Sep 16, 2019

GM strike complicated by union probe and political points

GM worker Carl More at the United Auto Workers Local 163 in Westland, Michigan, Sunday. Photo: Jeff Kowalsky/AFP/Getty Images

The labor dispute that erupted overnight between General Motors and the United Auto Workers is about more than just the usual issues, as both sides try to score points away from the bargaining table.

The big picture: Detroit labor talks are difficult enough without complications from a federal corruption probe, presidential politics and uncertainty about trade and climate policies — not to mention technological disruption sweeping across the industry.

The intrigue: UAW bosses are flexing their muscles to regain credibility with their members amid a deepening criminal investigation. And GM looks to drive a wedge between workers and union leaders while deflecting further attacks from President Trump over job cuts in swing states.

Driving the news: About 46,000 hourly workers walked off the job at GM at 11:59 p.m. Sunday, the UAW's first national strike since 2007.

  • The financial impact will be costly for both sides, especially if the strike drags on.
  • An assembly plant shutdown costs an automaker an estimated $1.3 million every hour, according to the Center for Automotive Research.
  • UAW members, whose top wage is about $30 an hour, will take home $250 per week in strike pay.
  • In 1998, a 54-day strike at 2 factories shut down nationwide production, costing GM more than $2 billion.

The issues: The union wants higher pay, better benefits and increased job security, arguing it made sacrifices during GM's bankruptcy a decade ago, and now it deserves a share of the company's record profits.

  • GM wants to cut costs ahead of an expected industry downturn, so it can continue to invest in electric vehicles and self-driving technology.

Between the lines: In an unprecedented move underlying the mistrust between the 2 sides (and likely to head off more criticism from Trump), GM publicly shared details of its offer to the union. Among them:

  • GM would invest $7 billion in U.S. factories, including 5,400 jobs.
  • Plans would include production of a new electric pickup truck at a Michigan factory and a new electric battery facility in Ohio.
  • GM offered workers a ratification bonus of $8,000 per member plus wage gains or lump-sum payments in all 4 years of the contract.
  • Health-care contributions would remain the same as in the current contract.

The other side: The UAW wants GM to restore annual cost-of-living raises and eliminate a 2-tier wage system it agreed to when the company was struggling more than a decade ago, sources said.

  • Since 2010, average wages in the U.S. motor vehicle manufacturing industry have fallen 2.1% — or 16.0% when adjusted for inflation.
  • The most senior UAW workers have had 3-percent wage increases twice in that period — in 2015 and 2017. During other years, they received lump sum payouts instead of annual raises.
  • Profit-sharing bonuses have increased. Since 2011, workers received an average $6,600 in profit-sharing, the equivalent of an extra $3.18 per hour.
  • GM’s record $12,000 profit-sharing per worker in 2017 equates to an additional $5.77 per hour.

The investigation: UAW leaders appear to be playing hardball, in part, to show rank-and-file members they are going to the mat for them amid charges that some union bosses were allegedly pocketing union training funds.

  • UAW President Gary Jones and his predecessor, Dennis Williams, have been implicated in a federal investigation, per the New York Times.
  • A criminal complaint alleges they helped current and former senior union officials embezzle member dues to buy personal luxuries, the Detroit News reports.
  • Neither Jones nor Williams have been charged with a crime.

What to watch: In a tweet, President Trump urged the 2 sides to resolve the dispute quickly, and several Democratic candidates expressed support for union members.

  • Talks were scheduled to resume at 10 a.m. Monday.

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