Shutdowns (Institutional)

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    For Bill Ford, ‘Every Negotiation Is a Roller Coaster’

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    As a 25-year-old junior executive at the car company that bears his last name, William Clay Ford Jr. had a bracing introduction to labor negotiations when a union official demanded that he stand up and vouch that he was made of the same stuff as his great-grandfather Henry Ford.Mr. Ford, now the company’s executive chair, harked back to the moment in an interview this week about how he and his company are navigating one of their most difficult labor negotiations in decades.The United Automobile Workers union has shut down three Ford plants, including its largest, and other plants and distribution centers at General Motors and Stellantis, which owns Chrysler. The union’s new president, Shawn Fain, has said he is prepared to call workers out at more plants if his demands for big raises, better benefits and job security are not met. He has referred to the companies as “the enemy,” and has said the union is fighting “corporate greed” and standing up to the “billionaire class.”In a speech this week, Mr. Ford said the strikes were helping nonunion automakers like Tesla, Toyota and Honda. Mr. Fain responded that workers at those companies were future U.A.W. members.In an interview after his speech, Mr. Ford said he had been counseling his executives not to let Mr. Fain’s words get to them and focus on getting a deal done. Mr. Ford also recalled his first difficult conversation with a union official.In 1982, Mr. Ford said, his father invited him to sit in the room for talks with the U.A.W. As a newcomer, he was not allotted a seat at a table where about 50 union negotiators sat on one side and an equal number of Ford executives on the other.Sitting against the wall, he was approached by an older union representative. “You, stand up,” the man said. “What are you made of? I knew your great-grandfather and your grandfather. I knew what they were made of. What the hell are you made of?”Mr. Ford said he had replied sheepishly that he had never known his great-grandfather and grandfather but that he shared their values. Similar confrontations followed daily — “I lived in terror of going to work,” Mr. Ford said.Then about a week later, the union officials invited him to a local bar. “Come with us,” Mr. Ford said they had told him. “You passed the test.”This interview was condensed and edited for clarity.Have you been involved in any talks that are comparable to the current negotiations?No, but every negotiation is different, and every leader is different. What I keep saying to our executives is: ‘Don’t take this personally. A lot of it is theater. The most important thing is get the deal done. The rhetoric doesn’t matter.’ Every negotiation is a roller coaster. Some are not pleasant, and some sting. Don’t overreact. And when it’s all over, we are still one team again, and have to go forward.Are you going to be on the same team at the end of these talks?I believe we will. I know many on their negotiating team personally, and some of them, I play hockey with them and consider them very close friends.You’ve said the real competition is not U.A.W. vs. Ford but the U.A.W. and Ford against Toyota, Honda, Tesla and the Chinese automakers. Do you think the union’s leadership agrees with that?I hope so, because if they don’t, it will be catastrophic. They can have disagreements with us and bargain hard, but we are not the enemy. I will never consider our employees the enemy. I think the employees know who the real competition is, and they will come together with us when this is over. We made a conscious decision to add jobs here in America when our competitors were moving production to Mexico.Would the offer you have on the table now put Ford at a significant disadvantage to other automakers?It certainly won’t be an advantage. We could live with the deal we have proposed, but just barely. If you go beyond that, we are going to have to start making hard decisions in terms of investments and future products.Shawn Fain has said the workers have fallen behind while the automakers and executives like Jim Farley, Ford’s chief executive, and Mary Barra, G.M.’s chief executive, have prospered. How do you respond?Everyone’s going to have their own viewpoint on executive compensation, and I totally get that. But I also know what the market is for top talent. You have entertainers and athletes who are making more than Jim Farley and Mary Barra. But that’s what the market is, and the company with the best talent wins, period.There were some years in the lean years when I took no pay, and I would do it again if I had to.You have three plants shut down by the strike. How is that affecting your operations?It’s messy, and it’s going to become messier. The most immediate effects will be on the suppliers. The supply base is very fragile. It barely survived Covid, and is not all the way back, so a prolonged strike will start collapsing the supply base, and then making anything in this country will be difficult.Manufacturing is a matter of national security, and we saw that during Covid. And I hope with all my heart we never get into another war, but if we did, this industry would be critical to defending our nation, as it was in World War I and World War II. Other industries can make small numbers of things. The auto companies can turn that into tens of thousands of things.“I never thought I would see the day when our products were so heavily politicized, but they are.” — William Clay Ford Jr.What’s your outlook on the U.S. economy?I think it’s fragile. Inflation is taking its toll. The consumer is still spending, but we’re watching it very carefully. On the other hand, there’s still strong employment, and we are seeing our sales hold up. There are conflicting signals, for sure.Let’s talk about electric vehicles. About 18 months ago, you launched the F-150 Lightning pickup. It seemed like electric vehicle sales were going to take off. But now Ford is slowing production of that truck. What happened?E.V. sales are still up 50 percent this year, so sales are growing very fast. But we’ve also seen a politicization of E.V.s. Blue states say E.V.s are great and we need to adopt them as soon as possible for climate reasons. Some of the red states say this is just like the vaccine, and it’s being shoved down our throat by the government, and we don’t want it. I never thought I would see the day when our products were so heavily politicized, but they are.The other is prices. Electric vehicles are expensive. We know prices will come down, and as that happens, we will have a bigger ramp-up of E.V.s. Keep this in mind: The most valuable company that our industry has ever seen is Tesla, and it’s growing. That’s a very instructive point when people say E.V.s are not desired.Are you concerned about some of Donald Trump’s comments? He just came into Michigan and said that the transition to electric vehicles is going to result in almost all auto production moving to China.I don’t want to personalize this, because, frankly, we have to pick a path forward and our lead times are longer than political lead times. So we can’t overreact to one bit of rhetoric or another. We have to deal with the most likely scenario, and how we can create the most value for our company, so we are pushing ahead with E.V.s because we do believe they have great application for a lot of people. And once people drive E.V.s, they will see that it’s a great experience.Electric vehicles are expensive. Did Tesla’s price cuts have a big effect on your business?That’s what we have seen with every new technology that has been adapted. You come down the cost curve pretty quickly as batteries get better.With our first-generation E.V.s, the Lightning and the Mustang Mach-E, they were done with a lot of internal combustion engineering in them. The next generation, which will start coming quite quickly, was developed with a clean sheet of paper. When you do that you can really start taking cost out, and then you can start pricing them accordingly.Tesla has been leading the price cuts, because they can with their scale. That’s something we are actually counting on in the future. And we will have products that compete and make money in that world. More

