makes-four-insane-stricken-at-work-in-standards.html">Nothing ought to be said about this matter in the public interest</a>.”</p>
<p><a href="https://billkovarik.com/wp-content/uploads/2012/08/Ethyl.Controversy.Kovarik.dissertation.pdf">More facts emerged in the months after the event</a>, and by the spring of 1925, in-depth newspaper coverage started to appear, framing the issue as public health versus industrial progress. A New York World article asked Yale University gas warfare expert Yandell Henderson and GM’s tetraethyl lead researcher Thomas Midgley whether leaded gasoline would poison people. Midgley joked about public health concerns and falsely insisted that leaded gasoline was the only way to raise fuel power. To demonstrate the negative impacts of leaded fuel, Henderson estimated that 30 tons of lead would fall in a dusty rain on New York’s Fifth Avenue every year. </p>
<p>Industry officials were outraged over the coverage. A GM public relations history from 1948 called the New York World’s coverage “a campaign of publicity against the public sale of gasoline containing the company’s antiknock compound.” GM also claimed that the media labeled leaded gas “loony gas” when, in fact, it was <a href="https://billkovarik.com/wp-content/uploads/2012/08/Ethyl.Controversy.Kovarik.dissertation.pdf">the workers themselves who named it as such</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An old advertisement for Ethyl brand gas." src="https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/436735/original/file-20211209-141178-1klcf7s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Leaded gas was marketed as Ethyl, a joint brand of Standard Oil and General Motors.</span>
<span class="attribution"><a class="source" href="http://hdl.loc.gov/loc.pnp/mrg.05719">John Margolies/Library of Congress</a></span>
</figcaption>
</figure>
<h2>Attempts at regulation</h2>
<p>In May 1925, the U.S. Public Health Service asked GM, Standard Oil and public health scientists to attend an open hearing on leaded gasoline in Washington. The issue, according to GM and Standard, involved refinery safety, not public health. Frank Howard of Standard Oil argued that tetraethyl lead was diluted at over 1,000 to 1 in gasoline and therefore posed no risk to the average person. </p>
<p>Public health scientists <a href="https://billkovarik.com/wp-content/uploads/2012/08/Ethyl.Controversy.Kovarik.dissertation.pdf">challenged the need for leaded gasoline</a>. Alice Hamilton, a physician at Harvard, said, “There are thousands of things better than lead to put in gasoline.” And she was right. There were plenty of well-known alternatives at the time, and some were even patented by GM. But no one in the press knew how to find that information, and the Public Health Service, under pressure from the auto and oil industries, canceled a second day of public hearings that would have discussed safer gasoline additives like ethanol, iron carbonyl and catalytic reforming. </p>
<p>By 1926, the Public Health Service announced that they had “no good reason” to prohibit leaded gasoline, even though <a href="https://billkovarik.com/wp-content/uploads/2012/08/Ethyl.Controversy.Kovarik.dissertation.pdf">internal memos complained that their research</a> was “half baked.”</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A graph showing that blood lead levels closely follow lead emissions from cars." src="https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/436456/original/file-20211208-68670-1nmlwhl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=508&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">As leaded gasoline fell out of use, lead levels in people’s blood fell as well.</span>
<span class="attribution"><a class="source" href="https://www.epa.gov/lead">U.S. EPA</a></span>
</figcaption>
</figure>
<h2>The rise and fall of leaded gasoline</h2>
<p>Leaded gasoline went on to dominate fuel markets worldwide. Researchers have estimated that decades of burning leaded gasoline caused <a href="https://news.un.org/en/story/2011/10/393292-phase-out-leaded-petrol-brings-huge-health-and-cost-benefits-un-backed-study">millions of premature deaths, enormous declines in IQ levels</a> and many other associated social problems.</p>
<p>In the 1960s and 1970s, the public health case against leaded gasoline reemerged. A California Institute of Technology geochemist, Clair Cameron Patterson, was finding it difficult to measure lead isotopes in his laboratory because lead from gasoline was everywhere and his samples were constantly being contaminated. Patterson created the first “clean room” to carry on his isotope work, but he also published a 1965 paper, “<a href="https://doi.org/10.1080/00039896.1965.10664229">Contaminated and Natural Lead Environments of Man</a>,” and said that “the average resident of the U.S. is being subjected to severe chronic lead insult.”</p>
<p>In parallel, by the 1970s, the U.S. Environmental Protection Agency decided that leaded gasoline had to be phased out eventually because it clogged catalytic converters on cars and led to more air pollution. Leaded gasoline manufacturers objected, but the objections were <a href="https://casetext.com/case/ethyl-corp-v-epa">overruled by an appeals court</a>. </p>
<p>The public health concerns continued to build in the 1970s and 1980s when University of Pittsburgh pediatrician Herbert Needleman ran studies linking high levels of lead in children with low IQ and other developmental problems. Both Patterson and Needleman faced strong partisan attacks from the lead industry, which <a href="http://www.beacon.org/Toxic-Truth-P662.aspx">claimed that their research was fraudulent</a>. </p>
<p>Both were eventually vindicated when, in 1996, the U.S. officially banned the sale of leaded gasoline for public health reasons. Europe was next in the 2000s, followed by developing nations after that. In August 2021, the last country in the world to sell leaded gas, Algeria, <a href="https://www.nationalgeographic.com/environment/article/finally-the-end-of-leaded-gas">banned it</a>.</p>
<p>A century of leaded gasoline has taken millions of lives and to this day leaves the soil in many cities from <a href="https://doi.org/10.1073/pnas.1906092116">New Orleans</a> to <a href="https://doi.org/10.1073/pnas.2102791118">London</a> toxic.</p>
<p>The leaded gasoline story provides a practical example of how industry’s profit-driven decisions – when unsuccessfully challenged and regulated – can cause serious and long-term harm. It takes individual public health leaders and strong media coverage of health and environmental issues to counter these risks. </p>
<p>[<em>You’re smart and curious about the world. So are The Conversation’s authors and editors.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-youresmart">You can read us daily by subscribing to our newsletter</a>.]</p><img src="https://counter.theconversation.com/content/173395/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bill Kovarik does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Burning leaded gasoline releases toxic lead into the environment, and for 100 years people around the world have been dealing with the health effects. How did a century of toxic fuel come to be?Bill Kovarik, Professor of Communication, Radford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1351702020-05-22T12:18:59Z2020-05-22T12:18:59ZWhy Ford, Chanel and other companies pitch in during a crisis – without the government ordering them to<figure><img src="https://images.theconversation.com/files/336859/original/file-20200521-102647-gbww8q.jpg?ixlib=rb-1.1.0&rect=50%2C179%2C3690%2C2311&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ford employees assemble ventilators. </span> <span class="attribution"><span class="source">AP Photo/Carlos Osorio</span></span></figcaption></figure><p><a href="https://www.who.int/news-room/detail/03-03-2020-shortage-of-personal-protective-equipment-endangering-health-workers-worldwide">Severe shortages of critical medical supplies</a> have prompted governments to compel private companies to fill the gap. In the U.S., President Donald Trump invoked rarely used powers to force <a href="https://www.nytimes.com/2020/03/30/business/gm-ventilators-coronavirus-trump.html">General Motors</a> to make ventilators, while the leaders of <a href="https://www.ft.com/content/42f636be-751d-4ebf-9b55-bf313014769f">France</a>, the <a href="https://www.autocar.co.uk/car-news/industry/government-ask-uk-manufacturers-build-ventilators">U.K.</a> and <a href="https://www.japantimes.co.jp/news/2020/02/28/national/mask-makers-distance-abes-coronavirus-guarantee/#.XsbHpBNKgnc">Japan</a> have put pressure on companies to make more medical supplies. </p>
<p>But, judging by how many non-medical companies have voluntarily stepped up to shift their manufacturing might to produce health care supplies – including GM rival <a href="https://www.businessinsider.com/ford-making-ventilators-to-fight-coronavirus-how-many-when-ge-2020-3">Ford</a> – it seems hardly necessary. </p>
<p>Fashion brands such as <a href="https://www.ft.com/content/e9c2bae4-6909-11ea-800d-da70cff6e4d3">LVMH</a>, <a href="https://www.reuters.com/article/us-health-coronavirus-france-chanel/chanel-turns-its-workshops-to-making-face-masks-as-coronavirus-spreads-idUSKBN21G0JP">Chanel</a> and <a href="https://wwd.com/beauty-industry-news/beauty-features/loreal-launches-sweeping-program-to-combat-covid-1203539626/">L’Oreal</a> <a href="https://www.businessinsider.com/dior-reopens-baby-dior-factory-to-start-making-face-masks-2020-4">are transforming their factories</a> to mass produce face masks. Spirit and beer makers <a href="https://www.nasdaq.com/articles/anheuser-busch-starts-making-hand-sanitizer-alongside-its-beer-2020-03-23">Anheuser-Busch</a>, <a href="https://www.adweek.com/creativity/diageo-and-anheuser-busch-join-alcohol-brands-pivoting-to-free-sanitizer/">Diageo</a>, <a href="https://www.businessinsider.com/coors-beer-company-makes-hand-sanitizer-amid-coronavirus-pandemic-2020-3">Molson Coors</a> and <a href="https://www.bevindustry.com/articles/92934-bacardi-launches-production-of-hand-sanitizer-at-puerto-rico-distillery">Bacardi</a> are shifting some of their production and distribution towards hand sanitizer. And automakers <a href="https://www.bloomberg.com/news/articles/2020-03-27/toyota-shifts-factories-to-face-shields-will-help-device-makers">Toyota</a>, <a href="https://www.reuters.com/article/us-health-coronavirus-volkswagen-ventila/volkswagen-tests-ventilator-output-as-carmakers-join-coronavirus-fight-idUSKBN2172VH">Volkswagen</a> and <a href="https://www.reuters.com/article/us-health-coranavirus-fiat-chrysler-vent/fiat-chrysler-starts-ventilator-component-output-in-italy-idUSKBN21L1FA">Fiat Chrysler</a> are leveraging their 3D printing capabilities to produce face shields and are <a href="https://www.msn.com/en-us/money/companies/ford-partners-with-3m-and-ge-healthcare-to-make-respirators-ventilators-to-fight-coronavirus/ar-BB11DicJ">partnering</a> with other companies to make ventilators.</p>
<p>And that’s just three industries. In all, hundreds of companies across the globe have committed money, supplies and know-how to help with the COVID-19 response, according to the U.S. Chamber of Commerce Foundation’s <a href="https://www.uschamberfoundation.org/aid-event/corporate-aid-tracker-covid-19-business-action">corporate aid tracker</a>. </p>
<p>Why are these companies being so generous? </p>
<p>As <a href="https://kelley.iu.edu/faculty-research/faculty-directory/profile.cshtml?id=EMAFIKRE">scholars</a> of <a href="https://scholar.google.com/citations?user=DFjwsYUAAAAJ&hl=en&oi=ao">corporate social responsibility</a>, we believe altruism certainly plays a role for many of them, but it’s not the only motivator. Research on company behavior points to two others: <a href="https://www.ingentaconnect.com/content/mcb/168/2015/00000020/00000002/art00003">bolstering reputation</a> and <a href="https://www.doi.org/10.1086/467466?mobileUi=0&">avoiding regulation</a>. </p>
<h2>Burnishing the brand</h2>
<p>In normal times, companies often undertake socially responsible initiatives to <a href="https://www.inc.com/maureen-kline/how-to-manage-your-companys-reputation.html">enhance their brand</a> and build a stronger relationship with consumers, investors and employees in order to drive profits. </p>
<p>What’s a socially responsible initiative? <a href="https://www.doi.org/10.1002/csr.132">There are many definitions</a>, but the way scholars like us think of it is it means taking voluntary action that is not prescribed by law or not necessary to comply with a regulation. </p>
<p>Reputation Institute, a management consultancy, found that people’s willingness to buy, recommend, work for or invest in a company <a href="https://www.forbes.com/sites/jacquelynsmith/2012/12/10/the-companies-with-the-best-csr-reputations/#49e60e384404">is significantly influenced</a> by their perceptions of its corporate social responsibility practices. So doing something that benefits people in their community can lead to <a href="http://dx.doi.org/10.2139/ssrn.2062429">higher sales</a>, <a href="https://philpapers.org/rec/SHIEDS">increase the company’s valuation</a> and <a href="https://doi.org/10.1108/14720701011085544">keep good employees around longer</a>. </p>
<p>But these are anything but normal times. Rather, it is a global crisis that has created a need for an <a href="https://unfoundation.org/blog/post/weekly-update-all-hands-on-deck-against-covid-19/">all hands on deck</a> response from everyone, including corporate America. In other words, <a href="https://www.forbes.com/sites/pamdanziger/2017/10/20/fire-floods-hurricanes-how-and-why-corporations-must-help/#10231fb67388">just like during natural disasters</a>, people expect companies to do their part – and not appearing to do so could damage a brand’s reputation. A <a href="https://www.conecomm.com/news-blog/2013-global-csr-study-release">2013 survey of citizens of 10 countries</a> that included the U.S., France, Brazil and China found that 9 in 10 people said they would boycott a company they believed behaved irresponsibly. </p>
<p>And this is especially true of industries that are more directly connected to the crisis. In the current situation, for example, there’s been a shortage of hand sanitizer, which fashion companies that make perfume <a href="https://tanksgoodnews.com/2020/03/17/lvmh-hand-sanitizer/">can easily produce</a>. And manufacturers are, as we’ve seen, <a href="https://www.wsj.com/articles/trump-lashes-out-at-general-motors-over-ventilators-11585327749">capable of repurposing</a> their assembly lines to build ventilators. </p>
<p>Not doing its part, in this environment, could result in a long-term hit to a company’s reputation. </p>
<h2>Eluding onerous regulations</h2>
<p>The other motivator is preempting government regulation, which becomes a greater risk during and after a crisis. </p>
<p>For instance, we saw <a href="https://corpgov.law.harvard.edu/2010/11/20/the-financial-panic-of-2008-and-financial-regulatory-reform/">more financial regulation</a> after Wall Street’s behavior sparked the Great Recession, and lawmakers from districts that suffer from hurricanes <a href="https://www.nber.org/papers/w25835">tend to support bills</a> promoting more environmental regulation. </p>
<p>So companies will often pursue voluntary self-regulation and take other proactive measures during a crisis in hopes of forestalling a more onerous government reaction. A recent <a href="https://web.stanford.edu/%7Etomz/pubs/MMT-APSR-2019.pdf">Stanford study</a> found that even a modest effort can work to effectively preempt regulation. </p>
<p>Furthermore, this allows companies to set the terms and control the agenda, <a href="https://store.hbr.org/product/profiting-from-environmental-regulatory-uncertainty-integrated-strategies-for-competitive-advantage/CMR498">allowing them to choose actions</a> that are in the interest of society, profitable, and avoid the costs and pains of complying with new regulations. </p>
