Unions and Pitchforks

Michael Randle

In 2016, our cover story was titled “Wages, Riches and Pitchforks.” The story got a lot of attention by the media. In fact, Amazon (without my consent) still sells the piece I wrote as a cheap PDF. (You can read it for free. Just go to https://sb-d.com/magazine/article/wages-riches-pitchforks.)

Here is an excerpt from that article: Not all right-leaning capitalists are against raising the federal minimum wage. Entrepreneur Nick Hanauer, a self-proclaimed plutocrat and founder or financier of over 30 companies, sees a future of angry mobs with pitchforks in this country if something isn’t done about income inequality. Hanauer explains in one of his TED Talks, “While people like us plutocrats are living beyond the dreams of avarice, the other 99 percent of our fellow citizens are falling farther behind.”

Hanauer continued by saying, “You see, the problem isn’t that we have some inequality. Some inequality is necessary for a high-functioning capitalist democracy. The problem is that inequality is at historic highs today and it’s getting worse every day. And if wealth, power and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th century France. That was France before the revolution and the mobs with the pitchforks.”

Hanauer claims there is no evidence to support the theory that if low wage workers earn a little more, unemployment will escalate and the economy will collapse. In his TED Talk, he also claims that Seattle
(his hometown), which voted to raise the minimum wage to $15 per hour in 2017 for some companies, has not seen negative effects from having one of the highest minimum wages in the country. “If trickle-down thinkers were right, then Washington State should have massive unemployment. Seattle should be sliding into the ocean. And yet, Seattle is the fastest-growing big city in the country,” Hanauer maintains.

“So I have a message for my fellow plutocrats and zillionaires and for anyone who lives in a gated bubble world: Wake up. Wake up. It cannot last. Because if we do not do something to fix the glaring economic inequities in our society, the pitchforks will come for us, for no free and open society can long sustain this kind of rising economic inequality. It has never happened.”

“There are no examples. You show me a highly unequal society, and I will show you a police state or an uprising. The pitchforks will come for us if we do not address this. It’s not a matter of if, it’s when. And it will be terrible when they come for everyone, but particularly for people like us plutocrats.”

Given the economic challenges and income inequality, why haven’t unions secured a better foothold in the South?

So, for four decades wage growth has been anemic, we have a stagnant population — an indication that those in their 20s and 30s do not believe they can afford children —
and income inequality where the rich get richer and the poor get poorer. That being the case, why does organized labor continue to struggle in the 15 Southern states?

Organized union membership is roughly half that in the South compared to the rest of the country, which is around 5 percent of the labor force. There are some states in the South with union rates of 10 percent or more, but that’s rare. 

Twenty-seven states adhere to right-to-work laws; however, every state Southern Business & Development covers is a right-to-work state other than Missouri. A right-to-work law gives workers the freedom to choose whether or not to join a labor union in the workplace. This law also makes it optional for employees in unionized workplaces to pay for union dues or other membership fees required for union representation, whether they are in the union or not.

The law is highly political, with Republicans mostly backing right-to-work legislation in support of big business, and Democrats backing union membership in support of labor and the power of collective bargaining.

While this is not an opinion on right-to-work, there is no question that the South’s efforts to become the engine of the largest economy in the world dilute the influence of labor unions in the region. As entrepreneur Nick Hanauer said earlier in this story, the decline in union membership in the 1960s and 1970s coincided with the decreasing shares of income amongst the 90 percent and increasing income in the top 10 percent. Again, you can make that political all you want, but the numbers indicate that as unions lost their clout, the rich got richer and the poor and middle class lost any leverage they had. 

Now, that does not mean right-to-work is not beneficial to the South’s economy. It is. The South’s GDP now makes it the third largest economy in the world, behind only the U.S. and China. As you know, the South was dirt poor 100 years ago. Without right-to-work laws, there is no way the South could have become the fastest growing U.S. region in the largest economy in the world.

Much of that increase in GDP can be attributed to foreign direct investment. Where does Toyota operate most of its assembly plants and its headquarters in North America? Where does Mercedes-Benz have its only U.S. plant and North American headquarters? Where does BMW have its largest North American plant? By the way, none of those facilities are unionized. The answer is all of those facilities operate in the American South.

But that does not mean unions will not try to organize even foreign plants in the South. They have tried with high-profile union drives at Nissan in Mississippi, Boeing in South Carolina and Volkswagen in Tennessee, just to name a few. Workers, especially at large foreign manufacturing facilities, are extremely lucky to have a job at one of those plants. These facilities already pay way more in wages than the average wage in the South.