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    U.A.W. Will Not Expand Strikes at G.M., Ford and Stellantis as Talks Progress

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    The United Automobile Workers reported improved wage offers from the automakers and a concession from General Motors on workers at battery factories.The United Automobile Workers union said on Friday that it had made progress in its negotiations with Ford Motor, General Motors and Stellantis, the parent of Chrysler, and would not expand the strikes against the companies that began three weeks ago.In an online video, the president of the union, Shawn Fain, said all three companies had significantly improved their offers to the union, including providing bigger raises and offering cost-of-living increases. In what he described as a major breakthrough, Mr. Fain said G.M. was now willing to include workers at its battery factories in the company’s national contract with the U.A.W.G.M. had previously said that it could not include those workers because they are employed by joint ventures between G.M. and battery suppliers.“Here’s the bottom line: We are winning,” said Mr. Fain, wearing a T-shirt that read, “Eat the Rich.” “We are making progress, and we are headed in the right direction.”Mr. Fain said G.M. made the concession on battery plant workers after the union had threatened to strike the company’s factory in Arlington, Texas, where it makes some of its most profitable full-size sport-utility vehicles, including the Cadillac Escalade and the Chevrolet Tahoe. The plant employs 5,300 workers.G.M. has started production at one battery plant in Ohio, and has others under construction in Tennessee and Michigan. Workers at the Ohio plant voted overwhelmingly to be represented by the U.A.W. and have been negotiating a separate contract with the joint venture, Ultium Cells, that G.M. owns with L.G. Energy Solution.Ford is building two joint-venture battery plants in Kentucky and one in Tennessee, and a fourth in Michigan that is wholly owned by Ford. Stellantis has just started building a battery plant in Indiana and is looking for a site for a second.G.M. declined to comment about battery plant workers. “Negotiations remain ongoing, and we will continue to work towards finding solutions to address outstanding issues,” the company said in a statement. “Our goal remains to reach an agreement that rewards our employees and allows G.M. to be successful into the future”Shares of the three companies jumped after Mr. Fain spoke. G.M.’s stock closed up about 2 percent, Stellantis about 3 percent and Ford about 1 percent.The strike began Sept. 15 when workers walked out of three plants in Michigan, Ohio and Missouri, each owned by one of the three companies.The stoppage was later expanded to 38 spare-parts distribution centers owned by G.M. and Stellantis, and then to a Ford plant in Chicago and another G.M. factory in Lansing, Mich. About 25,000 of the 150,000 U.A.W. members employed by the three Michigan automakers were on strike as of Friday morning.“I think this strategy of targeted strikes is working,” said Peter Berg, a professor of employment relations at Michigan State University. “It has the effect of slowly ratcheting up the cost to the companies, and they don’t know necessarily where he’s going to strike next.”Here Are the Locations Where U.A.W. Strikes Are HappeningSee where U.A.W. members are on strike at plants and distribution centers owned by Ford, General Motors and Stellantis.The contract battle has become a national political issue. President Biden visited a picket line near Detroit last month. A day later, former President Donald J. Trump spoke at a nonunion factory north of Detroit and criticized Mr. Biden and leaders of the U.A.W. Other lawmakers and candidates have voiced support for the U.A.W. or criticized the strikes.When negotiations began in July, Mr. Fain initially demanded a 40 percent increase in wages, noting that workers’ pay has not kept up with inflation over the last 15 years and that the chief executives of the three companies have seen pay increases of roughly that magnitude.The automakers, which have made near-record profits over the last 10 years, have all offered increases of slightly more than 20 percent over four years. Company executives have said anything more would threaten their ability to compete with nonunion companies like Tesla and invest in new electric vehicle models and battery factories.The union also wants to end a wage system in which newly hired workers earn just over half the top U.A.W. wage, $32 an hour now, and need to work for eight years to reach the maximum. It is also seeking cost-of-living adjustments if inflation flares, pensions for a greater number of workers, company-paid retirement health care, shorter working hours and the right to strike in response to plant closings.In separate statements, Ford and Stellantis have said they agreed to provide cost-of-living increases, shorten the time it takes for employees to reach the top wage, and several other measures the union has sought.Ford also said it was “open to the possibility of working with the U.A.W. on future battery plants in the U.S.” Its battery plants are still under construction and have not hired any production workers yet.The union is concerned that some of its members will lose their jobs, especially people who work at engine and transmission plants, as the automakers produce more electric cars and trucks. Those vehicles do not need those parts, relying instead on electric motors and batteries.Stellantis’ chief operating officer for North America, Mark Stewart, said the company and the union were “making progress, but there are gaps that still need to be closed.”The union is also pushing the companies to convert temporary workers who now make a top wage of $20 an hour into full-time staff.Striking at only select locations at all three companies is a change from the past, when the U.A.W. typically called for a strike at all locations of one company that the union had chosen as its target. Striking at only a few locations hurts the companies — the idled plants make some of their most profitable models — but limits the economic damage to the broader economies in the affected states.It also could help preserve the union’s $825 million strike fund, from which striking workers are paid while they’re off the job. The union is paying striking workers $500 a week.G.M. said this week that the first two weeks of the strike had cost it $200 million. The three automakers and some of their suppliers have said that they have had to lay off hundreds of workers because the strikes have disrupted the supply and demand for certain parts.Santul Nerkar More