<p>At the moment, companies may be stepping up to avoid a more draconian response from the government, such as when Trump invoked the <a href="https://www.washingtonpost.com/politics/2020/03/19/defense-production-act-trump-coronavirus/">Defense Production Act</a> against GM, which allows him to control and direct corporate resources towards production of critical equipment. This also gives the federal government priority in contracting, limiting a company’s ability to find the most efficient or profitable contracts.</p>
<p>So next time you read about a company doing something for the greater good, applaud the effort. But you could consider its other strategic motivations as well. </p>
<p>[<em>Insight, in your inbox each day.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=insight">You can get it with The Conversation’s email newsletter</a>.]</p><img src="https://counter.theconversation.com/content/135170/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ford is assembling ventilators, LVMH is making hand sanitizer, and Chanel is making masks. Here’s why these and dozens of other companies are doing it.Elham Mafi-Kreft, Clinical Associate Professor of Business Economics, Indiana UniversitySteven Kreft, Clinical Professor of Business Economics and Public Policy, Indiana UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1361382020-04-27T12:08:03Z2020-04-27T12:08:03ZCoronavirus bailouts will cost taxpayers hundreds of billions of dollars – unlike past corporate rescues that actually made money for the US Treasury<figure><img src="https://images.theconversation.com/files/330432/original/file-20200424-163122-16ka2t6.jpg?ixlib=rb-1.1.0&rect=0%2C649%2C6979%2C4925&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fire up the printing presses.</span> <span class="attribution"><span class="source">Nerthuz/Getty Images</span></span></figcaption></figure><p>The U.S. government <a href="https://www.bloomberg.com/news/articles/2020-04-24/congress-braced-for-a-bruising-fight-over-next-virus-relief-bill?srnd=premium&sref=Hjm5biAW">has now pledged almost US$3 trillion</a> to save the economy and Americans from the coronavirus recession. </p>
<p>Most of that is aimed at individual Americans in the form of <a href="https://www.vox.com/future-perfect/2020/3/24/21188470/coronavirus-unemployment-benefits-senate-stimulus">additional unemployment insurance</a> or the so-called <a href="https://www.irs.gov/coronavirus/economic-impact-payments">economic impact checks</a>. About $1.2 trillion – and counting – represent bailouts for American companies, large and small. </p>
<p>And more than 60% of that is in the form of grants or other financial assistance that will likely become grants – funds that will not be recovered by taxpayers. The Congressional Budget Office estimated on April 23 that the company-related coronavirus bailouts, excluding the <a href="https://www.nytimes.com/2020/04/23/us/politics/house-passes-relief-for-small-businesses-and-aid-for-hospitals-and-testing.html">fourth one just signed into law</a>, will <a href="https://www.cbo.gov/system/files/2020-04/hr748.pdf">ultimately cost more than $400 billion</a> over 10 years. Given that most of the latest bailout, worth $484 billion, will most likely end up becoming grants to small businesses as well, the price tag is bound to get a lot higher. </p>
<p>It may not come as a surprise that taxpayers ultimately foot the bill when lawmakers spend their money to bail out a corporate industry – such as <a href="https://www.rasmussenreports.com/public_content/business/federal_bailout/october_2011/60_oppose_financial_bailouts_74_say_wall_street_benefited_most">Wall Street during the Great Recession</a> – or the entire economy today. But this is actually the exception, not the rule. </p>
<p>The truth is, as my research shows, the vast majority of business bailouts passed by Congress over the past half century have either broken even or generated a profit. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=479&fit=crop&dpr=1 600w, https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=479&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=479&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/330567/original/file-20200426-163122-19o7xo4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The U.S. aided Lockheed after the defense contractor struggled to secure financing for its new large luxury jetliner, the L-1011 TriStar.</span>
<span class="attribution"><span class="source">Bettmann/Getty Images</span></span>
</figcaption>
</figure>
<h2>Profitable bailouts</h2>
<p>As part of <a href="https://politics.ucsc.edu/graduate/graduate-student-directory/index.php?uid=swnewsom">my ongoing research</a> on economic policymaking during recessions, I studied 10 corporate bailouts approved by Congress since 1969.</p>
<p>I only looked at bailouts that involved direct assistance – in the forms of loans, guarantees, grants or capital injections – by Congress to a company or industry in financial distress. I excluded the <a href="https://www.investopedia.com/terms/s/sl-crisis.asp">Savings and Loan crisis</a> of the 1980s and 1990s because that was less of a bailout and more of an expensive regulatory wind-down. All of the figures below have been adjusted for inflation. </p>
<p>I found that half of the bailouts made a clear profit for taxpayers. </p>
<p>For example, Lockheed Martin ran into <a href="https://www.nytimes.com/1971/02/02/archives/lockheed-accepts-a-loss-of-200million-on-c5a-lockheed-accepts-a.html">financial difficulties</a> in 1971 because the planes, helicopters and other military equipment it was making for the U.S. Department of Defense cost more than the Pentagon agreed to pay, which led to significant losses and fees. The defense contractor pinned its survival on making money off its <a href="https://www.lockheedmartin.com/en-us/news/features/history/l-1011.html">state-of-the-art TriStar airliner</a> but struggled to secure enough financing to finish the project. </p>
<p>Congress, concerned with the loss of at least 25,000 jobs if Lockheed went bankrupt, provided Lockheed with a lifeline in the form of loan guarantees. That is, it agreed to back a $1.62 billion private loan in exchange for a fee. Although the TriStar was a flop, it was enough to keep Lockheed solvent, and taxpayers earned $198 million. </p>
<p>Similarly, automaker Chrysler <a href="https://www.washingtonpost.com/archive/business/1979/11/04/the-bottom-line-details-of-the-chrysler-bailout/a7175793-ac11-4b4f-bbce-3cfbf620f77c/">found itself in financial peril</a> in late 1979 in part due to its slow reaction to market shifts brought about by the 1970s energy crisis. Consumers wanted more fuel efficient cars; Chrysler made too many gas guzzlers. <a href="https://publishing.cdlib.org/ucpressebooks/view?docId=ft4x0nb2jj&chunk.id=d0e2181&toc.depth=1&toc.id=d0e2181&brand=ucpress">Post-bailout studies</a> suggested the company <a href="https://books.google.com/books/about/Riding_the_Roller_Coaster.html?id=aQhTq18vi7AC">was headed toward insolvency</a>.</p>
<p>The potential loss of 250,000 jobs and the adverse impact on automotive dealers and suppliers spurred Congress to offer Chrysler up to $4.98 billion in loan guarantees. As a precondition for this help, Chrysler, in addition to paying fees on the loans, granted the U.S. government rights to buy 14.4 million company shares at a set price. This arrangement provided taxpayers with $1.03 billion – on $4 billion worth of loans – when the <a href="https://www.nytimes.com/1983/09/13/business/chrysler-top-bids-to-buy-back-stock-rights.html">government sold the shares</a> in 1983.</p>
<p>And more recently, Congress <a href="https://www.bloomberg.com/news/articles/2012-09-14/tallying-the-full-cost-of-the-financial-crisis?sref=Hjm5biAW">pledged trillions of dollars</a> saving the financial system in 2008. For my purposes, I split the aid to companies into four distinct bailouts, three of which made large profits. </p>
<p>One in particular, the <a href="https://ftalphaville.ft.com/2010/09/17/346281/why-does-everyone-hate-tarp/">much-derided</a> <a href="https://www.treasury.gov/initiatives/financial-stability/TARP-Programs/Pages/default.aspx">Troubled Asset Relief Program</a>, was a $854 billion bailout for financial companies. Ultimately, $382 billion was dispersed to Wall Street firms like Citigroup, JPMorgan and AIG in exchange for preferred stock and other compensation. Taxpayers earned $32.5 billion. </p>
<p>A <a href="https://fas.org/sgp/crs/misc/R44525.pdf">separate bailout</a> to Fannie Mae and Freddie Mac was <a href="https://www.bloomberg.com/quicktake/fannie-mae-and-freddie-mac-irbtxzdk">even more lucrative</a>. The U.S. government received preferred stock for the $234 billion invested in the two housing giants. Taxpayers got its money back as well as $123 billion in profits. </p>
<p>There were also two bailouts – for the <a href="https://fas.org/sgp/crs/misc/RS21278.pdf">Farm Credit System</a> in 1987 and the <a href="https://www.congress.gov/106/plaws/publ51/PLAW-106publ51.pdf">Steel and Oil and Gas industries</a> in 1999 that likely made money, but I was unable to find all the details necessary to do the full analysis. At a minimum, my review suggests both broken even. </p>
<p><iframe id="vnpqz" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/vnpqz/7/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Losses (mostly) by design</h2>
<p>Three bailouts approved by Congress since 1969 cost taxpayers’ money. In two of the cases, this was by design. </p>
<p>The railroad industry, from 1960 to 1970, <a href="https://www.nytimes.com/1973/02/11/archives/collapse-of-penn-central-reflects-ills-of-railroads-collapse-of.html">saw its total net income cut in half due</a>, in part, to mismanagement, market shifts in transportation from rail to vehicles and poor oversight by regulatory agencies. Its collapse not only ensured a large spike in unemployment, it meant losing a mode of transportation that, at the time, moved 41% of the nation’s goods and shipped U.S. military equipment domestically. </p>
<p>Congress, seeing this industry as vital to U.S. commerce and defense, <a href="https://fas.org/sgp/crs/misc/R46277.pdf">wanted to ensure the railroad industry remained afloat</a>. Beginning in 1970, several ailing railroad companies received $25.3 billion worth of loan guarantees and grants that were never meant to be repaid. Eventually, seven bankrupt rail companies were consolidated into one profit-making corporation on the taxpayers’ dime. </p>
<p>The terrorist attacks on 9/11 <a href="https://link.springer.com/chapter/10.1057/9780230100060_7">shut down the national aviation system</a> for three days and significantly reduced airline traffic for the remainder of 2001. The airline industry, which made up close to 10% of U.S. GDP at the time, was expected to lose $5 billion by the end of 2001. </p>
<p>Congress quickly <a href="https://www.washingtonpost.com/archive/politics/2001/09/22/congress-passes-15-billion-airline-bailout/964da954-32ef-4689-b5e5-cf3ef8f6f982/">provided the industry</a> with $22.1 billion in financial assistance to ensure its stability and viability. A third of this assistance came in the form of grants never meant for repayment as compensation for losses stemming from 9/11 and the three-day shutdown of the national aviation system. The remainder came in the form of loan guarantees that produced a slight profit. </p>
<p>And with extra money left over from the Troubled Asset Relief Program, the <a href="https://www.treasury.gov/initiatives/financial-stability/reports/Documents/2020.03%20March%20Monthly%20Report%20to%20Congress.pdf">U.S. Treasury loaned automakers</a> General Motors and Chrysler and their financing units about $97.2 billion in exchange for the right to purchase stock at a set price. This was in addition to a <a href="https://money.cnn.com/2008/09/29/autos/federal_loans/index.htm?section=money_latest">$30.5 billion loan</a> issued in September 2008 to finance more fuel-efficient cars. While most of the aid actually disbursed was paid back, taxpayers lost $14.9 billion after both companies went bankrupt.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/330569/original/file-20200426-163062-9eygsl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chrysler’s second bailout wasn’t as successful as its first.</span>
<span class="attribution"><span class="source">Joe Raedle/Getty Images</span></span>
</figcaption>
</figure>
<h2>Coronavirus bailouts</h2>
<p>Like the bailouts for the railroad and airline industries, a large chunk of the coronavirus aid is never meant to be paid back. </p>
<p>As long as small businesses keep workers on their payrolls, they won’t have to pay back the <a href="https://www.marketwatch.com/story/house-set-to-pass-bill-that-replenishes-coronavirus-aid-program-for-small-businesses-2020-04-23">$659 billion in total assistance</a> under the payroll protection program. </p>
<p>The <a href="https://fortune.com/2020/04/19/airlines-coronavirus-travel-industry-bailout/">airline industry has received $61 billion</a> in financial assistance from Congress, including a little more than half in grants. Small passenger airlines, the bulk of applicants, will not repay this assistance, while large airlines are expected to. </p>
<p>Congress also authorized Treasury Secretary Steven Mnuchin to provide distressed corporations and state and local governments <a href="https://www.schiffhardin.com/insights/publications/2020/cares-act-500-billion-economic-stabilization-fund-for-severely-distressed-businesses">with up to $454 billion in loans</a> and $17 billion for public companies <a href="https://www.bloomberg.com/news/articles/2020-04-24/mnuchin-asks-for-equity-stakes-in-exchange-for-17-billion-aid">deemed critical to national security</a>. Taxpayers will get interest and possibly equity stakes in some cases. </p>
<p>At the end of the day, Congress knows that when literally tens of millions of jobs, millions of small businesses and dozens of vital industries are at stake, you don’t haggle over the details. You just rescue them.</p>
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<p class="fine-print"><em><span>Scott Newsome does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Seven of the past 10 business bailouts since 1969 have either broke even, or more frequently, ended up making a tidy profit for taxpayers.Scott Newsome, Ph.D. candidate in Politics, University of California, Santa CruzLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319942020-02-20T01:56:46Z2020-02-20T01:56:46ZHolden was never really Australian<figure><img src="https://images.theconversation.com/files/316321/original/file-20200220-10985-o0wmow.jpg?ixlib=rb-1.1.0&rect=1058%2C296%2C989%2C614&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">General Motors Holden</span></span></figcaption></figure><p>In the wave of nostalgia about the <a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">death</a> of the Holden brand in Australia, something important has been overlooked.</p>
<p>Holdens were never especially Australian.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=816&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=816&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=816&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1025&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1025&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1025&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">James Holden.</span>
<span class="attribution"><a class="source" href="https://en.wikisource.org/wiki/Notable_South_Australians/James_Alexander_Holden,_J.P.">Wikisource</a></span>
</figcaption>
</figure>
<p>Their origins stretch back to 1856, when James Holden established a saddlery in Adelaide. </p>
<p>The firm expanded into the car industry in the first world war when the Commonwealth government placed a ban on the import of cars, and only permitted import of chassis. </p>
