Detroit News: Marick Masters on effects of automotive supply chain shortages
Detroit's automakers recorded major profits for the first half of the year, but the benefits of those earnings won't land evenly among their employees and could delay wage raises and shrink profit-sharing bonuses for some autoworkers. The global semiconductor shortage has forced auto plants to idle around the world, in some cases for months at a time. Automakers are prioritizing their highest-margin vehicles and those that help them meet fuel efficiency and emissions standards. That leaves employees at plants that often already have felt the pains of layoffs feeling further left behind. "I would worry first about the impact on profitability," said Marick Masters, a professor at Wayne State University's Mike Ilitch School of Business, adding the companies could argue the events that caused the chip shortage and affected profits "are really beyond their control." A fire at a chip plant in Japan, the spread of COVID-19 in Malaysia and severe weather in Texas and Europe have led to parts constraints that are out of the automakers' control. Masters expects the chip shortage and other supply concerns will affect the next set of contract negotiations in 2023 between the UAW and Detroit's automakers. The UAW is likely to argue for hourly pay increases so members can depend less on variable pay like profit sharing. "Workers, you've been used to getting for several years anywhere from $6,000 to $12,000 profit sharing," Masters said. "You kind of depend on that. And I think that if that becomes more problematic going forward, they're going to be forced to take a harder look at hourly wage rates."