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    Drivers and Dealers Could Soon Feel Impact of U.A.W. Strikes

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    Lengthy and expanding walkouts by the United Automobile Workers union against Ford, General Motors and Stellantis could strain a fragile supply chain.More than a week into its targeted strike at the three established U.S. car companies, the United Automobile Workers union has poked holes in a supply chain that has still not fully recovered from the pandemic.The companies and the union remain far apart in negotiations, and the U.A.W. could expand its strikes to more locations as soon as Friday. Depending on how long the strikes last, it could exact a heavy toll on autoworkers and the three companies — General Motors, Ford Motor and Stellantis, the parent of Chrysler and Jeep. But the work stoppages could also be painful to drivers, car dealers and auto-parts suppliers.A long and expanding strike will reduce the number of new cars on dealer lots, make it harder for people to repair their vehicles and reduce demand for parts needed to make new vehicles.So far, the economic damage has been limited because the U.A.W. has struck only a small number of plants and warehouses, but the pain could worsen if work stoppages grow to include many more locations and last weeks or months.“The economic spillovers from the U.A.W. strike remain contained as we near the two-week mark,” said Gabriel Ehrlich, an economic forecaster at the University of Michigan. “We are seeing some layoffs among automotive suppliers, ranging from seat makers to steelworkers. We would expect these impacts to accumulate as the strike persists and additional targets are announced.”When the union started walkouts at assembly plants, it appeared to target plants that make popular models, like the Ford Bronco, the Jeep Wrangler and the Chevrolet Colorado. It widened the strike on Sept. 22 to include parts distribution centers at G.M. and Stellantis.As those popular models become more scarce, dealers are likely to push up prices.“They took out the ones that are going to hurt the most,” said Jeff Rightmer, a professor at Wayne State University who specializes in supply chain management. “At this point, they’re not going to be able to get that production back.”New-car sales are expected to rise this month, despite the strike and high interest rates, according to Cox Automotive. And for now, overall inventories for the three companies remain stable, except for the most popular models, according to data from CoPilot, a firm that tracks dealer inventories.As of Sept. 24, G.M. had enough vehicles on dealer lots to meet demand for 40 to 70 days across its four brands. Ford had enough cars and trucks for 74 days. And Stellantis had more than 100 days across three of its four divisions; Jeep had less than 100 days.Jeep Wranglers at the Stellantis Toledo Assembly Complex in Toledo, Ohio, at the beginning of the strike.Evan Cobb for The New York TimesAmong the 10 models affected by the first set of U.A.W. strikes, supply for four models has dwindled to less than one month’s sales.“Once that dries up, they’re not building anything, so it’s important that the strike is as short as possible,” said Wes Lutz, a car dealer in Jackson, Mich., who sells Chrysler, Dodge, Jeep and Ram models.He has been getting cars from other plants, including large pickup trucks imported from Mexico. But he is worried that an expanding strike could reduce the supply of more models.An even bigger concern, Mr. Lutz said, is that the strikes at G.M. and Stellantis parts warehouses could soon make it hard to repair vehicles, leaving some drivers stranded. He said that he was working with other dealers to trade spare parts among themselves to keep their service departments going.Servicing and repairing vehicles is generally the most profitable part of car dealerships. Service departments bring in so much money that they can cover most or all of the costs of running dealerships, said Pat Ryan, chief executive of CoPilot.That’s why a parts shortage could deal a bigger blow to dealers than not having enough vehicles to sell. If parts are hard to come by for weeks or months, some dealers may suspend repairs and lay off mechanics.Another group of businesses exposed to the strikes are the companies that make parts and components like batteries and mufflers for new vehicles. Nearly 700 auto suppliers could be hurt by the strike, according to Resilinc, a supply chain monitoring company.CIE Newcor, an auto components maker, notified workers on Sept. 21 that it expected to lay off 300 employees at four Michigan plants starting Oct. 2. The extent of the layoffs will be “determined by the length of the potential U.A.W. — Detroit 3 strike,” the company said in a regulatory filing.Much of the auto industry practices “just in time” production, meaning materials are delivered and parts are built and sent to car factories as they are needed.If smaller suppliers go more than a few weeks without selling products to customers, some may have to seek bankruptcy protection, said Ann Marie Uetz, a Detroit-based partner at the law firm Foley & Lardner who represents auto suppliers. “There is definite strain in the supply chain, and you’re going to see some of them suffer as a result of the strike if it lingers for a month or more.” More

