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How Automobiles Work

JUDY WOODRUFF: Speaking of Flint, it is one
of many places around the country dealing with the impact of a national strike by the
United Auto Workers. It is now the 18th day of the strike against
General Motors affecting more than 50 sites and 46,000 workers. William Brangham takes a look at the big stakes
for both sides. It’s part of our regular reporting on business
and economics for Making Sense. WILLIAM BRANGHAM: Judy, the two sides were
still talking today, and there have been reports of progress in recent days. But as the strike continues, there are a number
of key issues still to be resolved, among them, wage increases, how much workers have
to pay toward their health care costs, converting temporary workers, who are paid at a lower
rate, into permanent workers, and a push to move more GM production back to the U.S. Micki Maynard is a journalist who follows
the automotive industry in Detroit, and has written several books on the subject. She joins me now from Ann Arbor, Michigan. Micki, thank you very much for being here. I laid out some of the details of the conflict
between the union and the automakers. What is the essential conflict there? MICHELINE “MICKI” MAYNARD, Journalist and
Author: I think the essential conflict is — there’s two parts to it. One is that the auto industry is at another
corner. The auto industry is looking at a future that’s
extremely uncertain. If you even think back 10 years ago to the
bailout, essentially, Americans, they wanted to get somewhere, they had to buy a car. If you lived in a big city, you might have
access to transit, but other than that, car ownership was what you were looking at. And fast-forward 10 years, we have all kinds
of choices. Even in a place like Ann Arbor, where I live,
I can choose from Zipcar, from Lyft and Uber. I could get a scooter if I wanted one. We have rental bikes. We have a terrific public transportation system. And, oh, yes, I can own a car. And, 10 years ago, we didn’t have that. So that’s the future facing the industry. And then what the UAW is looking at is, they
would like a guarantee from General Motors that the job levels right now will at least
stay at this level. Right now, the UAW is about one-tenth the
size at General Motors that it was at its peak in 1978. There were about 550,000 workers then. There are about 50,000 hourly workers now. They don’t want to lose any more jobs. And you can’t blame them. There has been an enormous amount of shrinkage. WILLIAM BRANGHAM: That is an incredible decline,
a 10-times decline in the number of — in that union. With regards to the strike, it has been going
on a long time. Why do you think this has been such a protracted
fight? MICHELINE “MICKI” MAYNARD: A couple of things. I think that emotions and tempers got very
high towards the end of the period before the strike deadline. And, sometimes, you just get angry and walk
out of the room. But the other issue that’s facing GM is that
they have an excess amount of cars. Right about this time of the year, car dealers
need about 65 days, so two months’ supply worth of cars. General Motors went into the strike with about
90 days’ worth of car, so 50 percent more than they needed. And from what I saw this week — I looked
at some sales figures — they have only lost about eight days’ worth of cars, or nine days’
worth of cars. So they could let the strike go another couple
of weeks without dealers really feeling the pinch. And this is a time of real uncertainty in
the manufacturing sector. Not just autos, but a lot of companies are
facing excess inventories. And a decision must have been made that, let’s
wind down some of these inventories, and maybe then we will talk. WILLIAM BRANGHAM: You touched on this before
about how the auto-buying population, the people who might be going into dealerships
and dropping money for cars, has certainly changed. You wrote a very interesting piece in The
Washington Post that touched on some of the other ways that the industry, the car-buying
world is shifting. Can you explain a little bit more about how
the world is changing under our feet that way? MICHELINE “MICKI” MAYNARD: Well, that’s — thanks
for mentioning my Washington Post story. I think that the focus on labor and the focus
on General Motors is simply different than it was over the past couple of decades. One of the major issues that has come up time
and again are SUVs and pickups. So if you think back to about 1990, most people
still owned cars for their regular usage. But right around 1990 was when people started
to drive SUVs, not just to go up in the mountains or anything, but to drive them for everyday
purposes. And we have had kind of three waves of these
big SUVs and pickups. And we’re in an another one of them now. So, while General Motors, Ford, Chrysler have
talked about the future as electric cars, possibly self-driving cars, much more efficient
cars, what they’re selling to the American public are big vehicles that are very profitable
for them. The average price of a car now is $37,000. That’s not just a car. That’s an SUV and a pickup. And loans are just getting longer and longer,
six years, seven years, eight years, so — for people to afford to pay for them. So if you look at owning a vehicle, you’re
going to spend a lot of money and you’re going to have it for quite a while. So people are weighing that into the equation
as they make decisions about whether they’re going to buy a vehicle at all. The other thing I wanted to mention was the
focus on electric vehicles, because General Motors, one of the proposals it’s made to
the union is that it would take two plants it was planning to close, put batteries in
one and put electric — I think electric trucks in the other one. But, again, the union has watched GM kind
of lurch around on electrics. They had the little EV1 that they killed. They had the Volt, which they told Congress
was going to be its future. The Volt is gone. And now they’re talking electrics again. And, in a sense, you can’t blame the union
for being a little skeptical about whether this is its future. WILLIAM BRANGHAM: It’s such a fascinating
backdrop to this whole strike as it’s unfolding. Micki Maynard, thank you very much for being
here. MICHELINE “MICKI” MAYNARD: My pleasure. Thank you.

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