Regardless, there is about to be a reckoning when it comes to the South and union activity. In the fall 2021 quarter, Ford, a union company since 1941, announced it is investing $11.4 billion to further its electric vehicle production at a site in Stanton, Tenn., (near Memphis) and Glendale, Ky. Ford will invest $5.6 billion to build batteries and assemble the company’s electric F-Series vehicles in Tennessee. The Kentucky site is a $5.8 billion investment and will include twin battery factories. The two sites will house about 11,000 new jobs.

It will be interesting to see what will happen at those Ford plants when they are up and running. If they unionize, it could change everything in the region. If they don’t, then Ford made an awesome bet.

It’s a historic time for automotive in the South

By Michael Randle

We have arrived at Southern Automotive Corridor 3.0. Phase 1 took us to the ’80s, second phase to the early 2000s. Now with electric cars, we are at 3.0, and it is amazing. Huge deals are flying everywhere in the Southern Auto Corridor.

This summer and fall quarter will be remembered 50 years from now as the most transformative period in the history of automotive manufacturing, not just in the South, but in the Midwest, too — the only two regions in the U.S. that are left with automotive assembly.

Even though Nissan, Volkswagen and Mercedes-Benz and their plants in the South have spent billions on electric vehicle technology, it really wasn’t until the second half of 2021 that just about everyone got in on the act. The billions spent earlier by some automakers in the South looks like chump change compared to what has been announced recently.

Massive EV-based projects were announced in the South in the second half of 2021. Ford announced projects the size of which we have never seen before. . .for example, automotive “cities” in Hardin County, Ky., and in Stanton, Tenn.

Ford announced its plans in September to create Blue Oval City at the West Memphis I-40 megasite in Stanton, Tenn. The new “city” includes an investment of nearly $6 billion to make electric vehicles, including a next-generation electric Ford F-Series model. Blue Oval City will also include (not counting suppliers) up to 6,000 new jobs. Over $800 million has been earmarked in incentives for Ford in the deal. Earlier in 2021, Ford announced it had increased its planned EV investment to $30 billion by 2025.

Here are some other EV automotive-related projects announced in the South just in the last six months:

  • Ford Motor and battery supplier SK Innovation have plans to invest over $5 billion and hire over 5,000 in an electric battery plant at the Glendale Megasite in Hardin County, Ky.,  that will power EV vehicles in the future.
  • The Ultium Cells LLC battery plant in Spring Hill, Tenn., is on schedule as of the fall quarter, company officials announced. The 2.8 million-square-foot facility is a joint venture between General Motors and LG Energy Solution.
  • Japan’s Nissan Motor Company will spend about $700 million at its two U.S. manufacturing plants in Mississippi and Tennessee to implement new technologies to make electric vehicles.
  • Mercedes-Benz is opening an EV battery pack assembly facility on a second Alabama campus in Bibb County.
  • Korean automaker Hyundai will begin EV production on the Genesis GV70 EV at its plant in Montgomery, Ala., beginning in 2022.
  • Amazon-backed electric truck maker Rivian is expected to announce a
    $5 billion electric truck and SUV factory in East Georgia.
  • South Korea’s SKC, a maker of plastic films, is set to invest $473 million to locate a semiconductor parts venture at its existing plant in Georgia. SK also is home to SK Innovation, which has invested $2.6 billion to put an electric-vehicle battery plant in Jackson County and plans to ramp up a second plant on the complex as demand grows.
  • Japanese automaker Toyota has chosen the Greensboro-Randolph Megasite for a large electric battery plant to ramp up EV manufacturing in the U.S. The site is a 1,825-acre site rezoned for heavy industry located near the center of the state.
  • Tesla will move its headquarters to Austin, Texas, following through on a threat Elon Musk made last year when tensions between the billionaire and California boiled over. Musk announced his decision in October.

No End in Sight for Lack of Labor

There is no data available about the fact that our labor keeps decreasing, and there may not be for a decade or more. In the last three years, About 10,000 people a day on average retired in the U.S. Compare that to a little over 2,000 joining the workforce by turning working age (16), and you can easily see where the labor issues are. People are aging out of the workforce faster than the rate of people entering it.

But the U.S. should not feel like the Lone Ranger. People are aging out of the workplace virtually around the world. In fact, for most countries — especially the U.S. — “job creation” is no longer the most important factor for an economy. Particularly in the South, the region that has seen the toughest time since the Great Depression, job creation has been paramount. But that is no longer the case. Some years, the South creates as many new jobs as the other three regions combined.

We are now entering an era when our politicians stumping for office should literally slow the promotion of job creation and instead figure out how they are going to fill those jobs. There are well over 10 million jobs available in this country as of October and only 8.4 million people looking for work.

Also affecting the labor market in the U.S. — 15 percent of the population was retired in 2010. In 2020, that figure rose to 20 percent.