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    U.S. Government Shutdown Could Delay Key Economic Data

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    A lapse in funding would delay data on unemployment and inflation as policymakers try to avoid a recession.A federal government shutdown would cut off access to key data on unemployment, inflation and spending just as policymakers are trying to guide the economy to a “soft landing” and avoid a recession.Federal statistical agencies, including the Bureau of Labor Statistics, the Census Bureau and the Bureau of Economic Analysis, will suspend operations unless Congress reaches a deal before Sunday to fund the government. Even a short shutdown would probably delay high-profile data releases — including the monthly jobs report, scheduled for Oct. 6, and the Consumer Price Index, scheduled for Oct. 12.This isn’t the first time government shutdowns have threatened economic data. The 16-day lapse in funding in 2013 delayed dozens of releases, including the September employment report. A longer but less extensive shutdown in 2018 and 2019 spared the Bureau of Labor Statistics but held up reports from the Commerce Department, including data on gross domestic product.But this shutdown, if it occurs, comes at a particularly sensitive time for the economy. Policymakers at the Federal Reserve have been trying to tame inflation without causing a recession — a balancing act that requires central bankers to fine tune their strategy based on how the economy responds.“Monetary policy, even in normal times, is a complicated undertaking — we are not in a normal time now,” said David Wilcox, a longtime Fed staff member who is now an economist at the Peterson Institute for International Economics and Bloomberg Economics. “It’s not a good strategy to take a task that is so difficult and make it harder by restricting the information flow to monetary policymakers at this delicate moment.”A short shutdown, similar to the one a decade ago, would delay data releases but probably wouldn’t do much longer-term damage. Data for the September jobs report, for example, has already been collected; it would take government statisticians only a few days to finish the report and release it after the government reopened. In that situation, most major statistics would probably be updated by the time the Fed next meets on Oct. 31 and Nov. 1.But the longer a shutdown goes on, the more lasting the potential damage. Labor force statistics, for example, are based on a survey conducted in the middle of each month — if the government doesn’t reopen in time to conduct the October survey on schedule, the resulting data could be less accurate, as respondents struggle to recall what they were doing weeks earlier. Other data, such as information on consumer prices, could be all but impossible to recover after the fact.“If we miss two months of collecting data, we’re never getting that back,” said Betsey Stevenson, a University of Michigan economist who was a member of President Barack Obama’s Council of Economic Advisers during the 2013 shutdown. “This thing gets more and more and more problematic as the duration goes on.”A longer shutdown would also increase the risk that policymakers misread the economy and make a mistake — perhaps by failing to detect a reacceleration in inflation, or by missing signs that the economy is slipping into a recession.“The thought of the Fed trying to make such an important, critical decision without big pieces of information is just downright terrifying,” said Ben Harris, who was a top official at the Treasury Department until early this year and is now at the Brookings Institution. “It’s like a pilot trying to land a plane without knowing what the runway looks like.”Policymakers wouldn’t be flying completely blind. The Fed, which operates independently and would not be affected by the shutdown, would continue to publish its own data on industrial production, consumer credit and other subjects. And private-sector data providers have expanded significantly in both breadth and quality in recent years, offering alternative sources of information on job openings, employment, wages and consumer spending.“The Fed has always done what it can to gather information from other sources, but now there are more of those sources it can turn to,” said Erica Groshen, a Cornell University economist who served as commissioner of the Bureau of Labor Statistics during the 2013 shutdown. “That will make the very data-dependent parts of the policy world and the business community a little less bereft of timely data.”Still, Ms. Groshen said, private data cannot match the breadth, transparency and reliability of official statistics. She recalled that in 2013, Fed officials contacted her department to see if the central bank could provide funding to get the jobs report out on time — a proposal that administration officials ultimately concluded would be illegal.Policymakers aren’t the only ones who will be affected by the lack of data. Trucking companies base fuel surcharges on diesel prices published by the Energy Information Administration. Inventory and sales data from the Census Bureau can influence businesses’ decisions on when to place orders. And the Social Security Administration can’t settle on the annual cost-of-living increase in benefits without October consumer price data. More

