Hey TST’ers!

It’s great to have you back for another issue. Thanks for reading, especially those of you who’ve recently taken the time to give me feedback.

As a matter of fact, one of the topics in this week’s issue is an audience request. Several of you asked for my take on the ongoing UAW strike and what it means for the workforce.

Ask, and ye shall receive!

Another fun announcement for you: In this issue, I’ll introduce a new section called “AI Insights,” a roundup of the most recent news about artificial intelligence. It’s become abundantly clear to me that AI will revolutionize nearly every aspect of the business world, and I love the idea of keeping you at the forefront.

Of course, I’ll also share some of the things I’ve been reading, watching, listening to, and thinking about, along with other goodies.

Let’s get started!

Industry Highlights: Strike While The Iron’s Hot

The Motor City is on strike.

In an historic move, 13,000 United Auto Workers walked out of their factories last week, marking the first time all three major car manufacturers have stopped work simultaneously. Since then, thousands more have joined the picket lines to fight for higher pay, better working conditions, and a reinstatement of traditional pension plans.

According to the Associated Press, about 13 percent of the union’s 146,000 members are now on the picket lines.

The strike puts a capstone on a summer full of high-profile exercises of labor power—from the freshly resolved WGA strike that began on May 2 to the UPS drivers that avoided stoppages after an 11th-hour deal last month.

What makes the UAW strike unique from these other scenarios, though, is its future implications.

The consumer will be among the first to feel the strike’s effects. Financial analysts have reported that car prices are already rising due to the strike, and the longer workers hold out, the higher they’ll go. Moody’s Analytics auto economist Michael Brisson told Investopedia that a widespread strike lasting 40 days could impact new and used vehicle pricing by as much as 10 percent.

This a tough pill for consumers to swallow, considering average car prices are already up more than $10,000 since 2020.

Repairs and maintenance will also be impacted.

The new workers who joined the picket lines last Friday were predominantly from 38 parts and distribution facilities. That means if something big like your motor or transmission needs to be replaced, it will be harder to source OEM parts. Automakers work hard to build a loyal customer base, and prolonged delays will factor in when it’s time for future purchases.

This UAW strike might also fundamentally change how unions fight for their demands.

Unlike previous union leaders who have kept negotiations close to the vest, new UAW President Shawn Fain takes a completely different tack. The Wall Street Journal reports that Fain has taken to publicly airing—and disparaging—automakers’ bargaining offers, “lac[ing] his speeches with verbal attacks that have taken auto executives aback.”

Fain’s full transparency and media use has made for some truly juicy primetime drama—and a new way to gain bargaining leverage. It could become a blueprint for future union leaders to wage their wars in the court of public opinion.

And because this revolution is being televised, there’s a strong chance it will have unprecedented political implications.

On Tuesday, President Biden visited a General Motors distribution center in Belleville, MI, becoming the first sitting president to join a picket line.

He was closely followed by former President (and 2024 Republican hopeful) Donald Trump, who held a rally Wednesday night at a Michigan auto parts supplier. Though the supplier is not a UAW shop, pundits believe it was Trump’s move to curry favor among autoworkers—many of whom already support him, Fortune reports.

Using the strike as a political football isn’t sitting well with many Old Guard politicians.

To me, the irony of this strike is that part of the reason the UAW is doing it in the first place is to rail against policies that are giving EV manufacturers like Tesla a competitive advantage. This year, Tesla has accounted for about 4.5 percent of US EV sales each month, while Ford and GM comprise less than half a percent each.

Of course, workers should be fairly compensated. The Big 3 CEOs made an average of 300x their workers in 2022, marking a growing wage gap among the haves and have-nots.

But to me, it seems the UAW may be overplaying their hand.

Bloomberg reports that, according to internal calculations, the UAW’s contract demands would add over $80 billion to each major US automaker's labor costs, potentially doubling the hourly labor costs to at least $150 from the current $64.

Also, the Anderson Economic Group estimates a 10-day industry-wide economic loss of over $5 billion from a strike. The last UAW strike at GM (40-day standoff) reportedly cost the company $3.6 billion and workers $1 billion in lost wages.

No one denies the profit surge experienced by these three, resulting from a stimulus charge and inventory shortages. But to maintain profitability and compete with the EV’s out there, cutting off their nose to spite their face will only serve their competitors. Handled incorrectly, we’ll see a lot more Chinese starter cars on our roads.

The Future of Work: A Labor War on the Horizon?

I don’t usually tie both of my newsletter sections together, but I think this topic calls for it.

One thing people have been asking about these worker strikes is WHY. Why now? Some have suggested it’s a holdover from the pandemic and Great Resignation, that workers still wield the power they feel they hold over employers to get what they want.

But as The Wall Street Journal recently pointed out, these labor fights are possibly just skirmishes indicative of a much bigger—and longer—war yet to come.

Experts believe that companies are going to have a lot of trouble filling positions in the years to come. The Labor Department recently projected that total employment will grow about 0.3 percent yearly until 2032—a significantly slower rate than the 1.2 percent average over the last decade.

This slowed growth is due to several factors. The first is one labor experts saw coming a mile away. Baby Boomers, who now comprise about 25 percent of the workforce, are retiring in droves. Though every generation is expected to eventually run its course, Boomer participation fell off a cliff during the pandemic, as many never returned once businesses began to reopen.

While Gen X’ers and Millennials are somewhat filling that void—they each currently comprise about a third of the workforce—the significance of a dramatic drop in birth rates cannot be ignored.