<p>Holden seized the opportunity to build the cars on the imported American chassis.</p>
<h2>Holden assembled cars</h2>
<p>The tariff on imported cars introduced after the war led the firm to negotiate a deal where it assembled (“manufactured”) General Motors cars, often Chevrolets. </p>
<p>Holden advertising said the “<a href="https://nla.gov.au/nla.obj-383039195/view?sectionId=nla.obj-387021766&searchTerm=general+motors+holden&partId=nla.obj-383128506#page/n1/mode/1up">new Chevrolets</a>” were “built in Australia for all conditions of service”. His son Edward sold out to the Americans in 1931 who renamed the firm General Motors Holden.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Advertisement, July 1931.</span>
<span class="attribution"><a class="source" href="https://nla.gov.au/nla.obj-383039195/view?sectionId=nla.obj-387021766&searchTerm=general+motors+holden&partId=nla.obj-383128506#page/n1/mode/1up">NLA</a></span>
</figcaption>
</figure>
<p>During the second world war, it deftly offered its services to the Commonwealth government.</p>
<p>With car sales stalling, government contracts to produce trucks and aeroplane parts kept the firm in business and enabled it to develop the infrastructure that would allow it to shift from assembling vehicles to making them.</p>
<p>In May 1944 the government gave it permission to divert scarce war-time resources to drawing up plans for an Australian-made car.</p>
<h2>General Motors was suspicious</h2>
<p>But General Motors’ US president Alfred Sloan wan’t keen. Australia was a small market and he might not see a return on his investment.</p>
<p>And he had grave reservations about doing business with what he thought was a <a href="https://books.google.com.au/books?id=9IdVCgAAQBAJ&pg=PT59&lpg=PT59&dq=socialist+holden+%22general+motors%22+chifley&source=bl&ots=Sieb7XFhhx&sig=ACfU3U2Rhq8TbM5RK_MZJXnu4ADmXhUN6g&hl=en&sa=X&ved=2ahUKEwilx4bC_9znAhX76XMBHf3RC68Q6AEwDnoECAsQAQ#v=onepage&q=socialist%20holden%20%22general%20motors%22%20chifley&f=false">socialist</a> Labor government. It owned railways and a telephone network, something uncommon in the US.</p>
<p>When Prime Minister Ben Chifley arranged a government loan of A£2.5 million, he agreed.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=360&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=360&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=360&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=452&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=452&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=452&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Prime Minister Ben Chifley at the launch of the Holden’s 48/215 in 1948.</span>
<span class="attribution"><span class="source">National Motor Museum/Heritage Images</span></span>
</figcaption>
</figure>
<p>Then the campaign to present the Holden as an Australian car began in earnest.</p>
<p>Politicians and journalists were wooed with special tours and advance viewings of the prototypes. However, it was made clear at the time that this was not an entirely Australian endeavour. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1153&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1153&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1153&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1449&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1449&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1449&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">1948 Holden advertisement.</span>
<span class="attribution"><a class="source" href="https://nla.gov.au/nla.obj-550404706/view?partId=nla.obj-550440935#page/n24/mode/1up">The Bulletin, NLA</a></span>
</figcaption>
</figure>
<p>Chifley launched it at a lectern festooned with the Australian, British, and American flags, describing it as a link “between this country and the American people”. </p>
<p>An <a href="https://nla.gov.au/nla.obj-550404706/view?sectionId=nla.obj-552716840&searchTerm=engineering+experience+and+know-how+behind+all+General+Motors+cars&partId=nla.obj-550440935#page/n24/mode/1up">early advertisement</a> described it as “made in Australia especially for Australian conditions” but with the “engineering experience and know-how behind all General Motors cars”. </p>
<p>“You get the dependability which stands behind such famous GM names as Cadillac, Buick, Oldsmobile, Pontiac, Chevrolet and Vauxhaull,” it reassured wives and husbands.</p>
<p>It entered the perfect market. After years of enforced austerity, Australians were ready to consume, and they finally had the money to do it. Broader post-war demographic shifts and social trends enhanced its appeal. As Australians moved to new suburbs on the outer fringes of cities, the Holden became an indispensable part of modern life.</p>
<h2>It mocked rather than competed with Japan</h2>
<p>Holden’s dominance began to erode in the 1960s in the face of competition from Ford and Japanese manufacturers. Rather than developing local solutions, GMH increasingly looked to its parent company GM for new Americian designs. </p>
<p>American commercials were imported and “translated”.</p>
<p><a href="https://www.youtube.com/watch?v=zqweygy9K9Y">America’s</a> “baseball, hotdogs, apple pie and Chevrolet became <a href="https://www.youtube.com/watch?v=VGW-WX77zjY">Australia’s</a> "football, meat pies, kangaroos and Holden cars”.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/zqweygy9K9Y?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">“Baseball, Hot dogs, Apple pie, Chevrolet” American General Motors commercial in the 1970s.</span></figcaption>
</figure>
<p>The removal of government tariffs on imported cars in the 1980s increased foreign competition. GMH responded by producing fewer models in Australia and “rebadging” imported GM cars as Holdens.</p>
<p>Reduced to a badge, Holden was losing its identity as well as its connection with Australians.</p>
<p>Although its financial fortunes improved in the 1990s, its Australianness was becoming more tenuous with each new model. By the new century, Holdens were indistinguishable from German Opels and South Korean Daewoos.</p>
<h2>And became more foreign, the more it denied it</h2>
<p>While advertising campaigns continued to extol Holden’s Australianness and, increasingly, its <a href="https://campaignbrief.com/holden-promotes-the-all-new-ho/">nostalgic connection</a> with growing up, buyers could increasingly see through them. Holdens were no more Australian than Fords, Toyotas or Mitsubishis.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/WwCXMWmAzhc?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Commodore ad, “Are you sure”, 2018.</span></figcaption>
</figure>
<p>Its decision to end <a href="https://www.abc.net.au/news/2017-10-08/holden-closure-australia-history-car-manufacturing/9015562">Australian manufacturing</a> severed the last strand of sentimental attachment.</p>
<p>Denied ongoing government support, and facing a market that no longer identified with its products, GM decided its relationship with Australia was no longer worth the effort. This week’s <a href="https://media.gm.com/media/au/en/holden/news.detail.html/content/Pages/news/au/en/2020/feb/0217_Holden.html">announcement</a> was the inevitable formality.</p>
<hr>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">Why Australians fell out of love with Holdens</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/131994/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Crawford does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s icon was owned and controlled by an American firm long suspicious about Australia.Robert Crawford, Professor of Advertising, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319152020-02-18T19:01:51Z2020-02-18T19:01:51ZVale Holden: how America’s General Motors sold us the Australian dream<figure><img src="https://images.theconversation.com/files/315840/original/file-20200218-11005-116edca.jpg?ixlib=rb-1.1.0&rect=26%2C13%2C4384%2C3525&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">State Library Victoria </span></span></figcaption></figure><p>General Motors has <a href="https://www.abc.net.au/news/2020-02-17/holden-car-brand-axed-after-160-years-in-australia/11972092">announced</a> the Holden brand will be “retired” in 2021. </p>
<p>This week’s announcement has been a long time coming. The Holden brand has been in a state of terminal decline since General Motors ceased local manufacturing in October 2017. A once-dominant presence in the everyday life of Australians, Holden became simply one of many imported cars on offer for the Australian consumer.</p>
<p>In 1926, when General Motors set up an Australian subsidiary, management immediately attempted to integrate the firm into the Australian community, importing General Motors <a href="https://www-tandfonline-com.ez.library.latrobe.edu.au/doi/full/10.1080/1031461X.2019.1651354">public relations practices</a> to Australia. </p>
<p>Using this then novel form of corporate communication, General Motors management placed the firm at the forefront of the nation-building project. It produced pamphlets and took out newspaper advertisements heralding General Motors’ contribution to the local economy. </p>
<p>A 1929 pamphlet asked: “What does General Motors mean?” </p>
<p>It answered: “More wealth for Australia, more jobs for Australians”. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=747&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=747&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=747&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=939&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=939&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=939&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A Holden ad published in the Daily Mercury on June 22 1932, with General Motors’ slogan, ‘More wealth for Australia, more jobs for Australians’.</span>
<span class="attribution"><a class="source" href="https://trove.nla.gov.au/newspaper/article/172806804?searchTerm=%22more%20wealth%20for%20Australia%2C%20more%20jobs%20for%20Australians%22&searchLimits=#">National Library of Australia</a></span>
</figcaption>
</figure>
<h2>An inherited identity</h2>
<p>In 1931, General Motors acquired South Australian car body manufacturer Holden’s Motor Body Builders. The formation of General Motors-Holden allowed General Motors to inherit an Australian identity. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">Why Australians fell out of love with Holdens</a>
</strong>
</em>
</p>
<hr>
<p>In the wake of the Great Depression, General Motors’ public relations focused on the firm’s contribution to full employment. The Holden brand was increasingly tied to its industrial workforce. This was a deliberate marketing development, directed towards the paradoxical goal of making General Motors a local institution. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=447&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=447&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=447&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=562&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=562&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=562&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Workers at Holden’s Motor Body Builders, King William Street, Adelaide, putting wooden frames together, c 1919-1928.</span>
<span class="attribution"><span class="source">State Library South Australia</span></span>
</figcaption>
</figure>
<p>In 1948, General Motors-Holden, in close collaboration with the Australian government, produced the first fully Australian-made car: the Holden 48-215, popularly known as the Holden FX. </p>
<p>Marketed as “Australia’s own”, the Holden was a resounding success for General Motors. The car entrenched local automotive manufacturing and solidified a powerful symbolic connection with the Holden brand and the stability of post-war Australian capitalism.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=477&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=477&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=477&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=600&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=600&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=600&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A Holden FX in an Australian paddock.</span>
<span class="attribution"><span class="source">State Library Victoria</span></span>
</figcaption>
</figure>
<p>It was in this context the Elizabeth manufacturing facilities opened in South Australia in 1954, forming the backbone of the community and providing a stable source of employment for years to come. </p>
<p>Production and sales of Holdens boomed in the 1950s, helped along by full employment for white men, high tariff protection, state-sponsored migration and amicable relations with trade unions. </p>
<h2>Reshaping lives</h2>
<p>By 1962, the one millionth Holden rolled off the assembly line, and Australian society had been transformed. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=508&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Norm Meninga with sons Mal and Geoffrey in front of the family car in Bundaberg, c. 1965-1970.</span>
<span class="attribution"><span class="source">State Library Queensland</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p><a href="https://www.ausstats.abs.gov.au/ausstats/free.nsf/0/FCF944CBE191A019CA2573AD00200367/$File/13010_1963%20section%2014.pdf">Expanding rates</a> of car ownership fostered a unique link between the Holden and the emerging notion of the “<a href="https://www-tandfonline-com.ez.library.latrobe.edu.au/doi/abs/10.1080/10314617908595612">Australian way of life</a>”. This was a unique post-war construction, and one deeply related to the growth of manufacturing and a growing suburban landscape. </p>
<p>The new industrial economy reshaped the everyday lives of Australians, fostering booming home ownership and an ever-expanding market for consumer durables. This entrenched General Motors-Holden within the cultural imagination, enabling widespread acceptance of Holden as “Australia’s Own Car”. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=427&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=427&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=427&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=537&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=537&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=537&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Promotional pamphlet produced by General Motors-Holden, c. 1948.</span>
<span class="attribution"><span class="source">State Library South Australia</span></span>
</figcaption>
</figure>
<p>But this symbolism of Holden obscures a more complicated history, including large-scale <a href="https://trove.nla.gov.au/newspaper/article/236847923?searchTerm=strike%20at%20GMH&searchLimits=l-decade=196%7C%7C%7Cl-year=1964%7C%7C%7Cl-month=10">industrial dispution</a>, <a href="https://www-jstor-org.ez.library.latrobe.edu.au/stable/27516626?sid=primo&origin=crossref&seq=1#metadata_info_tab_contents">racial tensions</a> on the assembly line and a long-term decline in the industrial workforce. </p>
<p>The dominant imagery of the Australian way of life was male-dominated. Women’s roles were restricted to housewives and mothers. This worked to render the role of women in the firm invisible. But <a href="https://collections.slsa.sa.gov.au/resource/BRG+213/81/2/3">women had worked</a> at General Motors-Holden from its inception.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=782&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=782&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=782&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=982&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=982&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=982&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Women working at General Motors-Holden in 1942.</span>
<span class="attribution"><span class="source">State Library South Australia</span></span>
