GM CEO Mary Barra paid a visit to the Oval Office Thursday, no doubt an awkward meeting after the pounding the automaker has taken from President Trump on Twitter lately.
The big picture: GM is facing intense pressure from the White House to bring jobs back from China and Mexico after announcing plans to idle 4 U.S. factories in important swing states.
- But with plenty to talk about — jobs, trade, fuel economy — Barra called it a "productive and valuable" session and the White House didn't disagree.
What's happening: The United Auto Workers union, steaming about the intended plant closings, has selected GM to set a new pattern labor agreement for the industry.
- Union members have authorized a national strike if a deal isn't reached by the Sept. 14 deadline.
Between the lines: The 4 GM factories have been designated as "unallocated" — meaning GM has no products assigned to those plants in the future. (A fifth is unallocated in Canada, where workers belong to a different union.)
- The semantics matter: Under the existing labor contract, GM can't close, idle, sell off or consolidate plants, except in the case of a sudden market downturn or an act of God. Hence, the odd term "unallocated."
- The UAW sued GM for violating the agreement, but the issue is likely to be resolved at the bargaining table long before it is heard in court.
- Although 3 of the 4 factories have already stopped production, none of the factories can be shuttered for good without the union's sign-off.
- "These plants are absolutely bargaining chips and the union is not going to give up on allocating those plants without getting something in return," says Kristin Dziczek of the Center for Automotive Research.
What to watch: As in previous negotiations, GM likely has plans to "save" hundreds of jobs in exchange for worker concessions on health care or other benefits. Among the possibilities:
- GM plans to introduce 20 new electric vehicles by 2023, mostly for the Chinese market, but Barra has told Axios that at least some will be built in the U.S.
- GM could also transfer some production from Mexico, where it currently builds pickups, SUVs, engines and transmissions.
- But U.S. autoworkers earn roughly $30 per hour vs. $3 for their Mexican counterparts, Dziczek notes.
- About 2,000 of 2,800 affected union workers have already accepted transfers to other GM plants — receiving $5,000–$30,000 incentive pay — but many could return to their home plants if production is restarted.
The bottom line: The drama will increase between now and the Sept. 14 contract deadline, but look for hundreds of U.S. manufacturing jobs to be created or retained — an outcome likely to please Trump.
Go deeper: The American car is becoming obsolete