This week, nearly 50,000 employees stayed off factory assembly lines in Detroit and dozens of other factories around the country, demanding equal wages for workers. And as the strike has entered its second week, it’s estimated to have cost GM between $25 and $50 million.

GM has been in the process of restructuring its operations, aiming to aggressively enter the electric vehicle market. In 2018, it announced plans to cut 15,000 workers and shutter up to five plants.

What do strikers want?

GM workers reportedly want equal pay and an end to a system that pays workers who have longer tenures about 40% more than people hired more recently. They also reportedly want a path to regular employment for temporary employees, many of whom have remained contractors for close to a decade. Additionally, workers want to keep their health care affordable, according to reports.

The strikers are represented by the United Auto Workers Union, which last organized a strike against GM in 2007. The UAW is one of the largest unions in the country, representing nearly 1 million current and former automobile workers.

What happens when workers go on strike?

A strike is a collective group action by employees to attempt to change working conditions, such as wages, benefits, or safety conditions, by withholding their labor. Under something called the National Labor Relations Act, employees are entitled to lawfully engage in a strike.

Unions, such as the UAW, typically represent workers in negotiations with an employer, to come up with new working agreements and contracts. Workers pay dues to belong to a union, and in exchange, they receive a number of benefits, such as representation in these contract negotiations, and pay for each week they remain on strike. Union members who cross a picket line to return to work before a strike concludes could jeopardize their pay and membership in the union.

As union membership has declined over the past few decades, the number of strikes has also decreased dramatically.

More about GM

• GM is one of the largest auto manufacturers in the world. GM, along with Ford and Chrysler, are the three largest auto producers in the U.S. Together, they account for nearly 3% of the U.S. economy.
• GM produces and sells cars under four brand names in the U.S.: Chevrolet, Cadillac, Buick, and GMC.
• In the 1980s, GM employed nearly 1 million workers. Today, that number is closer to 170,000.
• Last year, it announced plans to lay off 15% of its workforce, saying the move would save the company about $4.5 billion.
• Tariffs on steel and aluminum, stemming from the U.S. trade war with China, may have cost GM as much as $1 billion in the past year.
• Because of its size, GM has been rescued several times over the years from bankruptcy by the federal government, at taxpayer expense. Most recently, GM received a bailout of $13 billion during the financial crisis of 2008.
• GM Chief Executive Officer Mary Barra has said the company plans to sell up to 1 million electric vehicles annually, reportedly a costly transition that will require new, more tech-savvy workers and engineers.
• GM’s troubles come at a time when U.S. consumers are buying fewer passenger cars, and are instead shifting to pricier SUVs.

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That’s the message from the Alliance of Automobile Manufacturers, which has made fighting global warming by reducing carbon emissions a goal since 2018.

The alliance, an industry group whose members include some of the biggest automakers in the country such as Daimler AG, Ford, and General Motors, also wrote to the White House last year to push back against the Trump administration’s plans to ease fuel efficiency standards for cars.

Cars and climate: Some background

In April of 2018, the Environmental Protection Agency announced it would pare back Obama-era standards that would require car companies to produce vehicles that get 37 miles per gallon by 2022, eventually hitting 50 miles per gallon by 2025.

Instead, car companies in their letter urged the White House to follow California’s lead. The state, and 16 others plan to continue following the Obama era mileage goals. These states have sued the Trump administration, which said it may try to revoke the state’s authority in the matter.

States may set their own fuel efficiency goals, under the Clean Air Act.

Automakers say they’re still concerned about climate change and the industry’s role in rising global temperatures.

But cars are getting bigger!

Some car manufacturers have started turning away from making smaller economy cars with better mileage range, focusing instead on less energy-efficient SUVs and other larger vehicles.

In 2018, Ford announced it would stop manufacturing economy and mid-sized cars altogether, in favor of its trucks and SUVs. Car companies are also exploring tax loopholes that may reward them for manufacturing larger cars, according to the Wall Street Journal.