</figcaption>
</figure>
<p>Nostalgia for post-war stability ignores the instability faced by those who were excluded, and a growing dissatisfaction with the demands for social uniformity that accompanied the notion of an “Australian way of life”. </p>
<p>Yet the symbolism endured, perhaps best captured by Prime Minister Paul Keating in 1994 with the launch of the “<a href="https://pmtranscripts.pmc.gov.au/release/transcript-9205">Working Nation</a>” white paper. Keating chose to launch the white paper at the Holden factory, arguing for Holden’s place at the forefront of Australian nation building. </p>
<h2>Changing worlds</h2>
<p>The Australia of today is very different from the one that embraced Holden as a symbol of national culture.</p>
<p>The Holden car was a powerful symbol for many post-war migrants, as a source of both <a href="https://trove.nla.gov.au/newspaper/article/176527777?searchTerm=migrants%20%22General-Motors%20Holden%22&searchLimits=l-decade=195">employment</a> and <a href="https://academic-oup-com.ez.library.latrobe.edu.au/hwj/article/24/1/111/618748">inclusion</a> into the national myth.</p>
<p>But a once-great manufacturer is now a <a href="https://www.abc.net.au/news/2019-11-27/former-holden-workers-still-struggling-to-find-employment/11741876">painful public memory</a>, representing closures, lay-offs and long-term unemployment. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/an-end-to-australias-auto-dream-why-we-loved-holden-21368">An end to Australia's auto dream: why we loved Holden</a>
</strong>
</em>
</p>
<hr>
<p>With access to affordable housing and stable employment increasingly out of reach for a growing number of Australians, the place of the car in the Australian dream has shifted. But the Holden brand was always constructed to serve the interests of its parent company General Motors. </p>
<p>After ceasing Australian manufacturing, the Holden brand was disconnected from our national myths. The car of the last century is no more.</p><img src="https://counter.theconversation.com/content/131915/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jack Fahey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Thanks to savvy public relations, General Motors inserted itself at the heart of culture in mid-century Australia. But dreams don’t last forever.Jack Fahey, PhD Candidate, Department of Archaeology and History, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1239452019-09-23T11:33:14Z2019-09-23T11:33:14ZWhy the United Auto Workers GM strike is headed for failure<figure><img src="https://images.theconversation.com/files/293446/original/file-20190921-135122-qihsw7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">GM autoworkers went on strike on Sept. 15.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/Search?query=general+motors+strike&ss=10&st=kw&entitysearch=&toItem=18&orderBy=Newest&searchMediaType=allmedia">AP Photo/Mark Humphrey</a></span></figcaption></figure><p>The United Auto Workers union has a long history of successful <a href="https://www.foxbusiness.com/industrials/history-gm-strike-uaw-auto-workers">strikes against General Motors</a>. </p>
<p>The most famous example is the <a href="https://www.doi.org/10.1086/682956">1936 to 1937 Flint strike</a> that resulted in higher wages and the union being recognized for the first time as the sole collective bargaining representative of workers by GM. For the next 15 years, UAW strikes were relatively common and extremely successful, culminating in the <a href="https://seekingmichigan.org/look/2011/08/23/treaty-of-detroit">Treaty of Detroit in 1950</a>, which shaped management-labor relations for decades. Even today, worker strikes in most industries are still generally considered an <a href="https://www.washingtonpost.com/news/posteverything/wp/2018/05/31/its-time-to-acknowledge-that-strikes-work">effective tactic</a>.</p>
<p>So when UAW on Sept. 15 began <a href="https://www.wsj.com/articles/behind-the-gm-uaw-strike-two-combatants-with-something-to-prove-11568937301">its first nationwide strike</a> against GM in more than a decade – for, among other things, higher wages and an end to its <a href="https://www.reuters.com/article/us-autos-usa-families/for-uaw-members-two-tier-wage-issue-is-personal-idUSKBN0OI0C420150602">two-tiered salary system</a> – you might think workers stood a reasonable chance to win the concessions they sought. </p>
<p><a href="https://scholar.google.com/citations?user=0KmQgfIAAAAJ&hl=en&oi=ao">My research into the history</a> of the U.S. auto industry, however, suggests that the strike is likely doomed to fail. </p>
<h2>Why past strikes succeeded</h2>
<p>In “<a href="http://www.russellsage.org/publications/wrecked">Wrecked: How the American Automobile Industry Destroyed Its Capacity to Compete</a>,” sociologist Michael Schwartz and I looked at the history of labor relations and production systems in the U.S. and Japanese auto industry to better understand the decline of the “Big Three” automakers – General Motors, Ford and Fiat Chrysler.</p>
<p>In the process of our research we also gained an understanding of what makes an auto strike successful. Essentially, for a strike to achieve its aims, workers need sufficient leverage over production to be able to disrupt normal functioning for long enough that it would be cheaper for the company to offer the concessions. Put another way, workers have to cause the automaker enough pain to make it cry uncle. </p>
<p>The longer and more disruptive a strike is, the larger the concessions. Higher levels of what we call structural leverage mean that a relatively small number of workers can cause maximal disruption. </p>
<p>During the first half of the 20th century, General Motors produced cars using a just-in-time delivery system called “flexible production.” The automaker carried no stockpiles of inventory; it ordered vehicle components as it needed them. It also clustered its suppliers – which were often the sole source of key parts – around its American plants, <a href="https://research.upjohn.org/up_press/3/">where virtually all of its cars were built at the time</a>. </p>
<p>This made it easy for striking workers to cause the disruption they needed to extract major concessions from GM. For example, the Flint strike in 1936 and 1937 resulted in the closure of key plants, which <a href="https://www.doi.org/10.1086/682956">shut down 75% of GM’s production</a>. </p>
<p>This high level of structural leverage helped UAW strikes to be consistently successful, whether they were national strikes or small <a href="https://www.jstor.org/stable/2096206?seq=1#metadata_info_tab_contents">wildcat strikes</a> conducted by workers against the will of leadership.</p>
<h2>Losing leverage</h2>
<p>Things look different today. </p>
<p>GM and other U.S. auto companies abandoned flexible production during the 1950s and ‘60s to weaken labor’s leverage, as we learned in our research. Today GM carries <a href="https://www.autonews.com/sales/automakers-inventory-high-uaw-walks-job">large stockpiles of inventory</a>, and its suppliers and assembly plants are located all over the world. Just 28% of its workforce is in the U.S., and its cars <a href="https://www.foxbusiness.com/industrials/ford-gm-dont-make-the-most-american-made-car-heres-who-does">don’t rank high</a> on an index measuring how much of a car is made in the United States. </p>
<p>The result of the current production structure is that while a national strike shuts down U.S. production, that is only a minor part of GM’s total capacity.</p>
<p>Further, the strike’s expected costs to GM are a drop in its bucket. Some analysts are estimating that the strike will cost <a href="https://www.wsj.com/articles/with-no-vehicles-being-made-uaw-strike-could-cost-gm-100-million-a-day-11568653935">GM US$50 million to $100 million</a> per day. Even if the strike lasts a month, that’s a tiny fraction of GM’s <a href="https://www.marketwatch.com/investing/stock/gm/financials">$147 billion in 2018 sales</a>. </p>
<p>Finally, union leadership hampered the strike’s effectiveness before it even began by publicly announcing their plan. This gave GM extra time to prepare by <a href="https://www.detroitnews.com/story/business/autos/general-motors/2019/09/13/general-motors-supply-uaw-strike/2276885001/">stocking up on inventory</a>. </p>
<p>This isn’t to say that it’s impossible for auto workers to launch a successful strike in today’s environment. It’s just that it’ll take a lot longer. And this matters because striking workers suffer during strikes. Their pay goes from <a href="https://work.chron.com/average-pay-auto-workers-union-member-24071.html">$16 to $38 per hour</a> to about <a href="https://www.usatoday.com/story/money/2019/09/16/gm-uaw-workers-strike-pay/2342075001/">$1.25 per hour</a>, which they get out of the union’s strike fund. </p>
<p>While it’s not impossible that workers will wait out GM and win major concessions, but given the structure they are operating in, it is unlikely.</p><img src="https://counter.theconversation.com/content/123945/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Josh Murray receives funding from the Russell Sage Foundation. </span></em></p>The odds are stacked against the striking workers at General Motors. A sociologist who’s studied the decline of the US auto industry explains why.Joshua Murray, Assistant Professor of Sociology, Vanderbilt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1230602019-09-12T13:10:03Z2019-09-12T13:10:03ZHow corporate bankruptcy works<p><a href="https://s3.amazonaws.com/abi-org/Newsroom/Bankruptcy_Statistics/Total-Business-Consumer1980-Present.pdf">More than 20,000 companies</a> file for bankruptcy every year. </p>
<p>Although companies follow many different paths to bankruptcy, each one encounters a process that is carefully designed to balance the rights of debtors and creditors. </p>
<p>As I’ve learned from <a href="http://www.law.uga.edu/profile/lindsey-simon">studying and practicing bankruptcy law</a>, the system is not perfect, and sometimes outcomes seem unfair. But bankruptcy is definitely not a “get out of jail free” card for companies deep in debt. </p>
<h2>Making the best of a grim situation</h2>
<p>To most people, bankruptcy <a href="https://hbswk.hbs.edu/item/how-chapter-11-saved-the-us-economy">has a negative image</a>. And for good reason: A filing almost always means there’s not enough money to go around. </p>
<p>But the system makes the best of a grim situation by imposing an orderly and open process that preserves value and encourages negotiation. Bankruptcy reorganizations by well-known brands such as <a href="https://www.reuters.com/article/us-delta-bankruptcy/delta-exits-bankruptcy-after-19-month-restructuring-idUSWNAS850820070430">Delta</a> and <a href="https://ssrn.com/abstract=3252104">General Motors</a> show that it can bring parties together and resurrect struggling companies. </p>
<p>At the most fundamental level, the Bankruptcy Code creates an estate to collect all assets in one place, identify and categorize claims against the debtor in terms of priority and then distribute the assets accordingly. </p>
<p>Exactly how this plays out depends largely on what type of bankruptcy case the debtor files.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Delta went public after emerging from bankruptcy in 2007.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Delta-Stock/18e8c3a4e01748f190d454f514311bf3/8/0">AP Photo/Mark Lennihan</a></span>
</figcaption>
</figure>
<h2>Chapter 7 vs. Chapter 11</h2>
<p>Large business debtors have two bankruptcy options: liquidation or reorganization. </p>
<p><a href="https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics">Chapter 7 cases are designed</a> to liquidate the company, meaning it will no longer exist, and any remaining value is divided up and distributed to creditors. </p>
<p>In contrast, a <a href="https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics">Chapter 11 reorganization</a> allows a debtor to sell some or all of its assets or propose a reorganization plan that aims to resolve and satisfy enough creditors to re-emerge as a going concern. </p>
<p>For example, airlines United, Delta and American <a href="https://www.vox.com/the-goods/2019/3/11/18259894/bankruptcy-business-chapter-11-close-stores">all filed for Chapter 11</a> protection in the mid-2000s and managed to unload enough debt to stay aloft. More recent filings seeking reorganization include those by <a href="https://www.investopedia.com/news/downfall-of-sears/">Sears</a>, <a href="https://www.reuters.com/article/us-pg-e-us-bankruptcy/pge-bondholders-propose-competing-bankruptcy-plan-worth-up-to-30-billion-idUSKCN1TQ21D">Pacific Gas and Electric Company</a> and <a href="https://www.dailyrepublic.com/all-dr-news/wires/business/toys-r-us-is-back-from-the-dead-but-its-new-stores-are-unrecognizable/">Toys R Us</a>. </p>
<p>Once a Chapter 11 plan of reorganization is finalized and approved, a debtor emerges from bankruptcy and continues operating, usually in a stronger position than before. </p>
<h2>Benefits of bankruptcy for debtors</h2>
<p>Bankruptcy provides at least two valuable benefits to all debtors: time and space. </p>
<p>The moment a debtor files its petition, an automatic stay is imposed on creditors, which operates like a pause button on any collection efforts, litigation or similar actions. Creditors can ask the court to lift the stay under certain circumstances, but the standard for doing so is often difficult to meet.</p>
<p>The bankruptcy court has broad authority to control all matters involving the debtor’s estate, including claims that are distantly related to the main bankruptcy case. The debtor may ask the court to pause other lawsuits outside of the bankruptcy case if they affect the estate. By bringing together all those with a stake in the company’s assets in one place, a debtor can more efficiently deal with all claims against it.</p>
<p>Debtors then evaluate their problems and make the necessary changes to succeed after reorganizing. This includes deciding which contracts they want to carry forward and which to abandon. </p>
<p>To avoid a contested process, savvy debtors seek a global settlement with as many stakeholders as possible and offer “sweeteners” to sway undecided creditors to support their plan.</p>
<h2>Benefits for creditors</h2>
<p>Clearly, bankruptcy provides debtors with significant power to rearrange their business affairs.</p>
<p>What many people misunderstand, however, is that this power is balanced by <a href="https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics">strong creditor protections</a> For example, the Bankruptcy Code requires a debtor to publicly file information about all of its assets and liabilities, sit for a bankruptcy deposition with creditors and seek the court’s permission before taking many actions outside of the ordinary course of business. </p>
<p>The code provides for additional checks on the debtor, including the unsecured creditors’ committee and the <a href="https://www.justice.gov/ust">U.S. Trustee</a>. Creditors that are concerned about the debtor’s ability to preserve the estate’s value may ask the court to appoint an examiner or trustee to take possession of the estate, and creditors may even move to dismiss the case if they believe the debtor is abusing the bankruptcy process. </p>
<p>These and other features add a degree of fairness to an inherently unjust situation. The debtor may be sitting in the driver’s seat, but numerous other stakeholders have the power to make sure that the company follows the rules of the road. </p>
<p><em>This is a shortened version of an <a href="https://theconversation.com/why-companies-file-for-bankruptcy-and-how-it-protects-both-debtors-and-creditors-113101">article originally published</a> on Aug. 29, 2019.</em></p>
