Bombastic United Auto Workers President Shawn Fain has gotten all the attention for his “eat the rich” shirts and prop trash can. If you weren’t paying attention, you might have missed the person standing next to him. That’s Chuck Browning, and after the UAW’s historic contract with Ford yesterday, you should probably know who he is.
What’s interesting about Browning, and we’ll get into it, is that he doesn’t come from the reform caucus that narrowly won a majority of seats in the last UAW election, he comes from the old guard.
The old guard is alive and well at the automakers, too, and there’s been a shift in tone from many of them since GM’s announcement it would slow its electric vehicle plans. Automakers are starting to admit, both in word and in deed, that the EV transition isn’t going to be easy. In fact, it might be extremely hard and it’ll be gas-powered cars that pay for the transition.
Meet Chuck Browning
It feels like ages ago, but earlier this year was a close and extremely divisive UAW election, with the old guard (who were part of a group that found many of its members ending up in prison for embezzling union funds) just barely losing out to a reform caucus. It was close and it was nasty. One senior member of the old guard (the Administrative Caucus) who made it through was UAW-Ford VP Chuck Browning.
So who is this guy?
Browning is a Michigander who joined the UAW in 1987 as a worker at the then-Mazda plant in Flat Rock, Michigan. As a UAW member he worked his way up, according to his official biography, through the ranks of the organization:
Browning was appointed to the staff in 2000 by, UAW President Emeritus Stephen P. Yokich as an International Representative and assigned to the union’s National Ford Department. He rose to Coordinator, Assistant Director and then Administrative Assistant within the National Ford Department. His responsibilities included collective bargaining, contract administration and oversight of various departments under the jurisdiction of the Vice President of the union’s National Ford Department.
There’s been so much attention lately on the Hollywood strikes (WGA/SAG-AFTRA) and the huge deals workers got out of both Delta and UPS that it’s easy to forget the massive John Deere strike in 2021 that the UAW successfully negotiated. And who was helping lead the negotiations there? Chuck Browning, who also was director of the UAW’s agricultural unit. The workers actually rejected multiple contracts at the time, which was an early indication of the mood generally amongst labor.
In spite of, or perhaps because of, his long history, Browning’s attracted some criticism. The Administration Caucus (basically a party within the union), of which he was a member, has long been accused of being too cozy with automakers. Here’s a piece that mentions Browning from the World Socialist Web Site, an outlet we don’t often quote in The Morning Dump (they’ve never written a good car review), but is one of the few publications regularly covering the labor movement:
After the retirement of Bob King in 2014 Browning became the top aide to UAW President Dennis Williams, receiving approximately $150,000 a year for the position of “executive administrative assistant.” In 2015 Williams helped ram through a corruption-tainted sellout agreement at the Big Three automakers that opened the floodgates to temporary and part-time workers. It later emerged that Norwood Jewell, then vice president in charge of Fiat Chrysler, the successor to Holiefield, took bribes along with other UAW officials in a scheme to obtain management-friendly contract terms.
During his tenure Williams and other UAW officials concealed hundreds of thousands of dollars in improper expenditures, including extended vacations at private villas, golf outings, lavish meals and other expensive perks, billed to the UAW for “union business.”
Most of the accusations are of the guilt-by-association variety and it’s key to note that in the 18 months since that article, Browning has been reelected to his position and hasn’t been publicly charged with anything.
In the video at the top of this article, Browning speaks before a divided UAW national meeting just a day after Shawn Fain, a competitor to his slate, was sworn in. He says:
“Elections are a nasty, hard process. I really want to thank not only the people that won, for making the sacrifice to put yourself out on Front Street, have stuff said about you… and dammit, some of it might be true, right?,” he said, addressing the elephant in the room. “And I also want to thank those that aren’t up here today, that gave it a shot because they believed in something.”
It’s against this background that some assumed that Fain, who only won by a few hundred votes, didn’t have a mandate from workers to lead an aggressive stirk strategy. As recently as July, auto critic John McElroy made that point in an editorial:
Look, I get what the union is doing. You get elected to union leadership, not appointed. Fain and his slate are politicians, just like any Democrat or Republican running for office. They need to convince their members that they elected the right leaders. And their members may not be so sure about that. Remember, Fain won the presidency by the slimmest of margins, only 0.4%. Worse, 86% of UAW membership did not even bother to vote in the election, based on the returns that the union publicly posted. So, Fain really doesn’t have a mandate, and that’s one reason why I think he’s staking out such a belligerent strategy to rally his membership.
That’s why I’m convinced there’s going to be a strike this fall. If it lasts a couple of weeks, the damage can be contained. But if it drags on for months, the damage could be crippling, and not just for the car companies. With the approach he’s taking Shawn Fain is playing with dynamite and it could blow up in his face.
