Articles in Category: Automotive

GM workers month went on a nationwide strike, the first since 2007 at the Big 3 automaker. Photo by Jeffrey Sauger for General Motors

General Motors and the United Automobile Workers (UAW) union have reached a tentative agreement that would end the strike that has run for over four weeks.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

“We just reached a Tentative Agreement with GM a short time ago, today, Wednesday, October 16, 2019,” UAW Director and Vice President Terry Dittes wrote in a statement posted on the UAW website Wednesday. “We will go over the details when the Council meets tomorrow morning in Detroit.

“On behalf of the entire staff here in Negotiations, we want to thank you for your support.

“In the meantime, continue the picket lines until after the UAW-GM National Council concludes business tomorrow, Thursday, October 17, 2019, and then you will receive further instructions.”

The nationwide strike — GM’s first since 2007 — included approximately 46,000 workers.

“We can confirm the UAW’s statement regarding a proposed tentative agreement,” the automaker said in a statement on its website. “Additional details will be provided at the appropriate time.”

From Sept. 13, the last trading day before the strike, GM’s shares had fallen nearly 13% by Oct. 8. Since then, GM shares have recovered, paring losses since Sept. 13 to 5.7%.

According to several analyst estimates, the strike has cost the Big 3 automaker more than $1 billion, CNBC reported.

Among the list of grievances brought by UAW were fair wages, health care costs and a pathway for temporary workers to become permanent.

“We stood up for General Motors when they needed us most,” Dittes said on Sept. 15. “Now we are standing together in unity and solidarity for our Members, their families and the communities where we work and live.”

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Once a deal is ratified, the union will move to securing deals with the other Big 3 automakers, Ford and Fiat Chrysler.

The October 2019 Monthly Metals Index (MMI) report is in the books.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

This month, just one of the Monthly Metals Indexes (MMIs) increased, while six declined and three held flat.

Some highlights from this month’s MMIs:

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals coverage here on MetalMiner, which included: the U.S. and E.U.’s ongoing WTO battle over Boeing and Airbus subsidies, falling steel prices, rising SUV demand, and the nationwide strike at General Motors:

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

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The United Auto Workers (UAW) strike at a number of General Motors factories started Sept. 16 is now into its fourth week, with losses mounting for both GM, the workers and GM’s wider supply chain.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

According to CNN, GM is estimated to have lost some $660 million already. Losses are rising, as non-unionized plants close for want of parts made in the striking operations.

The numbers are eye-watering, although only some 46,000 workers are directly involved. GM alone is said to be suffering losses that started at $10 million a day but are rapidly rising toward $90 million a day, CNN reported, citing the Anderson Economic Group.

If a resolution is not found soon, GM alone could lose over U.S. $1 billion, in addition to the workers’ salary losses of about $18 million a day this week rising to $25 million next week.

Among GM’s approximately 10,000 strong supply chain are also going onto short working, layoffs and in some cases, outright shutdown as the closure of GM plants spreads. A separate CNN article even suggests a Midwest recession, as GM’s problems are heaped on a farming sector already in recession and those Midwest manufacturers already hit by a slowdown due to tariffs and fallout from the trade war.

GM’s share price has taken a hammering and credit rating agency Moody’s has already warned that the stoppage would probably have a material impact on GM’s finances.

With GM’s credit rating just one step above junk bond status, a downgrade would impact the firm’s cost of borrowing.

To suggest both sides are desperate for a resolution is an understatement.

But to say they are close to any kind of agreement is an overstatement following a collapse in talks this weekend.

The union’s demands are broadly two-fold. It is seeking to enhance job security by forcing GM to shift production of sport utility and pick-up trucks from its three manufacturing operations in Mexico to U.S. plants, a move that many would probably welcome (although there would be margin losses for GM in the process).

The other areas of focus for the union is worker rewards and pensions, wage increases and a path for temporary workers to become permanent employees, according to CNN. Two unresolved matters include the time of service required for less senior workers to reach the top union-wage — it currently takes eight years — and inflation and cost-of-living adjustments for pensions and 401(k) retirement plans.

Support for these issues is less universal outside of the strikers, anyway. GM’s workers are already highly paid, with many making over $30/hr, plus benefits like health care, for which workers pay only 4% — a pittance compared to levels in the rest of corporate America, the Economist says.

The UAW is not out to win any popularity contests.

UAW sees the growth of electric vehicles as a major disruptor for established internal combustion engine manufacturers, like GM, which threatens the firm’s capacity to reward them in the future. The union has also accurately judged the public mood, at least on the topic of offshoring and globalization.

