Steven Rattner on the UAW Strike and the Challenges of Bidenomics

Episode Summary

Executive Summary: The episode centers on the UAW strike against the Detroit Three and uses Steve Rattner’s perspective as the Obama-era “car czar” to explain why labor, profitability, and the EV transition are colliding. Rattner argues the unions made real but limited concessions in 2009, that today’s demands are much larger, and that automakers cannot absorb everything while funding an expensive shift to EVs amid global competition and industrial-policy pressures.

Main Topics: UAW strike and bargaining dynamics (Priority: 5/5): The hosts and Steve Rattner discuss the first week of the UAW strike, why it likely continues, and how the union’s strategy and leadership differ from 2009. 2009 auto rescue and labor concessions (Priority: 5/5): Rattner explains the bailout/rescue context, what workers gave up then, and why the concessions fell more heavily on newer workers than on established ones. Tiered labor, pay equity, and union cohesion (Priority: 4/5): The conversation examines the UAW’s tier system, its impact on solidarity, and whether a return to one wage scale is feasible. EV transition and automaker competitiveness (Priority: 5/5): The guests debate how difficult it is for legacy automakers to reinvent themselves while competing with Tesla, startups, and eventually Chinese EV makers. Manufacturing, offshoring, and labor-cost pressure (Priority: 4/5): Rattner argues U.S. manufacturing faces structural disadvantages from higher labor costs, global supply chains, and movement of production to Mexico and nonunion plants. Industrial policy, semiconductors, and batteries (Priority: 4/5): The discussion broadens to U.S. efforts to reshore chips and battery production, the role of subsidies and tax credits, and the limits of federal industrial policy. Management failures and auto-industry culture (Priority: 3/5): Rattner recounts how GM’s internal culture and weak management contributed to crisis, stressing that labor was not solely to blame.

Key Arguments: The 2009 rescue required “shared sacrifice,” and unions did concede, but mainly via changes that hit newer workers and retirees rather than cutting established workers’ cash pay. Rattner argues today’s UAW demands go far beyond restoring 2009 concessions and include items automakers cannot realistically afford, such as paid time for less work, a jobs bank, and defined-benefit pensions. He says the current strike reflects a different bargaining environment: low unemployment, recent union frustrations, corruption scandals, and a more confrontational UAW leadership under Sean Fain. Rattner maintains that labor costs matter even if they are a small share of total costs, because thin margins mean a modest increase can wipe out a large portion of profits. He argues EVs are structurally less labor-intensive than ICE vehicles, so protecting old auto jobs indefinitely is unlikely to work if U.S. automakers want to compete. He sees the broader manufacturing challenge as one of cost, permitting, supply chains, and global competition, not just wages. He is skeptical of broad industrial policy but supports targeted tax incentives when they make projects economically viable, citing solar and semiconductor efforts. He says semiconductors are strategically crucial because the U.S. does not make high-end chips domestically, creating national-security and supply-chain risk.

Data Points: UAW concessions relative to 2009: No full-time Tier 1 worker took a reduction in cash compensation - Rattner says most sacrifice fell on newer hires and some benefits, not on established workers' base pay. UAW tier pay gap: Tier 2 workers received roughly half the cash compensation of established workers - Describing the post-rescue wage structure for newer hires. Auto rescue taxpayer support: $82 billion - Rattner says the auto rescue involved committing this amount of taxpayer money. GM stock performance since IPO: Stock price has not budged since public debut about 12 years ago - Used to argue automakers have not created strong returns for investors. Overall stock market performance: Up 275% - Comparison versus GM’s stagnant share price to illustrate relative underperformance. UAW pay ask vs offer: UAW wants 35-36%; companies offered 20% - Rattner identifies this as the likely core cash-compensation bargaining range. U.S. unemployment rate: 3.8% - Cited as evidence of a tight labor market empowering workers. Job availability: About 1.5 jobs for every job seeker - Used to explain the broader leverage workers feel across industries. Detroit 3 facilities in Mexico: 20 facilities - Rattner cites this as evidence of cross-border production and labor-cost arbitrage. Mexican auto wages: $9 to $14 a day - He contrasts these wages with U.S. labor costs and notes low-wage competitiveness. Auto industry share of GDP: 3% - Rattner uses this to stress the sector’s economic and symbolic importance. Federal budget deficit: $2 trillion - He argues $52 billion for semiconductor support is large but manageable relative to the deficit. U.S. semiconductor funding: $52 billion plus about $12 billion for R&D - Referenced as the core CHIPS-style industrial-policy support. High-end semiconductor production: 92% made in Taiwan - Rattner uses this to argue for U.S. domestic capacity and supply-chain resilience. TSMC Oregon/Washington costs: 50% higher than in Taiwan - Illustrates the cost disadvantage of U.S.-based chip manufacturing. ASML EUV machine complexity: 650,000 parts - Used to show the global complexity of semiconductor supply chains. General Motors job classifications reduced: From about 300 to 6 - Example of 2009-era work-rule simplification to improve efficiency. Potential strike spillover: Up to 130,000 workers could be affected - Rattner says the strike may ripple through plants and suppliers.

Pivotal Quotes: "never let a good crisis go to waste" — Rahm Emanuel (quoted by Steve Rattner): Used to explain why the 2009 auto rescue created leverage for concessions. "you have to decide what your priorities are" — Steve Rattner: He uses this to frame the tradeoff between labor protection and the energy transition. "This was not labor's fault that these companies got in trouble" — Steve Rattner: Rattner emphasizes management failures at GM and the broader auto industry as a key part of the 2009 crisis.

Implications: The strike highlights a broader fight over wages, jobs, and the cost of rebuilding U.S. industrial capacity. For autos, EVs, and semiconductors, the big question is whether America can stay competitive without raising costs enough to lose production and employment.