Because of this, the Labor Department projects the overall work participation rate will continue to decline, reaching 60.4% in 2032.

Another worrisome sign that we’re in for significant labor issues in the near future is the recent wage increases. At first glance, that appears to be a good thing for workers, but it’s fueled by supply and demand, and at its current pace, it’s not sustainable.

So what can companies do to fill the impending void? They can either widen their worker funnel or make the current workforce more productive.

The latter is something all companies are looking into. Any company worth its salt is exploring generative AI technology to see how it can improve productivity. While most are optimistic about AI’s application, the tech is realistically too new to demonstrate any reliable application or return.

The former can be accomplished by offshoring or outsourcing jobs, but that, too, has lost its luster in recent years. Most companies are trying to localize their supply chains and expand their talent instead of complicating them.

The other option is putting efforts behind lobbying for looser immigration policies so that foreign workers can have more job opportunities in the US. Though it took a hit during the pandemic, foreign-born labor has risen significantly in the last decade and is projected to continue to rise.

But given that the US’s immigration policy is a hot-button issue—and we’ve got a contentious 2024 election looming—it’s unclear how possible opening the door to more foreign workers would really be.

AI Insights: Workplace 2.0

Generative AI technology is progressing at the speed of light, and as businesses begin integrating it into their workflows, I think it’s important for us to keep our fingers on the pulse. Moving forward, this section will be a roundup of AI-related insights and updates that I’ve found interesting that will help us move into Workplace 2.0

• IBM pledges to train 2 million in AI - A recent IBM study found that 40 percent of workers would need to be reskilled to take advantage of AI fully. They’ve set the goal to train two million learners in AI by the end of 2026, focusing on underrepresented communities.
  

• Harvard study reveals a 40% performance boost in professionals using GPT-4 - Harvard, Penn, and MIT conducted a joint study of consultants at the Boston Consulting Group and found that their use of ChatGPT-4 for day-to-day professional tasks has increased their productivity by a remarkable 40 percent.
  

• SAP unveils an AI assistant for enterprise solutions - SAP recently launched an AI assistant named Joule that’s aimed at optimizing human and business outcomes. It’s integrated with SAP’s existing cloud enterprise suite, and it has the ability to assist manufacturers in pinpointing sales discrepancies and recommending actionable supply chain solutions.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About Re: Supply Chain, Work, and Beyond

📕 Read - Elon Musk by Walter Isaacson

Last issue, I mentioned that I was gearing up to read the new Elon biography, and I finally got my hands on it and started digging in. Isaacson’s style is to go deep, and this book definitely does that. It’s huge and detailed. I’m only a couple hundred pages in, but so far, I’ve been struck by Musk’s struggles as a kid—how he was bullied so much that he was hospitalized at times. It’s an interesting lens to view the person we know today.

What Else I’m Reading

• DeepMind co-founder: Generative AI is just a phase. What’s next is interactive AI - Technology Review - Mustafa Suleyman, co-founder of DeepMind and CEO of Inflection, aims to develop interactive AI chatbots capable of executing tasks by integrating with other software and people. He emphasizes the need for robust regulation in this field and has substantial resources, including a billion-dollar company, top-tier talent, and specialized AI hardware, to support his vision.

📺 Watch - How To Get Rich

This is a fun little Netflix series where finance expert Ramit Sethi meets with people needing financial help. One episode follows a woman who spends over a million dollars a year on shopping, and another shares the story of a couple entangled in a Pyramid scheme. The financial advice is pretty basic, but the drama is high and entertaining. For the prudent ones out there, it’ll make them feel better about their financial decisions!

👂 Listen - Auto Supply Chain Prophets

Jan Griffiths is a superstar auto industry supply chain leader-turned superstar leader who hosts among other things, her podcast. Happy to say that in this recent episode, she and her co-hosts interviewed none other than YOURS TRULY!

Our discussion dives into the pivotal role of technology—especially AI—in reshaping procurement and supply chain operations. We also explore the emerging trend of isolating purchasing functions from manufacturing, impacting communication, relationship building, and supplier innovation.

💡 Think - 3rd Party in 2024?

There’s no two ways about it: the 2024 Presidential election will be messy. Recent polls show that two-thirds of Democrat-leaning voters don’t want Biden to be the nominee, and while it’s not illegal for Trump to sit in the Oval Office as a convicted felon, it certainly wouldn’t be a good look if that transpired.

We’ve never had two more older and disliked candidates at the helm of their respective parties. When you’ve got the plurality of the voters claiming they deem themselves Independents rather than R’s or D’s, I think it’s high time we give them a chance. Now, who that third party will be remains to be seen. The No-Labels movement has clearly stated if it’s a 2020 rematch, they will launch a candidate. Romney-Manchin? 🙂

The US has a long history of third parties dating back to the 19th century, with notable figures like Teddy Roosevelt, Ross Perot, and Ralph Nader trying to break through. But the winner-takes-all nature of the Electoral College and the perception that third-party candidates are “spoilers” definitely discourage voters from supporting them.

However we look at it, I think we have a truly historic race coming up.

Charts of the Week

Quote of the Week

Tweets of the Week

Finally...

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you.

If you have suggestions or topics you’re interested in seeing me address, shoot me an email at [email protected]!

Want more?

If you’d like to read more of my writing on the supply chain, entrepreneurship, or the future of work, check out my website.

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Happy reading this weekend!

-- Naseem