If ever there was a time to push GM to reshore production, even from neighboring Mexico to U.S. plants, it is now.

GM is currently Detroit’s most profitable company, with earnings of $8 billion last year. This strike will not bring the company down, but in a slowing Midwestern economy the damage is rippling beyond just the affected plants and their suppliers. Interconnected operations use up inventory and the impact spreads up and down the supply chains into the wider economy.

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Let’s hope increasing acrimony is reversed and a solution is found soon.

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This morning in metals news, the U.S. steel industry’s capacity utilization rate fell to 80.4%, those in the copper market could use satellites to keep tabs on production stoppages and the General Motors strike continues into its fourth week.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S. Steel Capacity Utilization Falls to 80.4%

The U.S. steel industry’s production levels remain higher in the year to date on a year-over-year basis. Production reached 74.3 million tons for the year through Oct. 5, up 3.0% compared with the same period in 2018.

Capacity utilization fell to 80.4% for the year, however, down from 80.6% as of the previous week.

New Service to Help Copper Watchers Keep Eye on Smelters

A new service will help copper traders and fund managers keep eyes on copper smelters — from above.

According to Reuters, a new service will offer the use of satellites to monitor copper smelters for production stoppages or ramp-ups, which would be invaluable to stay ahead of price movements.

The Earth-i service, based in the U.K., will launch next week, according to the report.

GM Strike Continues

The strike at automaker General Motors entered its fourth week this week, as GM and the United Automobile Workers (UAW) continue to dig in.

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According to a report by MLive, one point of negotiation has hit a wall: the issue of bringing production back to the U.S. from Mexico.

An interesting article in the Financial Times this week struck a chord with us at MetalMiner where we often debate how we see metals and manufacturing will go. As such, we often try to shoot holes in oft touted but poorly researched “trends” found in the popular media or espoused by politicians.

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One that crops up repeatedly is the inevitability of electric vehicles (EVs) burying the internal combustion engine (ICE), a proposition with which the Financial Times article would agree, it seems.

Anyone reading the mainstream media can be forgiven for thinking EVs are the fastest-growing sector of the automotive market. We are often bombarded with new model launches but, also, the ramifications of this surging demand are painted as an imminent threat to price stability for a host of key battery metals, like lithium, cobalt and nickel, or motor metals, like copper.

Indeed, the only trend said to be supporting copper prices is “surging” EV demand.

As the FT observes, EV numbers are growing.

Worldwide, some 5.1 million EVs were on the roads by the end of 2018, an increase of 2 million from the year before. Global sales of EVs are likely to be between 2.4 million and 2.9 million this year.

EV sales, however, are still being outstripped by growth in fuel-guzzling SUVs.

The between 7 million and 8 million EVs that should be on the road by the end of 2019 represent less than 0.1% of the 1.1 billion cars and other light vehicles that use internal combustion engines. Some 85 million ICE vehicles were sold worldwide in 2018 and, even from this much higher base, SUVs are experiencing rapid growth in outright numbers.

After growth of over 20% a year earlier in the decade, global demand growth for SUVs is now stabilizing — but at a high level of market share.

In the U.S., SUVs account for 45% of new car sales, the Financial Times reports.

But the trend is not limited to the U.S.

In Europe, SUVs take 34% of new sales, in China 42% and in India 23% the article advises, equating to some 25 million to 30 million annual SUV sales worldwide. While some of these may be hybrids, anyone who owns an SUV hybrid will know they are far from fuel efficient; in fact, they rarely even approach the level of fuel efficiency the manufacturers claim in their glossy sales brochures.

The reality is, despite governments and even oil companies pouring millions into infrastructure and commitment from traditional manufacturers — like all product lines having an EV version by 2020 or 50% of the fleet being EV by some future date) — Joe Public is not voting with his or her wallet to buy them. At least, not in enough numbers to drive a meaningful switch to EVs.

Indeed, the statistics suggest the switch is to larger, gas-guzzling SUVs, rather than EVs.

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If that is the case what does that say about metals demand?

It suggests, as far as the automotive market is concerned, it will continue to be driven by steel and aluminum, with support for copper — but not the tsunami of imminent demand for lithium ion batteries, as some have touted.

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Before we head into the weekend, let’s take a look back at this week’s coverage on MetalMiner, which included analysis of Chinese steel production, the U.S.’s search for sources of rare earths outside of China, and falling copper and aluminum prices.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

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The Automotive Monthly Metals Index (MMI) held flat this month for an MMI reading of 85.

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U.S. Auto Sales

The Big 3, which now all report sales on a quarterly basis, released sales figures for the third quarter.

