In 2019, from his catalytic perch in the White House, this writer entered into secret negotiations with both sides in a GM-UAW labor strike.
An action that had dragged on for a very painful month.
Painful both to GM and its workers, but also to the U.S. economy.
Within 48 hours, I was able to help broker a deal on behalf of President Donald Trump, one that satisfied both sides.
If I were in the Biden White House today, there’s not a snowball’s chance in Hades I could work any such magic.
Why?
"Bidenomics" is doing so such damage to America’s auto industry and its workers that there is really no deal to make.
From GM’s perspective, "Bidenomics" and the Democrat’s radical "Green New Deal" has hurtled the automaker onto a path of rapid transformation away from the internal combustion engine to electric vehicles.
The primary problem GM faces in meeting this challenge is that even at current wage and benefit levels, GM can’t possibly compete with a whole host of global competitors who have greater technological expertise, better access to the "engines" of EVs (Electric Vehicles) in lithium batteries, and ready access to a vast army of slave laborers and pollution havens, principally in Communist China.
Among these foreign challengers, Tesla looms as GM’s greatest existential threat along with China’s national champion BYD.
Once hailed as an "American" company, Tesla’s Elon Musk has moved much of his production to Communist China.
Musk now commands the largest EV plant in the world in Shanghai, one capable of producing EVs for export to the U.S., and into GM’s foreign markets at deep discounts.
Remember here it is not just China’s slave labor and lax environmental regulations that provide Tesla’s edge.
The Communist Chinese government also lavishes massive subsidies on its EV industry, far in excess of anything Bidenomics is throwing at the GMs of this world.
Fueled by such subsidies, Musk has shown a ruthless willingness to engage in predatory pricing and thereby take out any American competitors.
Remember, too, that EVs constitute an entirely new technology.
Gone from the GM’s bottom line are the highly profitable combustion engines and parts like pistons that make up the guts of a "gas guzzler" — and gone too are those UAW jobs in the parts industry.
Instead, whichever country can most profitably produce EV batteries will likely win the competition — batteries alone account for almost 30% of the total cost of an EV.
That winner take all country is, of course, Communist China, Inc.
Add all this up, and American automakers like GM and Ford simply cannot afford a contract that generously compensates UAW members while reinstituting massive benefits.
Over the next contract cycle, these companies will not only face a flood of low-cost EV imports into the U.S. under the laissez-faire, tariff-less world of Bidenomics.
American automakers will also get their clocks cleaned in export markets globally, by the likes of Tesla and the aforementioned BYD.
This China national champion is already the world’s largest EV maker globally, and a key reason why China is the world’s largest EV exporter.
From the UAW’ rank and file’s perspective, the news is equally grim.
Bidenomics has bred a virulent and persistent stagflation which, over the course of Joe Biden’s regime, has significantly eroded real wages, particularly for blue collar manufacturing workers like those in the UAW.
A flood of illegal immigrants under Biden’s open borders policies is also putting further downward pressure on wages across the blue-collar economy.
Knowing this, and knowing that inflation is likely to continue, no UAW negotiator worth his or her salt would support a contract without a rock-solid cost of living adjustment clause or COLA.
Putting this in real terms, the current negotiation is not just about negotiating a significant wage increase in nominal terms, e.g., 36% over the life of the contract.
It's also about insuring that, say, a 9% wage boost each year is not completed obliterated by a 10% inflation rate a year — quite possible under the profligate spending of the Biden regime and America’s looming fiscal cliff.
Of course, GM is unlikely to accept the UAW’s proposed COLA reinstatement precisely because of the risk and uncertainty it would impose on the company’s bottom line — the UAW lost the COLA in 2007.
In other words,"How do you spell 'stalemate'?"
If I were still in the White House, I would, of course, try once again to broker a deal.
But this writer would go into that deal with a heavy heart as he knows full well that any "good deal" for GM under Bidenomics would leave UAW members likely worse off while any "good deal" for the UAW would further imperil an American company whose days may already be numbered.
Of course, if this writer were still in a Trump White House, there is also not a snowball’s chance in Hades that Donald Trump would let the Elon Musk’s and BYD’s of this world even into American markets.
Will we ever learn that elections have consequences?
Peter Navarro holds a Harvard Ph.D. in economics. One of only three senior White House officials to serve with Donald Trump from the 2016 campaign to the end, Peter was chief China Hawk and manufacturing czar. White House memoirs include "In Trump Time," and "Taking Back Trump’s America." His website is peternavarro.com - Read more reports by Dr. Navarro — Here.
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