Both Ford and General Motors announced double-digit $1 billion profits for 2021 in their annual earnings reports released last week. Even as the pandemic continued to rage, sickening and killing countless workers and accelerating with the emergence of the Omicron variant, automakers raised massive sums for their big investors.
Ford reported net profit of $17.9 billion for the previous year, its highest since 2011, and up from a net loss of $1.3 billion in 2020. GM broke its previous record established in 2015, reporting net income of $10 billion, up 55% from the previous year. Stellantis, the transnational conglomerate formed by Fiat Chrysler and Peugeot, will not release its 2021 results until February 23.
Despite the banner’s earnings, however, Wall Street reacted coldly, sending Ford’s stock price down more than 9% on Friday, after learning that the company was well below analysts’ earnings-per-share forecast.
A sign of the unstable, even illusory nature of the economic recovery in the automotive industry, both Ford and GM sold less cars in 2021, the second year of the pandemic, than in 2020. GM sold 2.2 million vehicles, down 13% from 2020, while Ford sold 1.9 million, a drop of 6.8%.
In each case, however, revenue rose year-over-year despite declining sales, from $127 billion to $136 billion for Ford and from $122.5 billion to $127 billion. for GM.
The revenue boost was aided by strong price increases, with the Consumer Price Index posting an 11.8% increase in new vehicle prices in the United States for the 12 months ending December 31, 2021. At the same time, automakers have sought to redirect scarce semiconductors and other parts to their best-selling, highest-margin products, including pickup trucks and SUVs, pushing the factories that make them to operate. practically non-stop.
For Ford, a significant portion of its net income was financial, i.e., non-productive activities, primarily an $8.2 billion investment gain from Rivian’s IPO. , the electric vehicle startup in which Ford and Amazon have stakes.
The United Auto Workers union responded to earnings reports with a predictable mix of crawling at management and cold-blooded indifference to the suffering of workers. UAW Ford Vice President Chuck Browning wrote in a statement, “UAW Ford members have worked diligently and remained dedicated to producing the best built products in the world over the past year. which presented great challenges due to the pandemic and unprecedented supply chain issues. Their contributions to the profits of Ford Motor Company under such conditions are to be commended and our members should be very proud of this great achievement.
Presenting Ford’s multi-billion dollar profits – extracted as countless workers have been infected with COVID-19 in the company’s factories – as a “great achievement” is simply obscene, revealing once again that the UAW operates as an arm of corporate management. The total human cost of full production with increasingly reduced safety measures is unknown as the UAW stopped recognizing the deaths of its members from COVID just months after the pandemic began in 2020.
While Browning touted average “profit sharing” checks of around $7,000, those won’t be distributed to Ford’s many temporary workers, who pay UAW dues but have essentially no rights. The corporatist “profit sharing” regime has long been used by the UAW to promote acceleration and increased productivity. Meanwhile, the UAW has allowed real wages to fall or stagnate, driving down wages for new workers, freezing those for old workers, and reducing increases in the cost of living.
Both GM and Ford have sought to present a rosy picture for 2022, with GM predicting vehicle deliveries to increase 25-30% this year. However, there are a number of storm clouds on the horizon.
Supply chain disruptions continued to erupt even as reports of the findings were released. Last week, Ford announced it would implement temporary shutdowns or slowdowns at eight factories in North America, blaming the downtime on microchip shortages. Stellantis also announced that production at its plant in Windsor, Ontario, will be affected by the lack of chips.
In a January report, the U.S. Commerce Department warned that manufacturers’ median chip supply fell to just five days at the end of last year, from around 40 days in 2019.
While Ford has cited chip shortages as the reason for recent slowdowns, workers at its factories have denounced the rapid spread of the coronavirus in recent weeks. It is unclear to what extent labor shortages caused by widespread infection or exposure to COVID have played a role in production downtime, given the stalled information on the number of workers. infections and exposures among autoworkers imposed by corporations and the UAW.
Ultimately, the supply chain chaos – which has presented considerable uncertainty for autoworkers facing recurring layoffs – is the product of the collapse of the global economy in the wake of the criminal response to the pandemic by the financial elite, which has continued to reap billions of dollars in profits and boost stock values even as wave after wave of infections have caused global supply chains to break. At the same time, a rational and globally coordinated approach to ending the pandemic has been blocked by the accelerated growth of national antagonisms, led by the United States, as each of the major imperialist powers tries to unload the cost of the crisis on its rivals. and seek to deflect social tensions outward through reckless military aggression, primarily against Russia and China.
Financial analysts are also warning that a possible hike in federal interest rates this year could have a substantial impact on automakers’ profits. JD Power, the consumer data and insights firm, recently predicted that a rate hike by the Fed could result in $22 billion in lost sales, as well as hundreds of thousands in vehicle sales. less opportunity.
As competition and financial headwinds grow stronger and the race to dominate electric vehicle markets heats up, major automakers are drawing up plans for new attacks on jobs, wages and working conditions. workers. Worryingly, Ford noted in its 2022 outlook that the “underlying assumptions” for its higher earnings projection this year were “significantly higher profits in North America, as well as collective profitability in the rest of the world, as the company benefits from its extensive global overhaul. .”
The stark reality of this “vast global overhaul” is revealed by Ford’s demands for major concessions at its plants in Saarlouis, Germany, and near Valencia, Spain. Dangling promises of EV investment, the company has pitted the two factories in a bidding war, demanding wage cuts and break times, among other freebies, with the facility offering fewer concessions facing closure . To enforce these attacks, Ford relies on unions and union-controlled “works councils” in Germany and Spain.
GM, for its part, is expanding its use of lower-paid contractors while expanding its production capacity for electric vehicles and batteries.
Ford, GM and Stellantis are no doubt plotting new attacks on their workforces in every country, including the United States, where they will again seek to demand major concessions from autoworkers in 2023 contract negotiations. , with the support of the UAW, under the false pretext that these will “save jobs”. The way forward to fight such attacks was shown most recently by Ford workers in Saarlouis, Germany, who launched a rank-and-file factory committee independent of the unions, demanding an end to concessions and the defense of jobs. at all Ford factories. .