This week, we look at the ramifications of a vote on a third tentative agreement by striking workers at Volvo Trucks North America We also revisit patents and make bank with Hyliion Holdings founder and CEO Thomas Healy.
Holding the line
Are two strikes impacting production at Volvo Truck enough to get UAW workers a contract they will accept? The outcome of voting on a third tentative agreement by 2,900 represented hourly workers in Dublin, Virginia, should be known by Friday evening.
After twice telling UAW Local 2069 members that it got the best deal it could, local bargainers may have gotten enough from the company to put labor unrest to sleep for the next six years. Production and maintenance workers’ pay would rise to $30.92 an hour in July 2026. That is closing in on the top assembler worker wage of $32.32 an hour at the Detroit 3 automakers.
The latest deal also apparently ends the system of two-tier wages, in which new workers are paid a lower starting rate than on-roll workers. New hires at Volvo needed eight years to reach parity with their longer-serving colleagues.
The sad financial state of the Detroit 3 automakers in 2007 ushered in two-tier wages. The union unenthusiastically agreed to transfer the burden to future workers instead of accepting pay cuts for existing workers who would be voting on a concessionary contract. The practice spread from Detroit to other UAW-represented workforces, including Volvo Trucks in 2008.
The two-tier conundrum
Volvo claims a single six-year wage plan with catchup provisions for workers hired before 2010 would replace the two-tier system. But as retired Indiana football coach and ESPN personality Lee Corso is fond of saying: Not so fast!
There are ways to keep workers on unequal footing, according to Kristin Dziczek, senior vice president of research at the Center for Automotive Research in Ann Arbor, Michigan.
“The end of two tiers is always a different situation,” Dziczek told me. “There was a negotiation with Lear [in 2014]and The Wall Street Journal proclaimed ‘End of two tier” on its first page. But what it really did was give everybody an opportunity to get to the top wage, but they would have to change shops, So, it still had two tiers.”
At General Motors (NYSE: GM), a four-year contract signed after a 40-day national strike in 2019 put all workers on a single wage scale but with different benefit structures.
So, Dziczek is wary. The UAW highlighter doesn’t make it entirely clear where inequities exist, but they are probably there.
The players and the pressure
Picking sides in the months-long Volvo labor dispute meant more than backing labor or management. The local bargaining team drew the ire of the rank and file by ordering them back to work after reaching the first tentative agreement in April but not sharing details of the proposed deal until voting time.
“It’s not good to say, ‘This is the best I could get,’ and you can’t sell it to the members.”
Kristin Dziczek, senior vice president of research, Center for Automotive Research, Ann Arbor, Michigan
Workers voted 9:1 against the proposed agreement and grudgingly stayed on the job while bargainers returned to the table. A second deal in early June met the same 9:1 against fate. The International UAW had no choice but to step in to support the membership as workers at the New River Valley assembly plant stepped out again.
A similar drama played out two years ago at UAW Local 12, which represents nurses at St. Vincent Medical Center in Toledo, Ohio. A tentative agreement was reached, strikers took down their picket lines and returned to work, and then voted down the proposed deal.
“It’s not good to say, ‘This is the best I could get,’ and you can’t sell it to the members,” Dziczek said.
A group calling itself the Volvo Workers Rank and File Committee and the World Socialist Web Site (WSWS), known for hyperbolic attacks against the UAW International leadership, castigated newly elected UAW International President Ray Curry and brayed at local negotiators while portraying local strikers as victims of both the company and their union..
The International union largely stayed clear of the local negotiations, but it talked up the latest deal in a press release on July 1, appearing to be in accord with Volvo management while praising Local 2069’s solidarity in living on $275 in weekly strike benefits.
A ‘take this job and shove it economy’
Why this dispute, which began with negotiations in February, has dragged on, comes down to what Dziczek calls a “take this job and shove it economy.” Workers, she said, wield more power than they have in many years. When McDonald’s pays $600 signing bonuses for burger flippers…well you get the idea.
“Workers feel somewhat more emboldened by the dynamics of the post-pandemic labor market,” Dziczek said.
After decades of pro-management government, the Biden Administration is decidedly pro-union. The shortage of workers, especially in manufacturing and warehousing, is acute. And that creates leverage for workers.
As to Friday’s contract vote at Volvo, Dziczek quoted her late colleague and former GM negotiator Art Schwartz: “‘The optimal ratification vote is 50.1% because then nobody got more than the other.’ From the company standpoint, something that passes with an overwhelming 60-70%, they’ll feel like they gave away too much.”
Making bank
When Hyliion Holdings (NYSE: HYLN) went public during the height of the SPAC boom in 2020, company founder and CEO Thomas Healy became a paper billionaire at age 28. Healy is beginning to monetize his controlling stake, selling $4 million worth in two trades in May and June.That’s about 1% of what he owned.
The Reddit chat board crackled with some opinions on the sale, but since the relative sale was so small, no one got too exercised.
Healy now owns about 35.5 million shares of the natural gas-electric powertrain maker. Like many SPACs in the electric vehicle space, Hyliion shares have been hammered in recent months. His billion plus was worth $365,757,002.16 at Thursday’s closing price of $10.61.
Cue the tiny violin.
Down time rising
If you think you are seeing more trucks broken down on the side of the road, you may be right. First-quarter statistics from the American Trucking Associations Technology & Maintenance Council bear out a pretty big rise in on-road repair issues.
According to the TMC/FleetNetAmerica survey, fleets averaged 29,506 miles of operation between unscheduled road repairs – down 18.7% from the fourth quarter of 2020.
Truckload carriers averaged 21,856 miles between unscheduled repairs, a 13.1% decrease from Q4 2020. LTL carriers dropped 18.7% to 44,380 miles in the first quarter from 54,556 in the final quarter of 2021. The tank truck sector rolled for 17,420 miles in the first quarter, down from 19,905 in the previous quarter.
Patent redux
Last week’s Truck Talk looked at how autonomous vehicle patents suggest future success for the tech-saturated companies creating 80,000-pound freight-hauling robots. Google’s Waymo took issue with the counting of its patents by Patent Forecast, the source of the newsletter item.
“Today, we have over 1,800 issued patents in our portfolio globally, with approximately half of them issued in the U.S.,” Waymo spokesperson Julianne McGoldrick told me in an email. “For trucking, we have over 1,400 relevant patents in our portfolio, with over 700 of them issued in the U.S., putting us far ahead of any competitors in the AV trucking space.”
And, speaking of patents, Cummins Inc. (NYSE: CMI) has been named one of the world’s top 100 organizations innovating for a better environmental future based on a review of the company’s “Green Patent Portfolio.” The ranking in Sagacious IP’s GREEN100 Index follows a record year of 312 global patents of all types in 2020.
That’s it for this week. Thanks for reading. Want to get Truck Talk delivered to your in box, click here.
Alan