<p>[ <em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/123060/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lindsey Simon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A bankruptcy filing always means there’s not enough money to go around, but the process ensures both debtors and creditors are protected.Lindsey Simon, Assistant Professor of Law, University of GeorgiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1131012019-08-29T12:20:40Z2019-08-29T12:20:40ZWhy companies file for bankruptcy – and how it protects both debtors and creditors<figure><img src="https://images.theconversation.com/files/289919/original/file-20190828-184217-85d8hm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Critics have worried Purdue might use bankruptcy to avoid accountability. </span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Opioid-Crisis-Purdue-Bankruptcy/59244806d067425bba37138857b93bc9/62/0">AP Photo/Jessica Hill</a></span></figcaption></figure><p><a href="https://www.nytimes.com/2019/08/27/health/sacklers-purdue-pharma-opioid-settlement.html?action=click&module=Top%20Stories&pgtype=Homepage">Reports have emerged</a> that Purdue Pharma is in settlement talks to resolve thousands of federal and state lawsuits over its role in fueling the <a href="https://theconversation.com/us/topics/opioid-epidemic-26182">opioid epidemic</a>. As part of the reported settlement, the company would file for bankruptcy. </p>
<p>Earlier this year, Insys Therapeutics <a href="https://www.npr.org/2019/06/10/731363225/insys-files-for-chapter-11-days-after-landmark-opioid-settlement-of-225-million">became the first opioid drugmaker</a> to enter bankruptcy following its US$225 million settlement with the Department of Justice. In recent months, <a href="https://www.commondreams.org/news/2019/03/04/when-we-say-pharma-greed-kills-what-we-mean-critics-respond-possible-purdue">there’s been speculation</a> that drugmakers might use bankruptcy as a way to escape accountability and avoid billions of dollars in litigation costs. </p>
<p>Fortunately, that’s not how bankruptcy works. Rather, as <a href="http://www.law.uga.edu/profile/lindsey-simon">I’ve learned in my experience</a> studying and practicing bankruptcy law, the process is designed to not only protect debtors like Insys or Purdue but also creditors such as states and other opioid litigants. </p>
<p>Bankruptcy is not perfect, and sometimes outcomes seem unfair. But it’s definitely not the “get out of jail free” card that many fear. </p>
<h2>Making the best of a grim situation</h2>
<p>To most people, bankruptcy <a href="https://hbswk.hbs.edu/item/how-chapter-11-saved-the-us-economy">has a negative image</a>. And for good reason: A filing almost always means there’s not enough money to go around. </p>
<p>But the system makes the best of a grim situation by imposing an orderly and open process that preserves value and encourages negotiation. Bankruptcy reorganizations by well-known brands such as <a href="https://www.reuters.com/article/us-delta-bankruptcy/delta-exits-bankruptcy-after-19-month-restructuring-idUSWNAS850820070430">Delta</a> and <a href="https://ssrn.com/abstract=3252104">General Motors</a> show that it can bring parties together and resurrect struggling companies. </p>
<p>At the most fundamental level, the Bankruptcy Code creates an estate to collect all of the debtor’s assets into one place, identify and categorize claims against the debtor in terms of priority and then distribute the assets accordingly. </p>
<p>Exactly how those three core tasks play out in a given case will vary depending on what type of bankruptcy case the debtor files and specific facts about the debtor.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/264725/original/file-20190319-60964-f92spd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Delta went public after emerging from bankruptcy in 2007.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Delta-Stock/18e8c3a4e01748f190d454f514311bf3/8/0">AP Photo/Mark Lennihan</a></span>
</figcaption>
</figure>
<h2>Chapter 7 vs. Chapter 11</h2>
<p>Large business debtors have two bankruptcy options: liquidation or reorganization. </p>
<p><a href="https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics">Chapter 7 cases are designed</a> to liquidate the company, meaning it will no longer exist, and any remaining value will be divided up and distributed to creditors. </p>
<p>In contrast, a <a href="https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics">Chapter 11 reorganization</a> allows a debtor to sell some or all of its assets or propose a reorganization plan that aims to resolve and satisfy enough creditors to re-emerge as a going concern. </p>
<p>For example, airlines United, Delta and American <a href="https://www.vox.com/the-goods/2019/3/11/18259894/bankruptcy-business-chapter-11-close-stores">all filed for Chapter 11</a> protection in the mid-2000s and managed to unload enough debt to stay aloft. More recent filings seeking reorganization include those by <a href="https://www.investopedia.com/news/downfall-of-sears/">Sears</a>, <a href="https://www.reuters.com/article/us-pg-e-us-bankruptcy/pge-bondholders-propose-competing-bankruptcy-plan-worth-up-to-30-billion-idUSKCN1TQ21D">Pacific Gas and Electric Company</a> and <a href="https://www.dailyrepublic.com/all-dr-news/wires/business/toys-r-us-is-back-from-the-dead-but-its-new-stores-are-unrecognizable/">Toys R Us</a>. </p>
<p>Companies sometimes initially file under Chapter 11 to reorganize but later decide to shut down after they fail to confirm a plan or find a suitor. Recent examples of this include <a href="https://money.cnn.com/2018/04/19/news/companies/bon-ton-liquidation/index.html">Bon-Ton Stores</a>, <a href="http://www.nbcnews.com/id/28691963/ns/business-us_business/t/circuit-city-liquidate-remaining-us-stores/#.XPWBgS2ZNTY">Circuit City</a> and <a href="https://dealbook.nytimes.com/2011/02/16/borders-files-for-bankruptcy/">Borders</a>.</p>
<p>For companies looking to survive, the <a href="https://uscode.house.gov/view.xhtml?path=/prelim@title11&edition=prelim">Bankruptcy Code</a> requires either creditor support or payment in full. If even one class of impaired creditors votes against a plan, the company must go through a demanding “cramdown” process for court approval to proceed.</p>
<p>Once a Chapter 11 plan of reorganization is finalized and approved, a debtor emerges from bankruptcy and continues operating, usually in a stronger position than before. </p>
<h2>Benefits of bankruptcy for debtors</h2>
<p>Bankruptcy provides at least two valuable benefits to all debtors: time and space. </p>
<p>The moment a debtor files its petition, an automatic stay is imposed on creditors, which operates like a pause button on any collection efforts, litigation or similar actions. Creditors can ask the court to lift the stay under certain circumstances, but the standard for doing so is often difficult to meet.</p>
<p>The bankruptcy court has broad authority to control all matters involving the debtor’s estate, including claims that are distantly related to the main bankruptcy case. The debtor may ask the court to pause other lawsuits outside of the bankruptcy case if they affect the estate. By bringing together all those with a stake in the company’s assets in one place, a debtor can more efficiently deal with all claims against it.</p>
<p>While the stay is in place, debtors use the bankruptcy process to evaluate their problems and make the necessary changes to succeed after reorganizing. This includes deciding which contracts they want to carry forward and which to abandon. </p>
<p>To avoid a contested process, savvy debtors seek a global settlement with as many stakeholders as possible – which is what <a href="https://www.cnbc.com/2019/08/27/purdue-pharma-offers-10-12-billion-to-settle-opioid-claims.html">Purdue is likely trying to do</a> – and include “sweeteners” to sway undecided creditors in favor of the plan.</p>
<h2>Benefits for creditors</h2>
<p>Clearly, bankruptcy provides debtors with significant power to rearrange their business affairs.</p>
<p>What many people misunderstand, however, is that this power is balanced by <a href="https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics">strong creditor protections</a>. The Bankruptcy Code requires debtors to disclose significant information about their operations and imposes strict checks on debtor actions. </p>
<p>For example, the debtor must publicly file information about all of its assets and liabilities, sit for a bankruptcy deposition with creditors and seek the court’s permission before taking many actions outside of the ordinary course of business. </p>
<p>Under Chapter 11, the debtor is allowed to remain in possession of its estate and continue operating. Creditors that are concerned about the debtor’s ability to preserve the estate’s value may ask the court to appoint an examiner or <a href="https://www.justice.gov/ust">trustee</a> to take control. Creditors may even move to dismiss the case if they believe the debtor is abusing the bankruptcy process. </p>
<p>The Bankruptcy Code creates a committee of unsecured creditors – those without assets backing their claims – to advocate on behalf of claimants who are likely not involved in the case. The court may also form a special committee representing tort claimants in cases where debtors face litigation or future claimants whose injuries are not yet known. The court overseeing the bankruptcy of Imerys, for example, <a href="https://www.law.com/delbizcourt/2019/03/07/11-lawyers-named-to-tort-claims-committee-in-talc-suppliers-bankruptcy/">appointed plaintiffs</a> to represent cancer victims with <a href="https://www.bloomberg.com/news/articles/2019-02-13/imerys-sa-unit-seeks-bankruptcy-protection-over-talc-lawsuits">claims against the talc supplier</a>. </p>
<p>These and other features add a degree of fairness to an inherently unjust situation. The debtor may be sitting in the driver’s seat, but numerous other stakeholders have the power to make sure that the company follows the rules of the road.</p>
<p>With such protections in place, creditors and the general public need not fear the worst if bankruptcy plays a bigger role in the unfolding opioid saga.</p><img src="https://counter.theconversation.com/content/113101/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lindsey Simon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While critics accuse companies facing lots of lawsuits of using bankruptcy as a sort of ‘get of jail free card,’ the reality of the legal procedure is more complicated.Lindsey Simon, Assistant Professor of Law, University of GeorgiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1186402019-06-16T19:29:12Z2019-06-16T19:29:12ZMajor corporate failures have more in common than you’d think, and can be avoided<figure><img src="https://images.theconversation.com/files/278951/original/file-20190611-32347-v8n2ym.jpg?ixlib=rb-1.1.0&rect=0%2C90%2C1506%2C1037&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Enron: Once powerful, now gone.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/hanneorla/72929925">Hanneorla/Flickr</a></span></figcaption></figure><p>Well-known firms such as AIG, American Airlines, Arthur Andersen, Blockbuster, Chrysler, Citigroup, Delta Airlines, Dunlop, Enron, General Motors, Kodak, Marks & Spencer, Nokia, Parmalat, Polaroid and Woolworth have one thing in common: They’re cases of major corporate failures. Any resemblance seems to stop there, as they worked in widely different industries and the reasons behind their declines and collapses seem quite different.</p>
<p>However, in <a href="https://doi.org/10.1111/joms.12341">April 2018 research</a> published in the <em>Journal of Management Studies</em>, my colleagues and I asked whether there are any recurring patterns explaining how and why large corporations fail, a fundamental question that has puzzled organisations and management scholars. This article was co-written by Stefanie Habersang (Leuphana University of Lüneburg, Germany), Jill Küberling-Jost (Technical University of Hamburg, Germany), and Markus Reihlen (Leuphana University of Lüneburg, Germany).</p>
<p>To explore such patterns, we used a qualitative meta-analysis research design. This allowed us to synthesize the wealth of previously published single-case studies on corporate failures.</p>
<h2>Four common processes leading to corporate failure</h2>
<p>A first salient finding of our analysis was that all the failure cases seemed to converge around four distinct process archetypes. We named these processes imperialist, laggard, villain and politicized.</p>
<ul>
<li><p><strong>Imperialist</strong>: This process archetype describes the failure of a firm due to overexpansion. For example in the cases of Parmalat, WorldCom, and News of the World, a dominant firm leader (often either autocratic or charismatic) fostered an aggressive expansion strategy. These firms failed due to an unfocused overexpansion of the firm which gave rise to conflicts with internal and external stakeholders.</p></li>
<li><p><strong>Laggard</strong>: In the cases of Kodak, Nokia and Polaroid, once industry leaders, they failed because they did not adapt to changing market environments. These firms were stuck in their identity of being leaders, even as their dominance slipped away. While the management of these firms saw the need for change, they were not able to change a previously well-established business model that had made them so successful before – a similar process is described by Joshua Gans in discussing how the <a href="https://theconversation.com/why-apple-and-its-iphone-confound-disruption-theorists-38205">iPhone disrupted the mobile-phone industry</a>.</p></li>
<li><p><strong>Villain</strong>: Here the case involves the process of a previously good corporate citizen into a villain. In the cases of AIG, Enron and Fannie Mae, previously well-regarded firms with ambitious goals increasingly engaged in questionable business practices (<a href="https://theconversation.com/why-powerful-people-fail-to-stop-bad-behavior-by-their-underlings-73828">see also Kennedy and Anderson discussing how unethical practices can become routine</a>). After repeated discovery of such questionable business practices, these firms failed because they lost the trust of their customers and more generally their legitimacy in society. They lose their social “license to operate.”</p></li>
<li><p><strong>Politicized</strong>: This model describes how firms fail due to increasingly severe conflicts with internal and external stakeholders. In cases such as Arcandor, Chrysler and Delta Airlines, the firms failed because they engaged in “trench warfare,” which strained resources and did not allow them to adapt to changing customer demands.</p></li>
</ul>
<h2>Two underlying mechanisms explaining the four processes</h2>
<p>When examining the four typical process types in more detail, we were intrigued that each one could be explained by two underlying and self-reinforcing mechanisms: rigidity and conflict.</p>
<ul>
<li><p><strong>“Rigidity mechanisms”</strong> are processes of converging interactions. In the case of Marks & Spencer, top managers overestimated the firm’s stature, which lead to middle managers developing an illusion of invulnerability, which was fed back to top management. The process took hold and led to the company becoming locked in to an erroneous self-perception.</p></li>
<li><p>In contrast, <strong>“conflict mechanisms”</strong> are contradicting interactions and are also self-reinforcing. In the case of Nokia, changing consumer preferences for mobile innovations collided with the organisation’s strategy to diversify into businesses unrelated to mobile phones and caused it to lose sight of its core business.</p></li>
</ul>
<p>In total, we identified five types of rigidity mechanisms (e.g., identity rigidity, obedience rigidity, etc.), as well as five types of conflict mechanisms (e.g., identity conflict, authority conflict, etc.)</p>