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    U.A.W. Says It Could Expand Auto Strikes on Friday

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    The United Automobile Workers union said the strikes against General Motors, Ford and Stellantis could grow on Friday if negotiators don’t make enough progress.The United Automobile Workers union said on Wednesday that it planned to expand its strike against the big three Michigan automakers on Friday if negotiators failed to make substantial progress on new contracts.The union ordered workers to walk off the job nearly two weeks ago at three vehicle assembly plants — each owned by one of the companies, General Motors, Ford Motor and Stellantis, the parent of Chrysler and Jeep. Last Friday the union broadened the strike to include spare parts-distribution centers owned by G.M. and Stellantis, saying it had made progress in its talks with Ford.The U.A.W. president, Shawn Fain, is scheduled to update members in a video streamed live on Facebook on Friday morning.The union is seeking a substantial wage increase to make up for much smaller raises over the last decade. Each of the companies has offered to lift wages by roughly 20 percent over four years, about half of what the U.A.W. is seeking. The union has demanded other measures including cost-of-living adjustments, the right to strike to protest plant closures, pensions for more workers and company-paid health care for retirees.The three plants that have been shut down by the strike include a G.M. factory in Wentzville, Mo., a Ford plant in Wayne, Mich., and a Stellantis complex in Toledo, Ohio. They make some of the manufacturers’ most profitable models, including the GMC Canyon pickup truck, the Ford Bronco sport-utility vehicle, and the Jeep Wrangler.The second wave of the strike idled 20 Stellantis parts-distribution centers and 18 owned by G.M. More than 18,000 U.A.W. workers are now on strike. The union represents about 150,000 workers employed by G.M., Ford and Stellantis.The union and the companies started negotiating new collective bargaining agreements in July, but made little progress until this month. Their contracts expired on Sept. 14 and Mr. Fain called on the first round of work stoppages the following day. More

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    U.S. Government Shutdown Is Unlikely to Cause an Immediate Recession

