Massive Dockworkers Strike Could Send Ripples Through Automotive Industry
Good morning! It’s Tuesday, October 1, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
Walter Isaacson On Elon Musk(s)
1st Gear: 45,000 Dock Workers Strike On East Coast
Dockworkers on the U.S. East Coast and Gulf Coast have officially started striking as of the morning of October 1. It’s their first large-scale work stoppage in nearly 50 years, and it’s going to end up having a huge impact on the automotive industry and global shipping in general. This all came to a head after negotiations for a new labor contract broke down over wages. These damn CEOs just do not want to pay their workers what they are truly worth.
Now, dockworkers from Maine to Texas are on strike, and analysts say it could cost the economy billions of dollars a day, threaten jobs and increase inflation. The United States Maritime Alliance could end this tomorrow if it wanted to. From Reuters:
The International Longshoremen’s Association (ILA) union representing 45,000 port workers had been negotiating with the United States Maritime Alliance (USMX) employer group for a new six-year contract ahead of a midnight Sept. 30 deadline.
The ILA said in a statement on Tuesday it shut down all ports from Maine to Texas at 12:01 a.m. ET (0401 GMT) and had rejected USMX’s final proposal made on Monday, adding the offer fell “far short of the demands of its members to ratify a new contract”.
The ILA’s leader, Harold Daggett, has said employers such as container ship operator Maersk and its APM Terminals North America have not offered appropriate pay increases or agreed to demands to stop port automation projects.
The USMX said in a statement on Monday it had offered to hike wages by nearly 50%, up from a prior proposal. Daggett, meanwhile, said the union is pushing for a 61.5% pay increase, according to CNBC.
“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” Daggett said on Tuesday.
“USMX owns this strike now. They now must meet our demands for this strike to end.”
This is ILA’s first strike since 1977, and it’s worrying business owners that rely on ocean shipping to export their goods from the 36 affected ports.
Here’s what some automakers are doing to cope with the fact their worldwide logistics just took a shit:
Barclays researchers said they expect European automakers like BMW, Mercedes, Volkswagen and Volvo o be among the car companies whose imports would be affected, but noted that relatively high inventories will shield the immediate impact.
Automakers Hyundai and GM said they were monitoring the strike and had contingency plans in place.
Steve Hughes, CEO of HCS International, a company that specializes in automotive shipping and sourcing told Reuters the union is “holding the entire country over a barrel,” and he’s “really afraid that it is going to be ugly.” Listen Steve-O, it doesn’t have to be like this if folks are just paid their fair share. It’s really that simple.
Anyway, it’ll be interesting to see how this impacts the presidential election, which is now just over a month away.
The dispute is also wedging labor-friendly U.S. President Joe Biden into a virtual no-win position as Vice President Kamala Harris runs a razor-tight election race against Republican former President Donald Trump.
White House Chief of Staff Jeff Zients and top economic adviser Lael Brainard urged USMX board members at a meeting on Monday to resolve the dispute fairly and quickly, a White House official said. But Biden’s administration has repeatedly ruled out the use of federal powers to break a strike in the event of an impasse.
U.S. Chamber of Commerce President Suzanne Clark urged Biden on Monday to reconsider, saying it “would be unconscionable to allow a contract dispute to inflict such a shock to our economy.”
The White House on Tuesday said in a statement that it is monitoring the effects on the supply chain “and assessing ways to address potential impacts,” noting the initial effect on consumers is expected to be limited.
Officials told Reuters on the condition of anonymity they are hoping for a short strike, pointing to the sign the two sides had resumed talks late on Sunday and had narrowed their differences on Monday.
We’ll see how this shakes out, but as always, folks: solidarity forever.
Go make Frank Sobotka proud.
2nd Gear: Musk, Tesla Win Big In Autopilot Lawsuit
Tesla and CEO Elon Musk got a big win in court when the automaker won the dismissal of a shareholder lawsuit that alleged misleading statements about the capabilities of self-driving were said to prop up its stock price. While this is certainly a win, Tesla and Musk can’t breathe too big of a sign of relief yet. The company still faces a number of other complaints and regulatory investigations into its marketing.
Back in April of this year. Musk said that Tesla was going “ball to the wall for autonomy” while saying the robotaxi would be revealed later this year (nine days from now, in fact.) Musk has been a huge cheerleader for autonomy for over a decade now, and he’s even scammed persuaded customers to pay thousands of dollars for Full Self-Driving. From Bloomberg:
The name is a misnomer — FSD requires constant supervision and doesn’t render vehicles autonomous — but Musk has repeatedly predicted Tesla is on the verge of measuring up to the branding. The company is embroiled in numerous lawsuits over the features, including from Tesla investors who claim they were misled.
