President Trump when he was running for president last year dismissed UAW President Shawn Fain as a “dope” because of the union leader’s wholehearted support for the candidacy of Kamala Harris. It was a rare instance where Trump was overly charitable in his biting dismissals of those who displeased him.
Fain is a loser, a big loser, and no one knows that better than GM CEO Mary Barra, who played the union leader during the 2023 contract negotiations in one of her virtuoso political performances. When Fain was orchestrating his “Stand Up” strikes and mugging in his “Eat the Rich” t-shirts, Barra initially warned that the UAW’s demands would harm GM and put the company at a competitive disadvantage.
Eventually GM caved, allowing Fain to declare victory for the “historic” contract he claimed to have negotiated, making him a darling of the corporate media. Time named Fain one of America’s most influential people, MotorTrend named Fain its “Person of the Year,” President Biden invited him to a White House state dinner, and Harvard Law School invited him to deliver the keynote address to graduates of its trade union program.
Immediately upon GM signing the UAW agreement, Barra told Wall Street, for whose benefit GM is run, that the UAW contract was no big deal. The cost to GM over the contract’s 4.5-year lifespan was $9.3 billion, less than the $10 billion she announced she’d spend buying back GM’s stock.
Barra has since announced an additional $12 billion in stock buybacks, meaning that GM is spending more than twice the amount to goose its flailing stock price than the increase it gave the U.S. workers who build the automaker’s overpriced and problem-plagued, gas guzzling trucks and SUVs. Share buybacks, which were once illegal and still should be, are a form of stock manipulation that typically boosts the value of a company’s shares in the short term because it reduces the number outstanding, thereby making them more valuable.
Barra last year pounced when the value of GM shares rose because of her share buybacks, selling a big chunk of her holdings and pocketing more than $80 million.
So much for Fain’s “Eat the Rich” grandstanding. Barra demonstrated that she regards Fain as finger food.
Fain’s rank-and-file members quickly learned that their historic contract had some fine print that allowed the Detroit 3 automakers to fire them, particularly those who were getting paid less working on a temporary basis. Stellantis quickly moved to fire thousands of workers.
“We know the union did not tell us the truth,” an unidentified worker at a Stellantis plant in Warren told the World Socialist Web Site. “They say they work for us, but they work for the company.”
Fain’s historic contract didn’t prevent Barra from moving more jobs to Mexico, where GM is that country’s biggest automotive manufacturer, nor did it prevent Ford from increasing its substantial manufacturing and engineering presence in Mexico, where it proudly manufactures its electric Mustang, its Maverick pickup, and Bronco Sport SUV.
GM last June disclosed it planned to build its crossover Cadillac Optiq at its Ramos Arizpe plant in Mexico, the company’s most advanced factory in the country that GM spent $1 billion to modernize to produce next-generation fully electric vehicles. The investment was announced just months after Joe Biden assumed office and was denounced by UAW’s former leadership.
“At a time when General Motors is asking for a significant investment by the U.S. government in subsidizing electric vehicles, this is a slap in the face for not only UAW members and their families but also for U.S. taxpayers and the American workforce,” said Terry Dittes, UAW’s former vice president and director of the General Motors department.
It’s a safe bet that Barra planned on building more EVs in Mexico. Months before the presidential election, Biden’s Energy Secretary a former two-term Michigan governor Jennifer Granholm announced a $500 million taxpayer donation to GM to cover some of the costs of retooling an aging factory in her former state for electrification. Granholm said the donation saved 650 jobs and would create 50 new ones, implying that Barra would have closed the plant without the giveaway.
Ford last September announced it would invest $273 million in its Irapuato plant in Mexico, to build the Primary Power Unit for the Ford Mustang Mach-E, a component that integrates the electric motor and the transmission of the propulsion system.
Unlike his predecessors, Fain didn’t make much, if any, of a fuss after GM and Ford disclosed their Mexican investments. Despite UAW’s extensive Michigan membership, Fain was also quiet as a mouse in the wake of the state’s police announcing it was testing the Mexican-made Mustang to use as cruisers.
Joe Biden’s Department of Homeland Security in 2022 announced it would use the Mexican-made vehicle for its law enforcement vehicles, and Fain was silent about that as well, despite Fain hailing Biden as great friend of organized labor.
Fain’s Trump Reversal
When he was squandering UAW member dues to support Harris, Fain dismissed Trump as a “scab” and an enemy of union workers, despite Trump campaigning on a promise to impose punitive tariffs that would force GM, Ford, and other automakers to repatriate their Mexican and Canadian plants to the U.S. GM has some 25,000 employees in Mexico, while Ford has about 14,600 workers in the country.
Fain now says he supports Trump’s tariffs, providing they are done the “right way.”
“It needs to be not under the guise of drugs, immigration or border security, but they need to be strategic in how they do them,” Fain told the Detroit News this past weekend.