<p>While the rigidity and conflict mechanisms are fundamentally different – one is based on convergence, the other on divergence – both are capable of bringing about or preventing firm-level change contributing to the failure. Furthermore, we find that it is the distinctive pattern of rigidity and conflict mechanisms over time that gives each process archetype its pronounced characteristics and explains why firms fail.</p>
<h2>Helping executives avoid corporate failure</h2>
<p>No manager wants to experience or be the cause of a corporate failure. But at the same time, it is notoriously difficult to detect early on the subtle signals of factors that could lead to a downward spiral. In this regard, the outlined process archetypes hold two important implications.</p>
<p>First, we provide evidence-based conceptual frameworks that can help managers recognise patterns that may threaten the survival of their firm. For example, the “laggard” archetype draws the attention to the role of organisational identity in corporate failure. When firms must engage in a radical technological shift – for example, the automotive industry needing to shift from thermal to electric motors (as explained by <a href="https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=2ahUKEwiAiIqX0a7iAhWp3eAKHenCCukQFjABegQIAxAC&url=http%3A%2F%2Fisiarticles.com%2Fbundles%2FArticle%2Fpre%2Fpdf%2F40660.pdf&usg=AOvVaw2hTBRdY2aZ6wKoF-1MN2OU">Stefan Tongur and Mats Engwall</a>), converging on a new identity becomes a crucial task in the turnaround process.</p>
<p>Second, the good news is that we find that each of the outlined processes can be overcome. While it is important to note that some rigidity and conflict is actually desirable within organisations because the former increases efficiency and the latter has creative potential, it is the extreme forms of these two mechanisms that contribute to organisational failure. The practical implication is that effective leaders will have to strike the right balance between rigidity and conflict within their organisations…</p><img src="https://counter.theconversation.com/content/118640/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christoph Seckler ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Once-leading firms such as Chrysler, Citigroup, Dunlop and Nokia have one thing in common: they failed. While each case seems unique, research points to key processes that lead to corporate failures.Christoph Seckler, Assistant Professor of Entrepreneurial Strategy, ESCP Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1171592019-05-15T20:52:08Z2019-05-15T20:52:08ZIs Trump’s trade war saving American jobs – or killing them?<figure><img src="https://images.theconversation.com/files/274728/original/file-20190515-60567-14cvxlp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Trump administration says its trade policy saved the U.S. steel industry.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Pence/41ff064a9ae147d2bd54a94856edfade/7/0">AP Photo/Jim Mone</a></span></figcaption></figure><p>With the U.S.-China trade war <a href="https://www.nytimes.com/2019/05/13/us/politics/us-china-trade-tariffs.html">intensifying</a>, there is a lot of talk about whether tariffs save American jobs – as President Donald Trump <a href="https://www.nytimes.com/2018/09/17/us/politics/trump-tariffs-american-factories.html">claims</a> – or <a href="https://www.forbes.com/sites/stuartanderson/2018/09/24/tariffs-are-costing-jobs-a-look-at-how-many/#6e6f2e3d7b26">destroy them</a>. </p>
<p>On May 14, for example, Trump said his tariffs <a href="https://thehill.com/homenews/administration/443523-trump-credits-tariffs-for-rebuilding-us-steel-industry">helped save</a> the U.S. steel industry. Whether or not that’s true, many economists and industry organizations argue trade protectionism is actually hurting workers in a range of other areas, such as the <a href="https://www.forbes.com/sites/jamesellsmoor/2019/02/24/under-trumps-tariffs-the-us-lost-20000-solar-energy-jobs/">solar power sector</a>, <a href="https://www.cnbc.com/2019/05/13/boeing-shares-fall-on-speculation-that-china-may-single-it-out-in-the-trade-war.html">civil aircraft</a> and <a href="https://www.freep.com/story/money/cars/mark-phelan/2019/02/18/tariffs-trump-steel-aluminum-nada/2885080002/">auto manufacturing</a>.</p>
<p>So is the trade war making Americans better off or worse? Political economists <a href="https://sgpp.arizona.edu/user/jeff-kucik">like me</a> have been exploring this question since Trump’s trade war began about a year ago. The answer makes a big difference to the economic welfare of American workers. And, with the 2020 elections soon approaching, it may help determine whether Trump is able to remain in the Oval Office.</p>
<h2>The winners</h2>
<p>At first glance, the jobs data does look good for Trump’s argument. </p>
<p>Since Trump <a href="https://piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide">announced tariffs</a> on more than 1,000 Chinese products on April 3, 2018, about <a href="https://data.bls.gov/timeseries/ces0000000001?output_view=net_1mth">2.6 million new jobs</a> have been added to the U.S. economy.</p>
<p>This includes <a href="https://data.bls.gov/timeseries/CES3000000001">204,000 jobs in manufacturing</a>, the sector of the economy that hemorrhaged over 5 million positions from 2000 to 2009, a problem blamed on <a href="https://ourfuture.org/20150309/how-our-trade-policies-kill-jobs">free trade</a> and <a href="https://www.npr.org/2016/04/18/474393701/china-killed-1-million-u-s-jobs-but-don-t-blame-trade-deals">China</a>.</p>
<p>The good news for Trump doesn’t stop there. Some of the biggest gainers over the last year are industries like fabricated metals, machinery and electronic instruments, all of which saw gains of 15,000 to almost 30,000 jobs over the past year. All those industries enjoy at least some protection from Trump’s tariffs.</p>
<p>Those numbers seem to support Trump’s rhetoric that tariffs are providing a vital shot in the arm of America’s ailing manufacturing sector. And they may even show why the U.S. economy continues to hum despite <a href="https://www.newsweek.com/us-china-trade-war-recession-economy-bank-america-1421994">economist fears</a> that a trade war would <a href="https://www.cnbc.com/2019/05/15/latest-data-show-surprise-slowing-in-us-china-economies-as-trade-war-escalates.html">hurt growth</a>. </p>
<h2>The losers</h2>
<p>Unfortunately, not all industries are enjoying the same success. </p>
<p>Of the 20 major manufacturing categories in the <a href="https://www.bls.gov/ces/">latest Bureau of Labor Statistics data</a>, only six have grown faster during the trade war – which arguably began with the threat of widespread tariff increases in April of 2018 – than in previous years. The rest, which include chemicals, paper and textiles, either didn’t enjoy a boost or lost ground during the period. </p>
<p>And here is one lesson from the trade war. If Trump and his supporters want to claim that tariffs helped accelerate job creation in machinery and metals, then it follows that his policies should share some of the blame for the less encouraging performance of other sectors hurt by <a href="https://www.cmtradelaw.com/category/china-retaliatory-tariffs/">retaliation from other countries</a>.</p>
<p>After Trump extended steel tariffs to the European Union, the <a href="http://trade.ec.europa.eu/doclib/docs/2018/may/tradoc_156909.pdf">EU</a> hit America’s textiles industry. <a href="https://www.fin.gc.ca/access/tt-it/cacsap-cmpcaa-1-eng.asp">Canada</a> targeted some paper products in retaliation for tariffs on steel and <a href="https://globalnews.ca/news/4293847/tariffs-lumber-pricing-americans-out-of-housing-market-trump/">softwood lumber</a>. And China, Trump’s primary antagonist, <a href="https://www.crowell.com/files/20180803-China-301-Retaliation-List-25-Percent-Tariffs-Unofficial.pdf">hit chemicals</a> along with a large swath of other industries – with <a href="https://www.bbc.com/news/business-48253002">further retaliation</a> on the way. </p>
<h2>Beyond jobs</h2>
<p>Nonetheless, the simple fact remains: The U.S. economy continues to add more jobs.</p>
<p>But this is only one part of the equation for how tariffs are affecting working Americans and their quality of life. What about wages, which <a href="https://www.bls.gov/opub/ted/2016/wages-and-salaries-for-private-industry-workers-increase-2-point-6-percent-over-the-year-ended-june-2016.htm">account for 70%</a> of an employee’s average compensation?</p>
<p>There’s less good news for Trump in this data. </p>
<p>The annual growth in seasonally adjusted hourly pay during the trade war averages out to <a href="https://fred.stlouisfed.org/series/CES0500000003">around 3.2%</a> across all private sector U.S. employees.</p>
<p>There are two important things to say about that 3.2%. First, it falls short of pre-Great Recession levels, when wage growth was typically <a href="https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx">a full point higher</a>. Second, wage growth in manufacturing – the sector Trump has lavished the most attention on – actually <a href="https://www.latimes.com/business/la-na-trump-manufacturing-wage-growth-lags-20190411-story.html">lags behind</a> the national average at just 2.3%.</p>
<p>Those wage numbers are good reason to hold our applause for Trump’s tariffs. Protected industries are adding jobs, but wages aren’t living up to expectations.</p>
<h2>Looking for good news</h2>
<p>The competing job numbers explain why the debate over Trump’s tariffs are full of confusing anecdotes – and why most anyone can find “good news” to support their favorite argument.</p>
<p>Americans have heard United Steel Workers <a href="https://www.apnews.com/05b90ea409da42ab9534ce40ed9ffa48">thank Trump</a> for helping bring <a href="https://www.cnn.com/2019/02/12/business/us-steel-mill/index.html">over 1,000 jobs</a> back to Birmingham, Alabama. They’ve also heard General Motors announce that it <a href="https://hillreporter.com/general-motors-is-preparing-to-lose-a-massive-1-billion-over-trumps-tariffs-4416">lost US$1 billion</a> in 2018, partly because tariffs contributed to rising production costs, and that as many as <a href="https://reason.com/2018/11/26/after-losing-1-billion-to-tariffs-genera/">14,000 jobs are being cut</a>.</p>
<p>A fuller picture of how well workers are doing requires looking beyond the jobs numbers at how much money they’re actually taking home – and how it’s affecting their living standards. </p>
<p>And none of this says anything about another crucial part of the equation: consumer prices. If the latest data from Goldman Sachs is on the money, things are about to get a whole lot worse for working-class Americans as the price tags attached to products affected by the trade war <a href="https://www.cnbc.com/2019/05/13/this-chart-from-goldman-sachs-shows-tariffs-are-raising-prices-for-consumers-and-it-could-get-worse.html">begin to rocket upward</a>. </p>
<p>This is hardly good news for the average household.</p><img src="https://counter.theconversation.com/content/117159/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeffrey Kucik does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Trump claims the tariffs he’s imposed on imports from China and elsewhere are saving US industries and jobs. The data offers a murkier picture.Jeffrey Kucik, Assistant Professor of Political Science, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1091292019-04-22T10:45:46Z2019-04-22T10:45:46Z‘You’re unallocated!’ and other BS companies use to obscure reality<p>Corporate America has invented many ways to avoid letting the public know it’s laying people off – or telling employees themselves “You’re fired.” </p>
<p>Common parlance includes “downsizing,” “headcount management,” “restucturing” or even the unsightly “<a href="https://www.shrm.org/resourcesandtools/tools-and-samples/policies/pages/cms_000640.aspx">involuntary separation program</a>.” Or a boss might say “Your position has been made redundant” or simply, “You’ve been let go.” General Motors recently came up with a new one: “You’re unallocated.” </p>
<p>That’s basically how the <a href="https://investor.gm.com/news-releases/news-release-details/general-motors-accelerates-transformation">automaker announced</a> it was getting rid of several plants and potentially hundreds of employees – leading to much <a href="https://www.autonews.com/article/20181126/BLOG06/181129782/parsing-what-gm-means-by-unallocated">confusion</a> among workers about what “unallocated” <a href="http://gmauthority.com/blog/2019/02/uaw-sues-gm-in-hopes-of-keeping-3-plants-operating/">actually meant</a>. </p>
<p>To better understand why companies turn to euphemisms rather than spill bad news with plain language, <a href="https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=2120583">I pored over</a> thousands of conference calls, where these mild, vague and often ridiculous paraphrases often surface. As I found, using corporate BS can often backfire. </p>
<h2>Euphemistically speaking</h2>
<p><a href="https://www.academia.edu/20588736/Euphemism_and_dysphemism_Language_used_as_a_shield_and_weapon">Humans have always used euphemisms</a> to camouflage harsh realities and to avoid offending an audience. </p>
<p>People employ euphemistic terms to talk about anything they find embarrassing. For example, “rest room” is a euphemism for lavatory or toilet, even though no one goes there to rest. In educational circles, dropouts are referred to as “early leavers.” And “glass ceiling” often disguises discrimination at work.</p>
<p>To be considered a euphemism, an expression should first refer to something unpleasant – in GM’s case, layoffs and plant closures.</p>
<p>Second, it should be a mild way of referring to the unpleasantness, so “unallocated” is a substitute for the blunt expression “We are firing workers and shutting down the facilities.” </p>
<p>Finally, it should be a secondary meaning to an already used term. In business, unallocated funds refer to the money that is not currently used in a project.</p>
<h2>A field guide to corporate usage</h2>
<p>In the context of corporate disclosures, euphemisms <a href="http://dx.doi.org/10.2139/ssrn.2876819">are also used to refer to</a> something embarrassing or difficult to predict and control.</p>
<p>To develop a proxy for euphemism usage, I created a dictionary of corporate communication euphemisms by analyzing 78,000 earnings call transcripts for U.S. companies over the last 14 years. </p>
<p>During a 2011 conference call, for example, TriQuint Semiconductor Inc. CEO Ralph Quinsey <a href="https://seekingalpha.com/article/282516-triquint-semiconductors-ceo-discusses-q2-2011-results-earnings-call-transcript">talked about “cloudier near-term visbility”</a> rather than simply discussing his company’s failure to plan ahead. The same year, Lennox International Chief Financial Officer Bob Hau used “headwinds” to suggest the impact of markets is as fickle as the weather. And in 2005, Marty Singer, chief executive of Pctel, a provider of wireless security services, called his failure to execute on a plan merely a “hiccup.”</p>
<p>The most common euphemisms I uncovered tended to be rather banal or technical sayings, such as citing “headwinds” instead of clearly explaining outside challenges hurting a business or “lumpiness” to describe operational problems with delivering a product. To soften the blow of a particular bad quarter, corporate executives often call it a “transition period.” </p>
<h2>Why companies resort to euphemism</h2>
<p>Euphemisms were most popular in the cyclical industries, such as consumer companies, where managers need strong verbal skills to explain the perennial ups and downs. </p>
<p>I also found that their use spiked during the financial crisis, as companies tend to use more euphemisms when they are going through tough times. In addition, the companies that use euphemisms the most tend to be older businesses with fewer opportunities for growth, falling earnings and recent stock drops. </p>
<p>To me, this shows that these phrases are used to sugarcoat what companies would rather leave unsaid altogether to avoid giving investors, employees and other concerned parties bad news.</p>