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    White House and Wall Street estimates suggested the economy could withstand a brief shutdown, with risks mounting the longer it lasts.Federal government shutdowns have become so common in recent years that forecasters have a good read on how another one would affect the American economy. The answer is fairly simple: The longer a shutdown lasts, the more damage it is likely to inflict.A brief shutdown would be unlikely to slow the economy significantly or push it into recession, economists on Wall Street and inside the Biden administration have concluded. That assessment is based in part on the evidence from prior episodes where Congress stopped funding many government operations.But a prolonged shutdown could hurt growth and potentially President Biden’s re-election prospects. It would join a series of other factors that are expected to weigh on the economy in the final months of this year, including high interest rates, the restart of federal student loan payments next month and a potentially lengthy United Automobile Workers strike.A halt to federal government business would not just dent growth. It would further dampen the mood of consumers, whose confidence slumped in September for the second straight month amid rising gas prices. In the month that previous shutdowns began, the Conference Board’s measure of consumer confidence slid by an average of seven points, Goldman Sachs economists noted recently, although much of that decline reversed in the month after a reopening.Gregory Daco, the chief economist at EY-Parthenon, said a government shutdown would not be a “game changer in terms of the trajectory of the economy.” But, he added, “the fear is that, if it combines with other headwinds, it could become a significant drag on economic activity.”Jared Bernstein, the chairman of the White House Council of Economic Advisers, said in a statement on Wednesday that the council’s internal estimates suggest potential losses of 0.1 to 0.2 percentage points of quarterly economic growth for every week a shutdown persists.“Programmatic impacts from a shutdown would also cause unnecessary economic stress and losses that don’t always show up in G.D.P. — from delaying Small Business Administration loans to eliminating Head Start slots for thousands of children with working parents to jeopardizing nutrition assistance for nearly 7 million mothers and children,” Mr. Bernstein added. “It is irresponsible and reckless for a group of House Republicans to threaten a shutdown.”Goldman Sachs economists have estimated that a shutdown would reduce growth by about 0.2 percentage points for each week it lasts. That’s largely because most federal workers go unpaid during shutdowns, immediately pulling spending power out of the economy. But the Goldman researchers expect growth to increase by the same amount in the quarter after the shutdown as federal work rebounded and furloughed employees received back pay.That estimate tracks with previous work from economists at the Fed, on Wall Street and prior presidential administrations. Trump administration economists calculated that a monthlong shutdown in 2019 reduced growth by 0.13 percentage points per week.After that shutdown ended, the Congressional Budget Office estimated that real gross domestic product was reduced by 0.1 percent in the fourth quarter of 2018 and 0.2 percent in the first quarter of 2019. Although the office said most of the lost growth would be recovered, it estimated that annual G.D.P. in 2019 would be 0.02 percent lower than it would have been otherwise, amounting to a loss of roughly $3 billion. Because growth and confidence tend to snap back, previous shutdowns have left few permanent scars on the economy. Some economists worry that might not be the case today.Mr. Daco said federal workers might not spend as much as they would have absent a shutdown, and government contractors might not recoup all of their lost business.A long shutdown would also delay the release of important government data on the economy, like monthly reports on jobs and inflation, by forcing the closure of federal statistical agencies. That could prove to be a bigger risk for growth than in the past, by effectively blinding policymakers at the Federal Reserve to information they need to determine whether to raise interest rates again in their fight against inflation.The economy appears healthy enough to absorb a modest temporary hit. The consensus forecast from top economists is for growth to approach 3 percent, on an annualized basis, this quarter. But economists expect growth to slow in the final months of the year, raising the risks of recession if a shutdown lasts several weeks.Diane Swonk, the chief economist at KPMG, said she expected G.D.P. to rise about 4 percent in the third quarter, and then slow to roughly 1 percent in the fourth quarter. She said a two-week shutdown would have a limited impact, but one that lasted for a full quarter would be more problematic, potentially resulting in G.D.P. entering negative territory.“When you start nicking away even a tenth here or there, that’s pretty weak,” Ms. Swonk said.A shutdown could also further convey political dysfunction in Washington, which could rattle investors and push up yields on Treasury bonds, leading to higher borrowing costs, Ms. Swonk said.Biden administration officials had hoped to avoid such dysfunction when they reached a deal with Republicans in June to raise the nation’s borrowing limit. That agreement included caps on federal spending that were meant to be a blueprint for congressional appropriations. A faction of Republicans in the House has pushed for even deeper cuts, driving Congress toward a shutdown.Michael Linden, a former economic aide to Mr. Biden who is now a senior policy fellow at a think tank, the Washington Center for Equitable Growth, said immediate economic effects from the shutdown could force Republican leaders in the House to quickly pass a funding bill to reopen the government.“There’s a reason shutdowns tend to be pretty short,” Mr. Linden said. “They end up causing disruptions that people don’t like.” More

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    U.A.W. Threatens Strikes at More Plants