So, what to do? Millions of economists say, “not much.” The U.S. can increase legal immigration, which could result in reversing the trend, but for how long? Also, increasing legal immigration under President Trump literally gave it a bad name. His last year office, legal immigration — we are talking about working visas — dropped by 85 percent from over 1 million to 200,000.

Then again, a more productive workforce with the aid of automation and AI could help, too.

Top Automotive Deals in the South – Fall 2021

The Southern Auto Corridor’s 10 Largest New and Expanded Manufacturing and Selected Non-Manufacturing Job Announcements

Announcements Made in the Fall 2021 Quarter

CompanyJobsInvestmentN/ELocationDescription
1. Rivian7,500$5,000NSocial Circle, Ga.Auto assembly/EV batteries
2. Toyota1,750$1,290NLiberty, N.C.EV batteries
3. Toyota1,400$461EGeorgetown, Ky.Auto assembly
4. Ultium Cells LLC1,300N/AESpring Hill, Tenn.EV batteries
5. Mercedes-Benz600N/AEVance, Ala.Auto assembly
6. Mazda Toyota500N/AEHuntsville, Ala.Auto assembly
7. Toyota450$288EHuntsville, Ala.Engines
8. Dr. Schneider400$22NBaldwyn, Miss.Auto parts
9. NOVONIX300$160NChattanooga, Tenn.EV battery parts
10. Central Wheel145N/AEParis, Ky.Auto parts

($Inv. = Investment in millions – N=New; E=Expansion; R=Relocation)

Sources: RandleReport.com

 

Major Light Vehicle Plants in the Southern Automotive Corridor

Alabama

1. Mercedes-Benz (Vance)

2. Honda (Lincoln)

3. Hyundai (Montgomery)

4. Mazda Toyota (Huntsville)

Georgia

5. Kia (West Point)

Kentucky

6. Toyota (Georgetown)

7. Ford (Louisville)

8. Ford Truck (Louisville)

9. GM (Bowling Green)

Mississippi

10. Nissan (Canton)

11. Toyota (Blue Springs)

Missouri

12. Ford (Kansas City)

13. GM (Wentzville)

South Carolina

14. BMW (Greer)

15. Daimler Vans (Ladson)

16. Volvo (Berkeley County)

Tennessee

17. Nissan (Smyrna)

18. Volkswagen (Chattanooga)

19. GM (Spring Hill)

20. Ford (Blue Oval City – Under construction)

Texas

21. GM (Arlington)

22. Toyota (San Antonio)

Top Automotive Deals in the South – Summer 2021

The Southern Auto Corridor’s 10 Largest New and Expanded Manufacturing and Selected Non-Manufacturing Job Announcements

Announcements Made in the Summer 2021 Quarter

CompanyJobsInvestmentN/ELocationDescription
1. Ford Motor5,800$5,600NBlue Oval City, Tenn.Auto assembly/EV batteries
2. Ford Motor5,000$5,800NHardin County, Ky.EV batteries
3. Canoo2,000$400NPryor, Okla.EV auto assembly
4. U.S. Postal1,000$155NSpartanburg, S.C.EV auto assembly
5. NOVONIX300$160NChattanooga, Tenn.EV battery parts
6. Firestone250$50EWhitley C., Ky.Auto parts
7. Edelbrock200N/ANOlive Branch, Miss.Auto parts
8. REHAU150$50ECullman, Ala.Auto parts
9. Sungwoo Hitech117$40NTelford, Tenn.Auto parts
10. Gissing116$18NGreenville Co., S.C.Auto parts

($Inv. = Investment in millions – N=New; E=Expansion; R=Relocation)

Sources: RandleReport.com

 

Top Automotive Deals in the South – Spring 2021

The Southern Auto Corridor’s 10 Largest New and Expanded Manufacturing and Selected Non-Manufacturing Job Announcements

Announcements Made in the Spring 2021 Quarter

CompanyJobsInvestmentN/ELocationDescription
1. Mullen Technologies400$336NMemphis, Tenn.Electric vehicles
2. Magna Mirrors300$31NDuncan, S.C.Auto parts
3. Duckyang285$10NJackson Co., Ga.EV parts
4. Eberspaecher214N/ANLouisville, Ky.Auto parts
5. Hyundai TRANSYS150$9EWestpoint, Ga.Auto parts
6. Volkswagen150N/AEChattanooga, Tenn.Auto assembly
7. Stratus Plastics135N/AEMorgantown, Ky.Auto parts
8. STS Group120$39NWythe Co., Ky.Auto parts
9. Toyota100$210EBuffalo, W.Va.Engines
10. Metalsa97N/AEHopkinsville, Ky.Chassis

($Inv. = Investment in millions – N=New; E=Expansion; R=Relocation)

Sources: RandleReport.com

 

Will the automotive industry bring the South out of this recession?