Still concerned

Despite the turn toward bigger cars, automakers say they’re still concerned about climate change and the industry’s role in rising global temperatures.

“Automakers remain committed to increasing fuel efficiency requirements, which yield everyday fuel savings for consumers while also reducing emissions — because climate change is real and we have a continuing role in reducing greenhouse gases and improving fuel efficiency,” David Schwietert, executive vice president of federal government relations at the Alliance, wrote in last year’s letter.

Schwietert added that setting up two sets of rules could have negative consequences for the roughly seven million people who work either directly or tangentially in the car industry.

What are greenhouse gases?

Greenhouse gases, created primarily by industry and human activity, trap heat in the atmosphere and are thought to contribute to global warming. They include carbon dioxide from the burning of fossil fuels like coal and oil, methane from decomposing animal waste, nitrous oxide from agricultural activities, and fluorinated gas from industrial processes.

Interested in investing in companies that care about the planet? Check out these funds available on Stash.

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The company recently announced that it plans to stop production of all sedans, and instead focus on building trucks and SUVs.

Effectively, this means that Ford will no longer make models like the Taurus, Fusion, and Fiesta. Instead will only offer two cars stateside: The Mustang and the Focus Active crossover, which is due out next year.

Effectively, Ford is going all-in on SUVs and its massively popular F-Series pickup trucks.

Why is Ford shifting gears?

The short answer is that Ford’s cars are slow-selling and offer lower margins than the company’s other models. Car sales have been on the decline for years, and the company’s executive team is aiming at profitability—a goal more easily achieved by cutting fledgling models loose.

By 2020, almost 90 percent of the Ford portfolio in North America will be trucks, utilities and commercial vehicles.

“Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America,” Ford’s quarterly earnings statement said.

American consumers are buying more trucks and SUVs, and Ford’s strategy reflects that. The company makes several SUVs, like the Escape, Explorer, Edge, and EcoSport.

It’s even reintroducing once-extinct models, like the Ranger and Bronco–all in an effort to sate Americans’ demand for bigger vehicles.

The raw data

Ford’s strategy change is an effort to keep pace with Americans’ changing tastes. People want bigger cars, and that’s what they’re buying. As a result, sales of smaller models have been on the decline.

For example, as of the beginning of April 2018, Ford has sold nearly 215,000 F-series pickups. That’s more than twice as many sales of the Toyota Camry (~91,000), the country’s best-selling car so far this year, according to industry data.

Of the top 20 best-selling vehicles in America, 14 are SUVs or pickups. The rest are cars, but all from foreign competitors, according to industry data.

Car wars

Foreign competition is another reason Ford is forfeiting certain segments of the market. The “Big Three” American automakers—Ford, GM, and Chrysler—are being dominated by companies like Honda and Toyota in the small vehicle space.

Ford isn’t alone in throwing up the white flag. GM also recently announced that it would stop making models like the Chevrolet Sonic and Impala, as sales have plunged in recent years. Fiat Chrysler is likewise making changes to its lineup. The Dodge Dart and Chrysler 200 sedans were cleaved from dealerships as it, too, tried to keep up with changing demand.

What’s spurring sales of SUVs and trucks?

In part, it’s due to economic conditions. The economy is in good shape, and gas prices have been relatively low since topping out at more than $4.00 per gallon, on average, in 2008.

Back then, at those prices, drivers were desperate for smaller, more efficient cars.

But now, with gas prices averaging around $2.50 per gallon, a dollar’s worth of gas will get you further. Gas prices are, however, rising.

What does it mean for you?

While your new car options are obviously limited when Ford enacts its new strategy, there are some economic side-effects that can reach beyond the auto industry.

Investors, on one hand, will likely benefit as Ford’s plan to slash spending and become more profitable fleshes out. But getting there will require hitting some bumps in the road, including plant closures and layoffs.