<p>But this often backfires. </p>
<p>After analyzing the conference calls for euphemisms, I examined how markets reacted. When a company is reporting bad news, typically, share prices react quickly and then stabilize after the information has been absorbed. I found that when companies used a lot of euphemisms on earnings calls, investors didn’t seem to fully understand the magnitude of the bad news. </p>
<p>As a result, shares tended to slide for several months after an earnings call filled with euphemisms, as investors are having a delayed reaction to the bad news. And managers with strong BS skills <a href="https://doi.org/10.1111/1475-679X.12179">tend to succeed in delaying</a> the scrutiny of the “hiccups” to the period after the call when there is less focus on company performance.</p><img src="https://counter.theconversation.com/content/109129/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate Suslava does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Companies often go out of their way to avoid clearly explaining actions like firing people or informing investors and others of bad news.Kate Suslava, Assistant Professor of Management, Bucknell UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1129222019-03-07T11:38:26Z2019-03-07T11:38:26ZHow to prevent the ‘robot apocalypse’ from ending labor as we know it<figure><img src="https://images.theconversation.com/files/262819/original/file-20190308-82681-1wui77w.gif?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The future of work could look more like this.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/man-robotic-machine-work-together-inside-660540802">BigBlueStudio/Shutterstock.com</a></span></figcaption></figure><p>It seems not a day goes by without the appearance of another dire warning about the future of work.</p>
<p><a href="https://www.washingtonpost.com/news/wonk/wp/2017/03/30/were-so-unprepared-for-the-robot-apocalypse/?noredirect=on&utm_term=.a7f313d940c0">Some alarmists fear</a> a “robot apocalypse,” while <a href="https://futurism.com/kurzweil-claims-that-the-singularity-will-happen-by-2045">others foresee</a> the day of “singularity” coming when artificial intelligence exceeds human intelligence. <a href="https://futurism.com/kurzweil-claims-that-the-singularity-will-happen-by-2045">Still others warn</a> that <a href="https://inequality.org/facts/income-inequality/">income inequality will continue to rise</a> as owners of capital capture more of the benefits of innovations than those who labor for a living.</p>
<p>Yet there is also a counter-trend emerging: Groups as diverse as the <a href="https://www.weforum.org/projects/future-of-work">World Economic Forum</a> and the <a href="https://www.ilo.org/global/topics/future-of-work/WCMS_578759/lang--en/index.htm">International Labor Organization</a> are beginning to argue that it’s up to society to shape the future of work. What’s needed is action today to harness and channel technological changes, prepare the workforce for new demands and opportunities, strengthen their voices and built a new social contract that includes leaders in business, education, labor and government. </p>
<p>These are some of the issues <a href="https://www.edx.org/course/shaping-the-future-of-work-0">we’ll be discussing</a> in an online course that draws on some of the best experts in AI, robotics, economics and employment relations at MIT and around the world. Our main point is that avoiding apocalyptic outcomes requires bold actions and a collaborative approach. </p>
<h2>How to shape change</h2>
<p>Virtually every technological revolution has inspired workers to fear for their jobs. And for good reason.</p>
<p><a href="https://www.britishmuseum.org/research/publications/online_research_catalogues/paper_money/paper_money_of_england__wales/the_industrial_revolution/the_industrial_revolution_3.aspx">Each one resulted</a> in the creation of new jobs alongside the elimination of others. At the same time, new technologies changed the way work is done within most occupations. </p>
<p>But fighting technology-inspired changes, as the Luddites of the early 19th century did, rarely works – and can in fact have disastrous consequences. The Luddites, <a href="https://www.history.com/news/who-were-the-luddites">textile workers and weavers who feared the advent of automated looms</a> in England, destroyed machines and burned factories, hoping to arrest their advance. The government eventually quashed the unrest, killing some workers and jailing many others.</p>
<p>The new technologies that transformed the textile industry continued unabated. While many weavers lost their jobs, <a href="https://fee.org/articles/the-luddites-were-wrong-then-and-theyre-wrong-now/">it created new ones</a> for mechanics and other industrial workers and increased overall productivity. </p>
<p>The important lesson from this episode is that the transition from an agricultural to an industrial economy occurred in the absence of updated policies to govern the transition, which led to more pain for those who were displaced than was necessary.</p>
<p>So as today’s workers in dozens of occupations face down the robot apocalypse, what’s needed aren’t more battle cries but concerted action by leaders in business, education, government and, of course, labor. And if, <a href="https://www.mckinsey.com/featured-insights/future-of-work/how-will-automation-affect-jobs-skills-and-wages">as predicted</a>, AI and robotics do transform nearly half of jobs requiring new skill sets for workers, the current challenge may be greater than ever, making it even more important that we create a vision and a path forward that everyone can support. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=500&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=500&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262522/original/file-20190306-100781-1osilxo.gif?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=500&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">GM’s joint venture with Toyota taught the U.S. automaker the value of integrating new technologies with new work practices.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-ASSOCIATED-PRESS-I-California-USA-APHST6-/dd3e6c78d0d64b23b1238d3d1eac02a2/5/0">AP Photo/Paul Sakuma</a></span>
</figcaption>
</figure>
<h2>Giving ‘wisdom to the machines’</h2>
<p>Let’s start with business leaders since they buy and implement most new technologies. </p>
<p>The <a href="https://www.nytimes.com/2019/01/25/technology/automation-davos-world-economic-forum.html">dominant business motivation</a> for introducing new technology is to reduce human labor and the costs associated with it. Robots, or more broadly software, don’t leave for another job, go on strike or need bathroom breaks – let alone a paycheck or benefits. </p>
<p>But there <a href="https://gcgj.mit.edu/our-work/digests/dance-technology-automation-and-tomorrows-jobs">is ample historical and current evidence</a> that simply viewing technology as a labor cost saving tool leads to overinvestment and weak returns. </p>
<p>Just ask General Motors <a href="https://tech.slashdot.org/story/19/01/05/0248207/what-happened-when-automation-came-to-general-motorsinvestments">what it got for its nearly US$50 billion</a> in robots in the 1980s in its futile effort to catch up with Toyota’s more efficient production and labor relations systems. The answer is not much. </p>
<p>Instead, GM eventually learned from Toyota via a joint venture that the highest return on investments came by integrating new technology with new work practices, which <a href="https://www.ien.com/product-development/article/20974215/giving-wisdom-to-the-machines">allowed workers</a> to help “give wisdom to the machines.” </p>
<p>The key lesson for business is that <a href="https://theconversation.com/us-must-invest-in-its-workers-and-roads-to-sustain-job-gains-37778">it needs to engage workers</a> in designing and deploying new technologies to get the greatest productivity gains. </p>
<h2>Learning for life</h2>
<p>Lifelong learning is the new buzz phrase when it comes to discussions of work. Transforming this from rhetoric to reality will require fundamental changes in educational institutions and teaching methods.</p>
<p>It starts with the children in schools today <a href="https://www.cmswire.com/information-management/6-ways-artificial-intelligence-will-impact-the-future-workplace/">who will likely be most affected</a> by the AI revolution in coming decades. And while in the past the focus was on the STEM disciplines – science, technology, engineering and math – industry leaders these days say they need tomorrow’s workforce to be filled with people who can think analytically and creatively, work well together in teams and <a href="http://www.pewinternet.org/2017/05/03/the-future-of-jobs-and-jobs-training/">can adapt readily to near-constant change</a>. </p>
<p>In other words, workers need to be inculcated from an early age with more behavioral and analytic skills, such as teamwork, communications and problem-solving with data.</p>
<p>Even after people are in the workforce, learning new skills and acquiring new knowledge will continue throughout their careers. That means businesses and universities will need to form new partnerships that ensure the workforce can continue to adapt. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=481&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=481&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=481&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=604&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=604&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262520/original/file-20190306-100793-1kn2205.gif?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=604&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Franklin D. Roosevelt signed the first legislation tied to the New Deal in 1933.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-Associated-Press-Domestic-News-Finance-D-/83ed739130df4606b57d88bd6e8a2930/30/0">AP Photo</a></span>
</figcaption>
</figure>
<h2>A new social contract</h2>
<p>A key way government can contribute is by <a href="https://theconversation.com/obama-should-follow-overtime-plan-with-more-unilateral-moves-to-update-labor-laws-44339">revisiting</a> the legislative framework that supports labor. </p>
<p>The <a href="https://www.history.com/topics/great-depression/new-deal">New Deal was a series of programs</a>, projects and reforms that helped shift the U.S. from a primarily agricultural to industrial economy. It established collective bargaining rights, created Social Security and unemployment insurance, and set minimum wages and labor standards.</p>
<p>With the rise of the gig economy and the changing nature of the employer-employee relationship, a <a href="https://theconversation.com/attack-on-unions-shows-why-we-need-a-new-social-contract-governing-work-52884">new social contract is necessary</a> to support workers in this new reality. Benefits should be portable so workers can easily move from job to job without losing health insurance and other benefits now tied to a specific employer. Post-secondary education needs to be more affordable. </p>
<p><a href="https://lwp.law.harvard.edu/clean-slate-project">Labor law should make it easier</a> so different kinds of workers, from professionals, to low wage workers, to independent contractors, can all have their voices heard. And safety nets need strengthening to support those displaced or whose career has been downgraded by all the seismic changes coming our way. </p>
<h2>Workers need a seat</h2>
<p>As for labor leaders, they need to make sure they’re at the table with business, education and government to ensure workers aren’t left behind by new technologies. </p>
<p>Training needs to be at the top of <a href="https://scholar.google.com/citations?user=QfH1gOcAAAAJ&hl=en&oi=ao">union bargaining</a> agendas with business so that organized labor can be a champion of lifelong learning for workers. <a href="https://aflcio.org/about-us/careers-and-apprenticeships">One important way</a> is by building, expanding and modernizing apprenticeships. </p>
<p>In addition, they can’t just wait to be invited by companies to participate in discussions about implementing new tech. The <a href="https://unitehere.org/">union representing hotel workers</a> is showing how to get engaged by <a href="https://www.bostonglobe.com/business/2018/12/05/progressive-marriott-union-contract-could-have-ripple-effects/VljiCqd8IKev9R7OaFRSGJ/story.html">actively negotiating</a> new agreements with big casinos in Las Vegas and large chains like Marriott to <a href="https://www.bostonglobe.com/business/2018/12/05/progressive-marriott-union-contract-could-have-ripple-effects/VljiCqd8IKev9R7OaFRSGJ/story.html">ensure workers are heard in the process</a> and are fairly compensated along the way.</p>
<p>The key point is that none of these groups can meet the coming challenges on its own. Just as we’ll be doing in our class in coming weeks, people from all walks of life and segments of society should be discussing these issues so everyone can participate in shaping the future of work.</p><img src="https://counter.theconversation.com/content/112922/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While some alarmists predict AI will decimate the workforce, the truth is concerted action by leaders in labor, business, government and education can ensure workers aren’t replaced by robots.Thomas Kochan, Professor of Management, Co-Director of the MIT Sloan Institute for Work and Employment Research, MIT Sloan School of ManagementElisabeth Reynolds, Executive Director of MIT Industrial Performance Center and Work of the Future, Massachusetts Institute of Technology (MIT)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1121142019-02-21T11:44:22Z2019-02-21T11:44:22ZWhy cities should stop playing Amazon’s game and quit offering companies tax incentives<figure><img src="https://images.theconversation.com/files/260018/original/file-20190220-148545-1yd2iwg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Amazon will not build their second headquarters in Long Island City.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/APTOPIX-Amazon-HQ/ec98fcb3906b49b485145f4ee5ef92fa/24/0">AP Photo/Mark Lennihan</a></span></figcaption></figure><p>New York City should count its blessings. </p>
<p>Amazon’s <a href="https://www.bloomberg.com/news/articles/2019-02-16/amazon-s-pullout-is-a-blow-to-new-york-city-s-tech-momentum">decision to walk away</a> from its plan to build a new headquarters in Queens stunned city and state officials, who had promised US$3 billion in incentives in exchange for some 25,000 jobs. They had never questioned whether the promised jobs and economic stimulus would actually appear. </p>
<p><a href="http://www.economics.uci.edu/%7Eaglazer/TaxIncentivesInefficient.pdf">In my own research</a> as an economist studying corporate welfare, I have found and reviewed much evidence on the effectiveness of tax and other incentives. My conclusion: Incentives just don’t work. </p>
<h2>Corporate ‘downsizing’</h2>
<p>That’s in part because companies <a href="https://theconversation.com/amazon-hq2-texas-experience-shows-why-new-yorkers-were-right-to-be-skeptical-111137">aren’t obligated to follow through</a> on their promises. Just ask Boston.</p>
<p>In February, around the same time Amazon walked away from its NYC plans, General Electric announced <a href="http://fortune.com/2019/02/15/general-electric-boston-tax-incentives/">it will cut back</a> on jobs and investment in its new headquarters in Boston. Only three years ago, the company’s plan to relocate from Connecticut in exchange for $25 million in tax breaks <a href="https://www.thereporter.com/2016/01/13/general-electric-to-move-headquarters-to-boston/">was touted as a big deal</a> for Boston. </p>