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    The United Auto Workers union said workers would walk out of more plants on Friday if it didn’t make progress in talks with General Motors, Ford and Stellantis.The United Auto Workers said on Tuesday that the union would expand its strike against three U.S. automakers on Friday if it was unable to make substantial progress in contract talks with them.Nearly 13,000 U.A.W. members walked off the assembly lines at three plants last Friday, one each at the three companies — General Motors, Ford Motor and Stellantis, the parent of Chrysler. The union has demanded a 40 percent wage increase over four years, better benefits and other changes. The automakers, which are based in or have a big presence in Michigan, have offered raises of about half as much.In a video posted on Facebook on Tuesday, the union’s new president, Shawn Fain, said workers could walk out of more plants at the end of this week.“If we don’t see serious progress to noon Friday, Sept. 22, more locals will be called on to stand up and go on strike,” he said. “We’re going to keep hitting the companies where we need to.”Separately on Tuesday, Mr. Fain responded to criticism by former President Donald J. Trump, who is expected to visit the Detroit area next week.“Every fiber of our union is being poured into fighting the billionaire class and an economy that enriched people like Donald Trump at the expense of workers,” Mr. Fain said. “We can’t keep electing billionaires and millionaires that don’t have any understanding of what it is like to live paycheck to paycheck and struggle to get by and expecting them to solve the problems of the working class.”In an interview on NBC’s “Meet the Press” last weekend, Mr. Trump said Mr. Fain and the union were “failing” workers in the shift to electric vehicles that has been championed by President Biden.“The autoworkers are being sold down the river by their leadership,” he said, adding: “All of these cars are going to be made in China. The electric cars, automatically, are going to be made in China.”Mr. Biden has expressed support for the striking workers, although the U.A.W. has not endorsed his re-election thus far. The union has long backed Democratic presidential candidates, but some of its members supported Mr. Trump in the last two elections.Here Are the Plants Where U.A.W. Strikes Are HappeningSee the plants owned by Ford, General Motors and Stellantis where U.A.W. members are on strike.The union and the companies, which are engaged in three separate negotiations, remain far apart. The companies have offered raises of about 20 percent, but Mr. Fain has said that doesn’t go far enough to make up for the impact of inflation and concessions the union made over the last 15 years.The union also wants pensions to cover more workers, company-paid health care for retirees, shorter working hours and measures that make it harder for the companies to close plants in the United States. The automakers have rejected most of those other demands.In statements and interviews, auto executives have said meeting all of the union’s demands would put them at a severe competitive disadvantage to nonunion plants operated by Tesla and foreign automakers such as Toyota and Volkswagen. G.M., Ford and Stellantis already have higher labor costs than most nonunion car companies.The three automakers have said they cannot afford substantial raises and new benefits because they are investing tens of billions of dollars to develop electric vehicles and build battery plants. More

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    Battle Over Electric Vehicles Is Central to Auto Strike