By Michael Randle

Some suggest that the 2021 economy is surging, and that the COVID recession of 2020 was the shortest recession in history (March to June 2020, according to some). However, there is still a lot of current data that does not support that assertion. Technically, the U.S. is still in recession as of the first quarter of 2021, as defined by my friends at IHS Markit, the National Bureau of Economic Research and Wells Fargo, among others.

If you believe we are out of the recession, the real data does not support your belief. COVID-19 changed all of that! At the very least, we may be emerging out of a deep, dark — “Hey, it happened literally overnight” — recession.

For those who believe the economy is not so bad, tell that to the 10 million people who do not have a job when they had one in February of 2020, prior to the virus changing all of our lives. Tell that to the 15 million Americans on unemployment. Tell that to the 8 million people that fell into poverty in 2020. Tell that to the 2.2 million women who left the workforce from March to October 2020.

The U.S. economy shrank over four quarters by an average of 3.5 percent in 2020. Technically, that is a recession no matter the source. Therefore, in the winter quarter of 2021, we are still in recession.

However, according to the U.S. Department of Commerce, in the fourth quarter, the economy grew by 4 percent, which has only happened in a few quarters in the last two decades. It usually sits around 2 percent growth, and has for some time now.

We will take the 4 percent growth earned in the fall 2020 quarter. Let’s hope it continues for another quarter or two, so that this virus-generated recession will end. After two or three consecutive quarters of GDP growth, we will be out of this economic nightmare.

The last economic quagmire we found ourselves in was in 2008, when President Obama came into office. There was a huge argument at the time — should we bail out the domestic auto industry or not?

The U.S. ultimately bailed out Chrysler and GM with a $900 billion aid package. Shortly after, a huge increase in sales of light vehicles — sedans, SUVs and compacts — pulled us out of that recession.

We saw the recovery begin in early 2010. Parts suppliers and the Ford plants in Kentucky began announcing some serious deals. Then it spread throughout the Southern Auto Corridor in Alabama and Tennessee.

Now, with electric vehicles being produced by just about every automaker with a plant in the South, we are going to see the same thing — an expansion of the automotive industry to help pull us out of this recession. With the money we now have on the street (three major bailouts have been approved), the automotive industry is about to go nuts! It might be enough to pull us out of this recession.

Top Automotive Deals In The South – Winter 2021

 

The Southern Auto Corridor’s 10 Largest New and Expanded Manufacturing and Selected Non-Manufacturing Job Announcements

Announcements made in the Summer 2020 Quarter

CompanyJobs$InvN/ELocationDescription
1. Nokian400N/AEDayton, Tenn.Tires
2. Torc Robotics350N/AEBlacksburg, Va.Self driving systems
3. Metalsa300N/AEElizabethtown, Ky.Truck frames
4. Microvast287$220NClarksville, Tenn.EV batteries
5. Sesé240$42NChattanooga, Tenn.Auto parts
6. Hitachi Auto200N/AEBerea, Ky.EV motors
7. KB Autosys180$38NMeriwether Co., Ga.Brake pads
8. Schnellecke162N/ANVance, Ala.EV parts
9. Arrival159$3NCharlotte, N.C.Electric vehicles
10. Mobis120$15NJefferson Co., Ala.Auto parts

($Inv. = Investment in millions – N=New; E=Expansion; R=Relocation)

Sources: RandleReport.com

 

Top Automotive Deals In The South – Fall 2020

 

The Southern Auto Corridor’s 10 Largest New and Expanded Manufacturing and Selected Non-Manufacturing Job Announcements

Announcements made in the Summer 2020 Quarter

CompanyJobs$InvN/ELocationDescription
1. Hyundai Transys678$240NWest Point, Ga.Auto transmissions
2. Mazda Toyota380N/AEHuntsville, Ala.Auto assembly
3. Mercedes-Benz373$53ETuscaloosa Co., Ala.Auto assembly
4. Torc Robotics350$8EBlacksburg, Va.Vehicle software
5. Gestamp260$94EChattanooga, Tenn.Auto parts
6. Genuine Parts250N/ANLebanon, Tenn.Parts distribution
7. Arrival240$46NRock Hill, S.C.Electric vehicles
8. Cannon Auto200$114NCleveland, Tenn.Auto parts
9. Continental Tire200$20ELancaster Co., S.C.Tires
10. Toyota150$830EHuntsville, Ala.Engines

($Inv. = Investment in millions – N=New; E=Expansion; R=Relocation)

Sources: RandleReport.com