<p>Or consider General Motors, which in 2012 said it would build a new electric vehicle facility in White Marsh, Maryland, <a href="https://www.baltimoresun.com/news/maryland/baltimore-county/bs-xpm-2010-09-20-bs-md-co-council-approves-gm-20100920-story.html">after receiving a subsidy</a> of $105 million from the U.S. Department of Energy, $6 million in grants from Baltimore County and $4.5 million in state grants for economic development and job training. This past November, the automaker <a href="https://www.baltimoresun.com/business/bs-gm-cuts-20181126-story.html">announced</a> it will shut down the plant as part of a restructuring effort. </p>
<p>Or Foxconn. In 2017, Wisconsin Gov. Scott Walker <a href="https://www.nytimes.com/2017/08/10/us/foxconn-jobs-wisconsin-walker-tax-incentives.html">announced that the electronics giant</a> would build a new factory in the state. The $10 billion investment was supposed to create as many as 13,000 jobs housed on a high-tech campus the size of 11 <a href="https://www.greenbaypressgazette.com/story/news/2017/08/16/world-cup-soccer-lambeau-field-its-not-wide-enough/572436001/">Lambeau football fields</a>. Walker, who was described, during the announcement, as “a picture of grinning, fist-pumping excitement,” offered more than $4 billion in tax incentives in return.</p>
<p>With only 178 jobs created as of January, now the plans for a large factory to build large TV screens <a href="https://www.bloomberg.com/news/features/2019-02-06/inside-wisconsin-s-disastrous-4-5-billion-deal-with-foxconn">are in doubt</a>. Instead, Foxconn said it plans to work on a research and development facility in the state.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/260019/original/file-20190220-148536-115ctab.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Trump, Gov. Walker and Foxconn Chairman Terry Gou broke ground in 2018, when the company’s plans were still supposed to go ahead as promised.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Wisconsin-Governor-Walker/c13a12f07e8b4bfea50084101cfe5fc7/22/0">AP Photo/Evan Vucci</a></span>
</figcaption>
</figure>
<h2>Business as usual</h2>
<p>And for those that do stay, the benefits to the city or region aren’t all that great.</p>
<p>A 2016 study by economist Carlianne Patrick <a href="https://doi.org/10.1111/ecin.12339">compared counties that won large new factories</a> with those that lost out during the bidding process. She found that they typically did not generate more revenue for the local government than it spent on incentives, even if they did induce small increases in economic activity. </p>
<p><a href="https://EconPapers.repec.org/RePEc:ntj:journl:v:67:y:2014:i:2:p:351-386">Another study by Patrick found</a> that making it easier for local governments to offer aid to companies reduced employment in rural counties. And in 2018, <a href="https://doi.org/10.17848/wp18-291">the W.E. Upjohn Institute for Employment Research concluded</a> that factories and offices that received an incentive had employment growth 3.7 percent slower than those that didn’t receive the inducement. </p>
<p>More than that, a <a href="http://dx.doi.org/10.2139/ssrn.3227086">review of 30 different studies</a> by the Upjohn Institute found that incentives actually influence a company’s decision to invest in less than a quarter of cases. In other words, most of the time, a company would have made the investment with or without the tax break or other incentive. </p>
<h2>Incentives fail</h2>
<p>In <a href="http://www.economics.uci.edu/%7Eaglazer/MillionDollarPlants.pdf">my own study</a>, I collected data on 82 companies that invested in new
plants and factories across the U.S. from 1982 to 1993 and then tracked them for a a couple of decades. I also collected data on the various tax incentives and other inducement policies each state offered. </p>
<p>As of 2010, when the last data were available, 52 were still in operation. Twenty-four of them closed. I couldn’t find data on the other six.</p>
<p>The point of providing companies with tax incentives and other subsidies is that they are supposed to lead to economic growth and make a facility more viable. On the contrary, I found that the plants in states with higher tax incentives were actually slightly more likely to have gone out of business by 2010. </p>
<p>What is going on here? </p>
<p>My theory, based on <a href="https://ideas.repec.org/a/aea/aecrev/v75y1985i3p473-80.html">other research I’ve conducted</a>, is that a company that is offered a large incentive package is incentivized to build a plant or office early rather than doing sufficient due diligence to ensure the decision is the best one. </p>
<p>Another possibility is tied to politics: The company wants to ink the deal and secure the subsidy while the governor who offered the deal is still in office. That appears to have happened in Wisconsin, where <a href="http://fortune.com/2018/11/07/wisconsin-governor-scott-walkers-foxconn-lost/">Walker lost his re-election</a> the year after he offered Foxconn the large subsidies. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=548&fit=crop&dpr=1 754w, https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=548&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/260021/original/file-20190220-148536-1vc2u18.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=548&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">This area in Long Island City was the proposed site for a new Amazon headquarters.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Amazon-HQ/c623818486414fb6875fb553e0f5db76/29/0">AP Photo/Bebeto Matthews</a></span>
</figcaption>
</figure>
<h2>Economic realities</h2>
<p>It is striking that Amazon, <a href="https://blog.aboutamazon.com/company-news/update-on-plans-for-new-york-city-headquarters">in announcing its cancellation</a> of the New York headquarters, didn’t signal it was reopening the bidding process for one of its new headquarters. </p>
<p>Nowhere did it say that it would still hire the 25,000 workers it had said it would in New York City, though it <a href="https://www.cnbc.com/2018/11/14/amazon-has-promise-to-create-50000-new-jobsheres-how-to-land-one.html">still plans to create</a> that many jobs in Virginia. </p>
<p>While Amazon said it pulled out because of political opposition, another reason may be that the lure of the subsidies blinded Amazon to economic realities and that it’s second-guessing its investment. In which case, perhaps Amazon should count its blessings as well.</p><img src="https://counter.theconversation.com/content/112114/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Program in Corporate Welfare at UC Irvine supported this research. The Program has received funding from the Charles Koch Foundation and from the Troesh Family Foundation.</span></em></p>Economic research suggests tax incentives and other corporate subsidies don’t have the positive impact they’re supposed to.Amihai Glazer, Professor of Economics, University of California, IrvineLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1073062018-12-06T00:10:11Z2018-12-06T00:10:11ZCorporate welfare bums: It’s payback time<figure><img src="https://images.theconversation.com/files/248507/original/file-20181203-194938-dif4fx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Hundreds of people march in Vancouver to protest against corporate greed as part of the global Occupy movement in October 2011.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Canada’s welfare state is disintegrating. Meanwhile, Canada’s corporate welfare state has never been stronger. </p>
<p>In his <a href="https://www.budget.gc.ca/fes-eea/2018/docs/statement-enonce/toc-tdm-en.html">2018 Fall Economic Report</a>, Finance Minister Bill Morneau announced that corporations would receive $14 billion in new tax breaks. Enough money <a href="https://globalnews.ca/news/3626888/canada-child-care-cost-imf/">to fund</a> a national daycare program is being handed over to the business sector. </p>
<p>Although the rationale is the supposed need to maintain Canada’s competitiveness in the face of U.S. President Donald Trump’s gargantuan tax cuts, it is actually a question of priorities — or, more accurately, constituencies. The federal government has made it clear to whom it feels accountable. </p>
<p>In a time of <a href="https://tradingeconomics.com/canada/corporate-profits">record profits</a>, Canadian corporations already receive <a href="https://www.policyschool.ca/wp-content/uploads/2018/01/Business-Subsidies-in-Canada-Lester.pdf">billions</a> in subsidies every year, not to mention massive <a href="http://projects.thestar.com/canadas-corporations-pay-less-tax-than-you-think/">corporate tax cuts and loopholes</a> and the roughly $3 billion in taxes that wealthy Canadians and corporations <a href="https://www.thestar.com/news/canada/2018/06/28/canadians-with-offshore-holdings-evade-up-to-3-billion-in-tax-per-year.html">evade through offshore havens</a> on an annual basis. Despite perennial promises by government to crack down, that money continues to accumulate, sloshing around the <a href="https://www.wealthx.com/report/world-ultra-wealth-report-2018/">global economy</a> in an era of unprecedented wealth and inequality.</p>
<h2>Victory for the one per cent</h2>
<p>This triumph of the “one per cent” follows decades of cuts to the social welfare programs that strengthen the fabric of our society. According <a href="http://www.oecd.org/social/expenditure.htm">to a report</a> by the OECD, Canada ranks 24th out of 34 countries in social expenditures as a percentage of GDP.</p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=780&fit=crop&dpr=1 600w, https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=780&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=780&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=980&fit=crop&dpr=1 754w, https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=980&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/248506/original/file-20181203-194925-1a6ib97.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=980&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">NDP Leader David Lewis in February 1973.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Chuck Mitchell</span></span>
</figcaption>
</figure>
<p>Austerity-minded governments have insisted that we cannot afford the rising costs of social programs without incurring enormous deficits or a higher tax burden on ordinary Canadians. But this argument does not, apparently, apply to tax breaks for corporations. And the double standard is not new.</p>
<p>In the 1972 federal election campaign, the New Democratic Party denounced “corporate welfare bums.” Federal leader David Lewis (grandfather of co-author Avi Lewis) railed against multinational corporations that received significant subsidies from the government while at the same time escaping their fair share of taxes. </p>
<p>He said in his book <a href="http://www.lorimer.ca/adults/Book/1717/Louder-Voices.html"><em>Louder Voices: The Corporate Welfare Bums</em></a>:</p>
<blockquote>
<p>“I oppose in principle the tax concessions and loopholes for which large, often foreign-owned corporations benefit at the expense of the ordinary Canadian taxpayer. The latter is forced to carry a heavier tax burden because the corporations do not pay their share.” </p>
</blockquote>
<p>Lewis added that “while social welfare legislation has been subjected to the most critical scrutiny as to its costs, benefits and consequences,” and been consistently targeted for cuts, “the attention of Canadians has been deflected from any examination of…the corporate welfare state.” He went on:</p>
<blockquote>
<p>“Welfare is for the needy, not big and wealthy multinational corporations.”</p>
</blockquote>
<p>This campaign proved enormously successful. The NDP elected 31 MPs, their biggest caucus to that point. They also held the balance of power in a minority Liberal government. Canadians proved receptive to calls to re-balance the tax burden and direct government spending to benefit people over corporations.</p>
<h2>Firms don’t gripe when they get bailouts</h2>
<p>And yet, 45 years later, corporations continue to receive billions of dollars in grants and tax breaks, and social spending suffers. Corporations extol the value of the free market and denounce increased government spending. Except, of course, when government largesse flows their way.</p>
<p>What do Canadians get for these billions of dollars in corporate welfare payments? We’re told that corporations require grants and tax breaks to remain competitive, to create jobs and to stimulate the economy.</p>
<p>And yet a singular feature of corporate welfare is that it’s almost always free of any conditions to ensure those benefits actually occur. </p>
<p>The most striking example in Canadian history happened just recently. General Motors, <a href="https://www.macrotrends.net/stocks/charts/GM/general-motors/gross-profit">a company that makes about $20 billion each year</a>, is closing its Oshawa plant, bringing to an end a century of automotive production in that city. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/248508/original/file-20181203-194928-12wwrhm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Union head Jerry Dias addresses GM workers in Oshawa in late November 2018.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Eduardo Lima</span></span>
</figcaption>
</figure>
<p>Just a decade ago, <a href="https://www.cbc.ca/news/thenational/national-today-newsletter-gm-oshawa-medical-implants-1.4920729">Canada engineered a $10.8 billion bailout of the company, with an eventual cost to the public purse of $4-5 billion</a>. For all those tax dollars, federal and provincial politicians purchased zero leverage. The plant will now close, and 2,200 people will lose their jobs while our governments claim utter impotence to intervene. </p>
<p>Even more disturbing is the estimated <a href="http://theindependent.ca/2018/01/26/wasteful-corporate-subsidies-deplete-funds-for-social-programs/">$3.3 billion</a> a year that our federal and provincial governments bestow on the large oil and gas producers to continue polluting the planet. </p>
<h2>It’s time to pay us back</h2>
<p>And in a few years, we could look back at current oil and gas handouts as a bargain. Recent revelations suggest that the industry is sitting on <a href="https://www.thestar.com/news/investigations/2018/11/01/what-would-it-cost-to-clean-up-albertas-oilpatch-260-billion-a-top-official-warns.html">$260 billion of environmental liabilities</a>, which could very well fall to the public purse.</p>
<p>If David Lewis were alive today, he would doubtless discover new levels of eloquent outrage. He might say: If Canada’s largest 100 corporations paid the full amount of even our insufficient corporate tax rate and did not take handouts, we would have tens of billions more each year to devote to the priorities of the many, not just the few.</p>
<p>We could fund that national day care program, make post-secondary education a free public service, build clean electric mass transit across the country and many other programs that would benefit the people of Canada. </p>
<p>In an era of climate crisis, precarious work and instability, it’s time the corporate welfare bums paid us back.</p><img src="https://counter.theconversation.com/content/107306/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Roberta Lexier receives funding from SSHRC. She is affiliated with the Broadbent Institute and is a member of the New Democratic Party. </span></em></p><p class="fine-print"><em><span>Avi Lewis is affiliated with The Leap, a non-profit devoted to making system change irresistible, and building a world based on caring for the earth and one another.</span></em></p>Canada’s welfare state is disintegrating while corporate welfare soars. In an era of climate crisis, precarious work and instability, it’s time the corporate welfare bums paid us back.Roberta Lexier, Associate Professor, Department of General Education, Mount Royal UniversityAvi Lewis, Lecturer, Rutgers UniversityLicensed as Creative Commons – attribution, no derivatives.