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    Carmakers are anxious to keep costs down as they ramp up electric vehicle manufacturing, while striking workers want to preserve jobs as the industry shifts to batteries.A battle between Detroit carmakers and the United Auto Workers union, which escalated on Friday with targeted strikes in three locations, is unfolding amid a once-in-a-century technological upheaval that poses huge risks for both the companies and the union.The strike has come as the traditional automakers invest billions to develop electric vehicles while still making most of their money from gasoline-driven cars. The negotiations will determine the balance of power between workers and management, possibly for years to come. That makes the strike as much a struggle for the industry’s future as it is about wages, benefits and working conditions.The established carmakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — are trying to defend their profits and their place in the market in the face of stiff competition from Tesla and foreign automakers. Some executives and analysts have characterized what is happening in the industry as the biggest technological transformation since Henry Ford’s moving assembly line started up at the beginning of the 20th century.Nearly 13,000 U.A.W. workers walked off the job at three plants in Ohio, Michigan and Missouri on Friday after talks between the unions and the companies in three separate negotiations failed to result in agreements before a Thursday deadline. Pay is one of the biggest sticking points: The union is demanding a 40 percent pay increase over four years but the automakers have offered roughly half as much.But the talks are about more than pay. Workers are trying to defend jobs as manufacturing shifts from internal combustion engines to batteries. Because they have fewer parts, electric cars can be made with fewer workers than gasoline vehicles. A favorable outcome for the U.A.W. would also give the union a strong calling card if, as some expect, it then tries to organize employees at Tesla and other nonunion carmakers like Hyundai, which is planning to manufacture electric vehicles at a massive new factory in Georgia.“The transition to E.V.s is dominating every bit of this discussion,” said John Casesa, senior managing director at the investment firm Guggenheim Partners who previously headed strategy at Ford Motor.“It’s unspoken,” Mr. Casesa added. “But really, it’s all about positioning the union to have a central role in the new electric industry.”Under pressure from government officials and changing consumer demand, Ford, G.M. and Stellantis are investing billions to retool their sprawling operations to build electric vehicles, which are critical to addressing climate change. But they are making little if any profit on those vehicles while Tesla, which dominates electric car sales, is profitable and growing fast.Ford said in July that its electric vehicle business would lose $4.5 billion this year. If the union got all the increases in pay, pensions and other benefits it is seeking, the company said, its workers’ total compensation would be twice as much as Tesla’s employees.Union demands would force Ford to scrap its investments in electric vehicles, Jim Farley, the company’s chief executive, said in an interview on Friday. “We want to actually have a conversation about a sustainable future,” he said, “not one that forces us to choose between going out of business and rewarding our workers.”Attendees at the Detroit Auto Show looking at a 2024 Chevy Silverado EV in Detroit this past week. Talk of the autoworkers’ strike loomed over the show.Brittany Greeson for The New York TimesFor workers, the biggest concern is that electric vehicles have far fewer parts than gasoline models and will render many jobs obsolete. Plants that make mufflers, catalytic converters, fuel injectors and other components that electric cars don’t need will have to be overhauled or shut down.Many new battery and electric vehicle factories are springing up and could employ workers from the plants that have shut down. But automakers are building most aggressively in the South where labor laws are tilted against union organizers, rather than in the Midwest, where the U.A.W. has more clout. One of the union’s demands is that workers in the new factories be covered by the automakers’ national labor contracts — a demand that the automakers have said they can’t meet because those plants are owned by joint ventures. The union also wants to regain the right to strike to block plant shutdowns.“We are at the dawn of another industrial revolution and the way we’re going is the way we went in the last industrial revolution — a lot of profit for a few and misery and not good jobs for the many,” said Madeline Janis, executive director of Jobs to Move America, an advocacy group that works closely with the U.A.W. and other unions.“The U.A.W. is really taking a stand for communities across the country to make sure this transition benefits everybody,” Ms. Janis added.Automakers have been racking up record profits during the last decade, but they cannot afford to lose time from work stoppages in their race to compete with Tesla and foreign automakers.The three companies are already struggling to get their electric vehicle business going. A new G.M. battery factory in Ohio has been slow to produce batteries, delaying electric versions of the Chevrolet Silverado pickup and other vehicles. Ford this year had to suspend production of its electric F-150 Lightning in February after a battery caught fire in one of the pickups that was parked near the factory for a quality check. And Stellantis won’t even begin selling any fully electric vehicles in the United States until next year.Those problems and Tesla’s growing sales could put the union in a strong position to extract a good deal.On Thursday, in a sign that automakers are willing to go much further than they had previously, G.M. offered a 20 percent pay raise over four years. That is half of what the union is seeking but far more than workers received in recent contracts. President Biden on Friday strongly supported the union in remarks at the White House. The administration has been pouring billions into programs to promote electric vehicles and does not want a strike to delay a centerpiece of its climate policy.Despite all the money that automakers have made in recent years, their executives express a profound unease about the growth of electric vehicles, which account for 7 percent of the U.S. new car market so far this year and are on track to surpass sales of one million this year. Managers are acutely aware that traditional companies like theirs have a poor track record of retaining dominance after a big change in technology. Witness the way that Apple sidelined Nokia and Motorola as cellphones became smartphones.Auto company executives and most industry analysts underestimated how quickly electric vehicles would catch on and cannot confidently forecast how sales, which have been bumpy lately, will grow in the future. “I don’t think anyone can perfectly predict what the adoption will be,” Mary T. Barra, the chief executive of General Motors, said in an interview with The New York Times last month.Speaking to “CBS Mornings” on Friday, Ms. Barra said an excessive pay raise would undermine G.M.’s ability to continue producing vehicles with internal combustion engines while also developing electric vehicles. “This is a critical juncture where investing is very important,” she said.Still, unions and their supporters are unlikely to express much sympathy for auto executives. Ms. Barra and the leaders of Ford (Jim Farley) and Stellantis (Carlos Tavares) have gotten tens of millions of dollars in compensation packages in recent years. The companies’ shareholders have been rewarded with dividends and share buybacks.Unions “are not going to have a lot of patience for sob stories,” said Karl Brauer, executive analyst at iSeeCars.com, an online marketplace.Adjusted for inflation, wages for autoworkers in the United States have fallen 19 percent since 2008, according to the Economic Policy Institute, a left-leaning research group.At the same time, union officials are aware of the changes in the industry and have said they do not want to handicap G.M., Ford and Stellantis as the companies try to recover ground they have lost to Tesla, which has aggressively resisted attempts to unionize its factories. The Detroit carmakers also face challengers like Rivian, a start-up that makes electric pickup trucks and sport utility vehicles in Illinois, as well as foreign-owned rivals like Mercedes-Benz and Toyota, whose U.S. factories, mostly in the South, are not unionized.“That’s the biggest challenge here,” Mr. Brauer added, “trying to commit to a long-term contract in an industry that is very uncertain and unpredictable over the next five years.”Union supporters say it would be wrong to blame workers if the traditional carmakers cannot compete with Tesla and other rivals.“If you look at the breakdown at what it costs to build an E.V., labor is a very small part of the equation. Batteries are the most,” Ms. Janis of Jobs to Move America said. “This idea that the U.A.W. is going to price Ford, G.M. and Stellantis out of the market is not true.”But other analysts said that a long work stoppage could help Tesla and foreign automakers gain ground on G.M., Ford and Stellantis.“If something happens to disrupt their business, does that give a leg up to the emerging electric vehicle makers?” said Steve Patton, who overseas the consulting firm EY’s work with auto companies. “Who stands to benefit if there is a protracted strike?” More