In her ruling Monday, US District Judge Araceli Martínez-Olguín rejected shareholders’ allegations that Musk overstated Tesla’s technology with assurances that drivers could “go to sleep” in their car by 2020, among other promises. She found that some of the alleged overstatements concerned future plans, while others weren’t necessarily false.
“Plaintiffs fail to connect Musk’s hands-on management with any information that he allegedly learned rendering his statements false or misleading,” the judge wrote. However, she gave the investors until Oct. 30 to file an updated version of their complaint.
Investors claimed they were harmed when the truth about Tesla’s shortcomings came to light and its stock price fell, according to the complaint, which alleged that Musk sold $39 billion in stock before then.
Tesla consumers are moving ahead with a separate proposed class action over the company’s marketing of its driving systems, while Tesla earlier this year settled a high-profile lawsuit involving a fatal crash while its Autopilot feature was engaged.
Still, Tesla faces numerous federal probes into whether or not Autopilot defects have caused fatal crashes. It’s also facing investigations by federal prosecutors and the Securities and Exchange Commission into whether Tesla made misleading claims about the feature to the public, Bloomberg reports. Similar claims that have been brought by the California Department of Motor Vehcules were allowed to move forward earlier in 2024.
3rd Gear: U.S. New Vehicle Sales Slow In Q3
New vehicle sales in the U.S. are projected to have grown at a slower pace in the third quarter of 2024 than they were a year earlier. Industry experts blame inflation as a big reason why this is happening. A big chunk of the slowdown is coming from crossover and pickup truck buyers. Earlier in the year, those segments saw a surge in orders, but that has tapered off as folks struggle to get behind higher prices. From Reuters:
Market research firm J.D. Power estimates overall new vehicle sales to be up 0.2% at 3,882,600 units in the third quarter.
Buyers are also opting for more affordable models such as compact pickup trucks and SUVs such as Ford’s Maverick
Subcompact SUVs and compact cars are two of the hottest vehicle segments right now, helped by their relatively affordable price tags, said Charlie Chesbrough, senior economist at Cox Automotive.
Industry experts expected automakers to rebound with stronger sales in the third quarter, however, discounts offered by companies and the U.S. Federal Reserve’s interest rate cut were not enough to invigorate demand.
Data from Cox shows that General Motors is still expected to retain the top spot in the third quarter, but it’s still going to suffer a three percent drop in sales. Toyota and Ford are expected to take up the next two spots.
However, auto research firm Edmunds expects quarterly overall new U.S. vehicle sales to be down nearly 2%.
[…]
“Consumers in the market continue to be pressured by high interest rates and slow-to-recede vehicle prices, which are translating to high monthly payments,” said Chris Hopson, principal analyst at S&P Global Mobility.
To be honest, the average new car is so expensive nowadays that I don’t know how anyone but the ultra-rich can even afford them.
4th Gear: 194,000 Jeep PHEVS Recalled For Fire Risk
Jeep is recalling about 194,000 4xe plug-in hybrids because of a pretty serious fire risk. At this point, 13 of these SUVs have already burst into flames, and the automaker is telling owners to park outside and away from other vehicles until repairs can be carried out. From the Detroit Free Press:
The Italian-American automaker is recalling some 2020 through 2024 model year Jeep Wrangler and 2022 through 2024 Jeep Grand Cherokee plug-in hybrids. The issue involves a battery component, the company said.
The owner of the Jeep, Ram, Chrysler, Dodge and Fiat brands said the fires occurred when the vehicles were parked and turned off. It estimates 5% of affected vehicles may have the defect.
Stellantis said vehicle risk is reduced when the battery charge level is depleted and said owners are advised to refrain from recharging and should park away from structures or other vehicles. The company said a remedy is imminent.
The recall covers about 154,000 Jeeps in the U.S., 14,000 in Canada, 700 in Mexico and a further 26,000 outside North America. Yikes, mate.
Reverse: YOU DID IT JIMMY!!!!!!!
Neutral: The GOAT
President Joe Biden on Jimmy Carter’s 100th birthday
On The Radio: Red Hot Chili Peppers – ‘By The Way’
Red Hot Chili Peppers – By The Way [Official Music Video]