It seems to have worked thus far, though there’s still the risk that the concessions the car companies are giving will cause costs to rise so high that Ford, GM, and Stellantis are no longer competitive and have to start shutting down plants. I’m not convinced that’s the case yet, but it’s a possibility (I think, as always, prices will just be passed on to consumers).
This gets me back to something else that Browning said at that meeting earlier this year in the video at the top of this post:
“We have major, major negotiations coming up. Major negotiations. And I’ve been reading some of the crap–I actually did do a little reading, it’s good for me–about things they’re saying: that this is a divided house, or we’re not united, or when we debate on the floor there’s winner or losers, or we’re gonna try dominating each other, or that we’re going to be a damn mess going into negotiations. It’s bullshit.”
It does seem like the mix of the old guard, represented by a more conciliatory leader like Browning, with the new guard, represented by Fain, was a winning combination this time.
‘This Is A Pretty Brutal Space” Admits Mercedes CFO
A friend who has worked with a few large automotive brands the other day pointed out that automakers are “addicted to a margin.” That’s absolutely true. This is why Ford, GM, and Dodge will make pickup trucks and full-size SUVs until everyone stops buying them or the government makes them stop.
Because of their huge lead and large volume, the Tesla Model Y and Model 3 are still among the most profitable (on a percentage basis) vehicles on the road, which is impressive given that they’re both (relatively) lower-cost electric cars.
Almost no one outside of China has been capable of getting Tesla-like margins on their EVs and all the price cuts and margin battles are starting to get tougher for automakers to swallow as demand seems to be stabilizing.
Mercedes-Benz announced its third-quarter results and they weren’t great, with a 1.4% drop in revenue that the company ascribed to “a subdued market environment marked by intense price competition, particularly in the electric vehicle segment.”
Here’s the money quote, via Reuters, from the brand’s CFO Harald Wilhem on the earnings call:
With some traditional players selling battery electric vehicles below the level of internal combustion engine cars despite their higher production costs, “this is a pretty brutal space,” Harald Wilhelm said.
“I can hardly imagine the current status quo is fully sustainable for everybody,” he said.
Some of the company’s problems also stem from a shortage in the 48-volt systems supplied by Bosch, according to the company.
VW: I Guess We’ll Keep Doing This
Over in Wolfsburg, things were maybe slightly rosier, with Volkswagen reporting both an increase in sales and an operating return on sales of 6.2% for the third quarter. Unfortunately for investors, the company had to cut its estimates for profitability for the year, with CFO Arno Antlitz saying “We cannot be satisfied with our profitability, which in the third quarter fell short of our ambitious targets.”
The company also said in its sales report that it’ll keep moving forward with its electrification strategy:
Deliveries of battery electric vehicles (BEV) increased by 45 percent to 531,500 vehicles in the first nine months of the year. Their share of total deliveries increased to 7.9 percent in the first nine months and represent a 9.0 percent share in the third quarter. This means that the targeted annual range of between 8 and 10 percent of total deliveries remains firmly in sight. From January to September, Europe remained the main BEV growth driver, with an increase of 61 percent to 341,100 vehicles. In the U.S., BEV deliveries rose by 74 percent to 50,300 units, and in China, they exceeded the previous year’s level with an increase of 4 percent to 117,100 units.
No one knows for sure where EV demand will end, so forward is maybe as good a strategy as backward.
Fisker Dropping/Raising Prices Of Ocean
I’m anxious to drive a Fisker Ocean because it’s a new electric vehicle that is technically on the market, but I’ve never seen one. It also utilizes contract manufacturing, which I think is an interesting path for smaller EV startups.
With Tesla cutting back on prices, Fisker is now adjusting prices variously across its range according to Automotive News:
After the 11 percent price reduction, the Ocean Extreme will now start at $61,499, excluding shipping. Fisker said on its website that shipping charges vary by location and other factors.
The EV startup said the $7,500 price cut applies to both new and existing orders. The Ocean is manufactured for Fisker by Magna Steyr, in Graz, Austria. The Ocean doesn’t qualify for the $7,500 federal EV tax incentive because it’s not made in North America. The top trim of the Tesla Model Y crossover starts at at $54,130, with shipping, and qualifies for the EV tax incentive.
At the lower end of the spectrum, Fisker will raise the price of its mid-level trim by $3,000 to $52,999 and its entry-level Sport model by $1,000 to $38,999. None of those prices include a destination charge.
The Big Question
It’s all well and good that Ford and the UAW have come to a deal, but the big question is: Will Ford’s members ratify the contract? It seems like there are historic gains here and that may be persuasive. At the same time, UAW employees working for Mack Trucks rejected a negotiated contract and went on strike. What do you think, generally, about the tentative agreement in regards to Ford’s competitiveness with non-union shops?