Fain is right about the importance of implementing the tariffs as part of a strategic, well-thought-out plan, which is lacking in Trump’s threatened tariffs on Mexican-made vehicles sold in the U.S. GM and Ford can’t overnight move production from their Mexican factories to the U.S., but so far Trump hasn’t gotten even one commitment from either automaker to move even some of their production back to the U.S. They are portraying themselves as innocent victims, and the corporate media, seeing an opportunity to vilify Trump, is amplifying all their warnings.
Not surprisingly, Trump hasn’t received much credit for some of his initial successes.
Honda, already the most American automaker when it comes to manufacturing, reportedly plans to build a hybrid version of its Civic hatchback in Indiana, not Mexico as it had planned, because of Trump’s tariffs. Honda also plans to buy batteries for its hybrid vehicles from Toyota’s massive battery plant coming online in Greensboro, NC, to avoid tariffs. Unlike GM and Ford, Toyota hasn’t scaled back its more than $20 billion electrifications investments in the U.S.
BYD, China’s powerhouse EV maker, has cancelled plans to build a massive factory in Mexico. The ostensible reason is that China’s communist government, which must approve the expansion, suddenly fears U.S. automakers could gain access to BYD’s advanced technology and manufacturing methods. The cynic in me believes that BYD hoped to export its Mexican-made vehicles to the U.S. and the company concluded that wouldn’t be possible while Trump remains in office.
Having mercilessly trashed Trump and squandered millions of his members’ union dues supporting Kamala Harris, Fain’s sudden embrace of the president’s tariffs doesn’t carry much weight or influence, particularly with his rank-and-file members. The Detroit Free Press, which too often serves as a shill for GM’s and Ford’s managements, quoted unidentified local UAW leaders in a story today amplifying the corporate media’s gloom and doom that Trump’s tariffs will result in plant closures and layoffs.
“I am concerned about manufacturing as a whole this year because people can’t afford to buy groceries, so people aren’t going to buy a $70,000 car,” said a local UAW leader. “I am telling my people to start saving their money. Dealers are down 50% on sales and inventory is stacking up. I think manufacturing as a whole this year will be down.”
With Barra having earmarked more than $22 billion for stock buybacks this past year, the UAW should be shouting from the rooftops about how these programs divert long-term investments in research, employee wages, or infrastructure. Instead of using funds to innovate, expand production, or increase worker pay, buybacks serve primarily to artificially inflate stock prices, benefiting executives and institutional shareholders at the expense of the broader economy.
Even with GM squandering more than $20 billion in share repurchases, investors who bet on Barra’s leadership have suffered. A $1,000 investment in GM stock when Barra was named CEO more than 11 years ago would have yielded $1,831. An investment in an S&P 500 ETF would have yielded $3,180.
Barra’s 2024 compensation will be disclosed in short order, and I’m doubtful she’ll receive substantially less than the $28 million she’s received in the previous two years, despite a disastrous year that included closing GM’s troubled Cruise driverless taxi business that was once considered a worthy rival to Google’s Waymo driverless taxi enterprise and valued at $30 billion. Since Barra closed Cruise, Waymo has expanded and enjoys a valuation of $45 billion.
As for consumers being able to afford a $70,000 car, Barra aims to cater to the uber wealthy who can afford a vehicle starting at $132,000 like the electric 2026 Cadillac Escalade IQL, which like the EV Hummer weighs more than 9,000 pounds and was deemed more harmful to the environment than gas engine vehicles.
If Fain were a credible leader, he’d have an opportunity to organize salaried workers at GM and Ford, who are also losing jobs due to offshoring, making them potential allies for unionization. In addition to moving engineering jobs to Mexico where Ford increasingly is transferring work, Ford also has more than 12,000 salaried workers in India and last September announced plans to resume manufacturing in that country and to add an additional 3,000 employees to its India workforce.
GM last year laid off 1,600 employees, mostly at its real headquarters in Warren, MI, including a beloved veteran worker with 38 years of service who was notified he was fired via an early morning email.
Trump’s proposed 25% tariffs on Mexican-made vehicles sold in the U.S., which I’m still doubtful he will follow through on, could yield substantial benefits, as they already have. Whereas the Biden administration was willing to donate $500 million in taxpayer monies to incentivize GM to keep its U.S. factories open, Trump’s proposed tariffs incentivize GM and Ford to repatriate their substantial Mexican operations at no cost to the U.S. Treasury.
While GM and Ford might try passing on the tariff costs to consumers, they will be at a significant disadvantage to Toyota, Honda, and Tesla, the three most red, white, and blue automakers.
Frankly, if Trump’s tariffs result in Americans buying more American and better-made vehicles manufactured by Toyota, Honda, and Tesla with more U.S. made parts, he will have performed a great public service. Anyone who believes that GM and Ford are patriotic companies with America’s best interests at heart is as clueless as Shawn Fain.