GM, UAW Reach Tentative Deal to End Month-Long Strike

By Reuters
October 16, 2019Businessshare
GM, UAW Reach Tentative Deal to End Month-Long Strike
General Motors assembly workers picket outside the General Motors Bowling Green plant during the United Auto Workers (UAW) national strike in Bowling Green, Ky., on Oct. 10, 2019. (Bryan Woolston/Reuters)

General Motors Co and the United Auto Workers union have reached a tentative deal for a new four-year labor deal, moving the sides closer to ending the month-long strike that had drawn the attention of President Donald Trump and Democratic candidates in the 2020 presidential election.

The deal is subject to approval by the union’s national GM council during its meeting on Oct. 16 and then must still be ratified by the wider membership, the UAW said in a statement. The strike continues at least until Thursday’s meeting.

If the council approves the deal, it would decide whether to end the strike at that point or continue until the wider membership votes.

“The number one priority of the national negotiation team has been to secure a strong and fair contract that our members deserve,” UAW Vice President Terry Dittes, director of the union’s GM department, said in a statement. He said the union would not release details of the agreement until after the Thursday meeting.

GM officials confirmed a tentative deal had been reached, but declined further comment.

Shares of GM were up 2.1% at $37.03 on Wednesday afternoon.

The strike began on Sept. 16, with about 48,000 hourly workers of the UAW union at GM seeking higher pay, greater job security, a bigger share of profit and protection of healthcare benefits. Other issues included the fate of plants GM has indicated it may close, and the use of temporary workers.

General Motors Flint Truck Assembly 2
A union strike sign is stuck in the fence outside the General Motors Flint Truck Assembly in Flint, Mich., on Oct. 9, 2019. (Brian Snyder/Reuters)

The Center for Automotive Research (CAR) in Michigan has estimated the strike’s weekly costs to GM and the UAW strike fund at $450 million and $12 million, respectively. Analysts had said investors were comfortable with a strike that was costly upfront as long as the No. 1 U.S. automaker maintained its long-term financial and strategic flexibility.

Details of GM’s last offer emerged over the weekend and included an increase of its proposed ratification bonus by $1,000 to $9,000. GM also proposed 3 percent pay raises in the second and fourth year of the four-year-contract and 3 percent and 4 percent lump sum payments in the first and fourth year, respectively. It agreed to make temporary workers with three years of service permanent and give those workers a $3,000 ratification bonus.

If the deal is approved by the workers, the union will next begin negotiations with Ford Motor Co or Fiat Chrysler Automobiles NV (FCA), covering many of the same issues regarding healthcare costs, job security and the use of temporary workers. The UAW previously agreed to temporary contract extensions with both automakers while it focused on GM.

A successful ratification is not a sure thing as workers during the 2015 talks initially rejected a deal with FCA before eventually approving a deal that had been tweaked after further negotiations.

This year’s talks have been overshadowed by a widening federal investigation into corruption at the union.

However, UAW officials and striking workers on the picket lines said their focus in the dispute with GM was on jobs, pay equity and fairness for workers who made concessions in 2009 to help GM through its government-led bankruptcy.

For GM and the UAW, the bargaining came at a time of industry uncertainty following nine years of strong sales and robust profit, fueled by the trucks and SUVs built by UAW workers. GM Chief Executive Mary Barra and President Mark Reuss joined the bargaining on Tuesday, indicating a deal was close.

General Motors Chief Executive Officer Mary Barra
General Motors Chief Executive Officer Mary Barra announces a major investment focused on the development of GM future technologies at the GM Orion Assembly Plant in Lake Orion, Mich., on March 22, 2019. (Rebecca Cook/Reuters)

Union leaders said the rewards of the recovery had not been shared fairly. Inflation-adjusted wages for all U.S. auto workers have fallen 16% since 2010, and UAW workers at the Detroit Three have received only two base wage increases of 3% in the past nine years, according to CAR.

GM management, on the other hand, sees UAW wages as 26% higher than the average for non-union auto factories in the Southern United States. High absenteeism and rich health benefits add to the cost burdens at a time when U.S. vehicle sales are projected to decline and automakers are funding investments in electric vehicles.

The strike was the first nationwide walkout at GM since a two-day work stoppage in 2007. The UAW has been careful about deploying strikes to gain leverage in bargaining since a 54-day walkout that occurred in Flint, Michigan, in 1998 that cost GM more than $2 billion and accelerated the loss of UAW-GM jobs.

By Ben Klayman

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