General Motors reported third-quarter deliveries of 738,638 vehicles, marking a 6.3% year-over-year increase.

Negotiations between GM and the United Automobile Workers (UAW) union entered their third week this week, UAW rejected the latest GM offer on Sept. 30, according to a UAW statement.

“This proposal that the Company provided to us on day 15 of the strike did not satisfy your contract demands or needs,” UAW Vice President Terry Dittes said in a release. “There were many areas that came up short like health care, wages, temporary employees, skilled trades and job security to name a few.  Additionally, concessionary proposals still remain in the company’s proposals as of late last night.”

Earlier this month, MetalMiner Executive Editor Lisa Reisman weighed in on a lingering strike’s potential impact on steel prices.

“Given that the U.S. market consumes about 110 million tons annually, and GM’s share represents about 8% of domestic steel production, it would take a 39-day strike to lower demand by 1 million tons, or 1%,” she wrote.

As of Thursday, Oct. 3, the strike has reached its 18th day.

Ford reported third-quarter vehicle sales of 580,251, down 4.9% on a year-over-year basis. However, Ford truck sales increased 8% year over year.

Fiat Chrysler’s third-quarter sales were flat compared with Q3 2018.

Honda sales were down 14.1% in September compared with September 2018 sales.

Toyota reported sales fell 16.5% in September on a volume basis and by 9.2% on a daily selling rate basis. Nissan’s September sales fell 17.6% on a year over year basis.

According to a jointly released forecast by J.D. Power and LMC Automotive, accounting for fewer selling days, September vehicle sales were down 7.8% compared with September 2018.

Ford, Mahindra Team Up

Ford recently announced a joint venture partnership with India’s Mahindra, which will aim to “develop, market and distribute Ford brand vehicles in India and Ford brand and Mahindra brand vehicles in high-growth emerging markets around the world.”

Ford will own a 49% controlling stake in the joint venture, with Mahindra owning a 51% stake.

“Ford and Mahindra have a long history of working together, and we are proud to partner with them to grow the Ford brand in India,” Ford’s Executive Chairman Bill Ford said in a release. “We remain deeply committed to our employees, dealers and suppliers, and this new era of collaboration will allow us to deliver more vehicles to consumers in this important market.”

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Actual Metal Prices and Trends

The U.S. HDG price fell 3.8% month over month to $804/st as of Oct. 1.

LME three-month copper was essentially flat, moving to $5,640/mt. U.S. shredded scrap steel fell 13.6% to $254/st.

The Korean aluminum 5052 coil premium rose 0.6% to $3.14 per kilogram.

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This morning in metals news, the WTO ruled in favor of the U.S. in its ongoing battle with the E.U. over Airbus subsidies, striking workers at General Motors rejected the automaker’s latest offer, a Louisiana steel group has gone bankrupt and copper prices are slumping.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

WTO Rules in U.S.’s Favor

As part of the ongoing saga between the U.S. and E.U., a World Trade Organization (WTO) arbitration panel was set this week to determine the level of countertariff measures the U.S. would be permitted to apply against E.U. goods (in retaliation against the E.U. for its subsidies toward aircraft manufacturer Airbus).

On Wednesday, the panel announced it had ruled in the U.S.’s favor, affording the U.S. the ability to wield $7.5 billion in tariffs on E.U. goods.

A proposed tariff list released earlier this year by the United States Trade Representative included copper alloys, among other items.

Union Rejects GM Offer

A GM offer to end the UAW strike — now in its third week — was sent back by the union because it did not adequately address workers’ demands, according to UAW Director and Vice President Terry Dittes.

“Last night, Monday, September 30, 2019, GM passed a comprehensive proposal at 9:40 pm across the bargaining table,” Dittes said in a prepared statement.

“This proposal that the Company provided to us on day 15 of the strike did not satisfy your contract demands or needs. There were many areas that came up short like health care, wages, temporary employees, skilled trades and job security to name a few. Additionally, concessionary proposals still remain in the company’s proposals as of late last night.”

Bayou Steel Group Files for Bankruptcy

A Louisiana steel group has filed for bankruptcy, nola.com reported, impacting 400 workers at the Bayou Steel Group facility.

According to the report, the company has as much as $100 million in outstanding debts.

The closing comes 40 years after the mill in LaPlace, Louisiana, first opened, according to the report.

Copper Price Falls

LME copper was bid down 0.5% on Wednesday, Reuters reported, down to $5,660 per ton.

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As MetalMiner’s Stuart Burns explained earlier today, copper prices are forecast to decline further in the year ahead.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

 

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!