Report: UAW Officially Strikes Against GM
Strike comes amidst GM’s cost-cutting initiatives and an ongoing investigation into UAW leadership.
GM’s UAW members headed to the picket lines early Monday as talks broke down between the company and union representatives. Negotiations have resumed for now. The nationwide strike could potentially cost the company hundreds of millions of dollars if its plants are shut down for an extended period of time. Wages, profit sharing, and health care are the main issues dividing the two parties.
The strike isn’t exactly surprising, as GM has closed several plants and cancelled a substantial portion of its passenger car lineup since 2018. CNBC reports that at least one factory could be spared as a result of the negotiations. GM hasn’t experienced any strikes since 2007. The nationwide walkout will almost certainly set the tone for the UAW’s future talks the FCA and Ford, as the union tends to use the first contract talks as the for all three automakers.
The Issues
A main sore point involves the status of temporary workers. Lower tier employees are compensated less than their more established co-workers and receive fewer benefits despite paying the same union dues as permanent workers. Temporary workers represent about 7% of the UAW workforce. The union would like to see a more defined path to permanent status for those workers. Wages, health care benefits, job security, and profit sharing remain core issues for the union as well. “We told UAW GM members that we would stand up for them and their future,” said Gary Jones, President of the UAW. Workers appear to be vehemently against any proposal that would increase their health care costs.
The UAW feels particularly emboldened this year for several reasons. General Motors earned a net profit of $2.4 billion in the second quarter of 2019. That figure represented a 1.9% increase from 2018. There’s also the recent cost cutting measures that resulted in four plants being shuttered. About 4,000 factory workers were affected by the move. CEO Mary Barra also recently endorsed a statement issued by The Business Roundtable that could complicate matters for the company. The agreement is a non-binding pledge that seeks to redefine the modern corporation as something other than a profit seeking entity. It endorses fair compensation and the idea that important benefits are essential to employees. UAW President Gary Jones could feasibility call Mary Barra out for signing such a statement after cutting a substantial number of jobs over the past twelve months or so.
Complications
The UAW wants its workers to be protected and properly compensated, but that might become even more difficult in the next several years. Electric vehicles and autonomous driving technology are busting the budgets of pretty much every mainstream automaker. With no immediate return on investment, companies are forced to spend billions of dollars on vehicles that have yet to be fully embraced by the public. The rise of crossovers also impacted GM, and the company is adamant that the cancellation of vehicles like the Cruze and Impala were necessary due to shifting consumer tastes. A retraction in the Chinese market could also complicate things for GM, as the company has a substantial presence there.
To further complicate matters, the UAW is being subjected to a federal investigation that is ongoing and quite expansive. As part of that probe, Gary Jones and former UAW President Dennis Williams had their homes raided by the government. Authorities accuse UAW Region 5 Director Vance Pearson of embezzling unions funds, and the affidavit claims several others not yet implicated did the same. It’s entirely possible that the scandal goes all the way to the top. If contract negotiations fail to produce anything substantial in the short term, a new team might have to face GM at the table amidst a decline in legitimacy. The UAW’s position with FCA and Ford would also be impacted.
The Stakes
A protracted strike would have enormous consequences for GM and the UAW. If talks last for weeks, the company would potentially lose a ton of money. It’s estimated that the UAW’s 2007 strike, which lasted for two days, resulted in more than $600 million in losses for the the company. Workers will obviously miss out on their paychecks, although they will be provided with $250 per week. That’s a fraction of what they normally receive as compensation, and a prolonged strike would no doubt have a ripple effect on the U.S. economy. GM’s suppliers could also be severely impacted as well.
GM is adamant that it produced a fair offer to the union. The company is proposing wage increases and approximately $7 billion in factory investments, including an $8,000 signing bonus. GM also supports reviving plants in Michigan and Ohio, although specifics about those plans have not been made public. Rumors point to the Detroit-Hamtramck being allocated an electric pickup and Ohio being tasked with the production of battery cells. GM has since backed off on increasing health care costs for its workers.
Is there any end in sight? Unfortunately, that is not the case right now. GM and the UAW remain far apart on many issues. “We got 98% left to go” said UAW spokesman Brian Rothenberg. Barring any breakthroughs, the two sides remain deadlocked. It’s a situation that will hopefully resolve itself soon.
Photos: AP; General Motors