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They’re a wonder of technology—pistons, gears, valves and wheels, streaming along highways and roads all over the world. For many, cars mean freedom, and the ability to pursue work and travel far from home. Cars also mean convenience. Need groceries ten miles away? No problem.

Cities have grown larger because of them, as residents have moved 20 miles or more from from urban centers–and the suburbs couldn’t exist without them. Numerous industries depend on car manufacturing and sales to continue operating—think oil for gasoline, rubber for tires, and plastics for the innumerable components that go into cars.

And let’s not forget the trucking industry, that moves the products consumers depend on from one corner of the country to another, is also an outgrowth of the automobile. In 2017, revenues for this industry alone were three quarters of a trillion dollars.

In fact, from the days that the first Model Ts sped off the assembly line at a Ford factory more than 100 years ago, to today’s electric-powered Teslas, cars have shaped society and the world we live in. They have allowed us a kind of mobility that previous generations could never have imagined.

Cars drive the economy

Certainly car manufacturing and sales are huge economic drivers. There are about 1.5 billion cars on the planet, and that number is expected to grow to 2 billion by 2040. In 2017, some 88 million cars sold worldwide, and nearly a quarter of those were sold in the U.S. alone.

In the U.S., automobile manufacturing and sales contribute up to 3.5 percent of the U.S. economy, according to research. As an industry, they are the biggest manufacturing and retail segments combined, employing close to 2 million people who either work directly for the big manufacturers, or for companies selling parts and manufacturing components as suppliers, not to mention sale of the vehicles themselves.

Furthermore, workers in the industry earn some $500 billion annually, according to industry research.

The so-called Big Three automakers in the U.S. are Chrysler, Ford, and General Motors. These companies were at one point the largest manufacturers in the world. Today, they are still critical to the economy, but in recent years have been joined by foreign auto manufacturers including Honda and Toyota, which employ some 100,000 workers in the U.S., in addition to their workers overseas.

Cars and climate change

While cars are a huge part of the economy, they’ve taken a physical toll on the planet. Cars contribute to the warming of the earth’s atmosphere, dumping billions of tons of carbon into the atmosphere each year.

Auto sales and dealerships are an industry in their own right, contributing up to 2.6% of gross domestic product

The Environmental Protection Agency (EPA) estimates that about one-third of all greenhouse gases are caused by cars and other forms of transportation that use petroleum fuel. And traffic-related deaths—about 1.3 million people annually die from car accidents around the world—are also a significant concern.

Car makers are aware of the problems, and they are innovating at a fast and furious pace, with manufacturers focusing on making automobiles that are more energy efficient, safer, and—soon—driverless.

Additionally, fuel efficiency has increased over the years, and cars now average about 25 miles to the gallon, an increase of nearly 30% from 2004, according to the U.S. Environmental Protection Agency.

And all of the major car companies now have electric models or hybrids whose motors switch between gas and electric.  As much as five percent of all sales will be for all-electric vehicles in the next ten years, according to recent research.

The future of the car industry

Meanwhile, car companies are some of the biggest innovators around. Whether it’s coming up with the first idea for a moving assembly line more than a century ago, to today’s “just in time” template that conserves time and resources by producing what’s needed only when it’s necessary.

Manufacturers including Chrysler, Ford, General Motors and Tesla are working on the next generation of automobiles. They are using the latest technology, including computer software, high-power lithium-ion batteries, radar, cameras and even lasers to ensure cars run more efficiently, use fewer resources, and keep people safe.

Good to know: Airbags, which were at one time controversial, have saved an estimated 45,000 lives since they were first introduced in 1987, according to the National Highway Traffic Safety Administration.

Collectively, these companies know they must respond to challenges ahead.

Some day soon, driverless cars may become the norm. That could mean having a fleet of shared cars circling neighborhoods, ready to take you grocery shopping, or safely home after a big night out.

“My guess is that in probably 10 years it will be very unusual for cars to be built that are not fully autonomous,” Elon Musk, the founder and chief executive of Tesla said recently at a summit of world leaders.

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