Experts: UAW got a good deal from GM
“It’s a good agreement,” one UAW local leader said last week in Detroit. “If they don’t ratify it, they’re foolish.”
DETROIT — Many labor experts and union leaders say the UAW got a good deal from General Motors and expect union members to ratify it.
In the meantime, about 46,000 workers will remain on strike while they learn about the tentative agreement and vote through next week.
“It’s a good agreement,” one UAW local leader said last week. “No, they couldn’t get guaranteed product, but you can’t always get guarantees because the market is going to dip. If they don’t ratify it, they’re foolish.”
Here are manufacturing wins listed in the agreement:
■ Detroit-Hamtramck Assembly Plant: Electric truck and van assembly, including assembly of battery modules. It is approx- imately a $3 billion invest- ment and 2,225 new jobs at full volume.
■ Warren, Mich., Tech Center: A new vehicle program, $200 million invest- ment and retention of approximately 75 jobs.
■ Lansing (Mich.) Delta and Spring Hill, Tenn., assembly plants: Next generation midsize SUV assembly; $1 billion, 5,000 jobs.
■ $2 billion investment in U.S. plant refurbishment
Even though the union lost its effort to keep Lordstown Assembly Plant in Ohio open, labor experts said Detroit-Hamtramck stay- ing open is a big win for the UAW. Those plants were targeted for shutdown in a GM announcement in November, along with a Toronto-area factory and transmission plants in Warren and Baltimore.
“To have your technological work on advanced vehicles being so close to the GM Tech Center in Warren, absent the UAW that wouldn’t happen,” said Harley Shaiken, a professor at the University of Califor- nia, Berkeley who special- izes in labor. “GM is putting as much as $3 billion into Detroit-Hamtramck. That’s a major gain.”
But the uncertainty, said Shaiken, lies in if the elec- tric vehicles don’t sell as expected. Then that invest- ment and potentially 2,000 jobs at Detroit-Hamtramck might wither.
GM wins
Here’s what GM got out of the agreement, labor experts said:
■ It keeps the three plants closed.
■ GM has dramatically expanded its Mexican operations over the last five years, giving it a source of low wage advantage. That remains intact.
GM overall will be very profitable with this agree- ment because it retains a highly skilled, productive workforce and still has flexibility left in its plants.
Beyond that, Erik Gordon, professor at the University of Michigan Ross School of Business, said he doesn’t see many wins for GM in this contract. He said the three plants were already slated to idle. Also, GM already had an out-of-line cost structure. It now goes forward with an even bigger cost structure.
“I think their cost structure will widen versus their global competitors,” said Gordon. “GM has to go another four years without the hope of lowering their labor cost structure. If you’re a GM shareholder all you can say is, ‘It could have been worse.’ ”
By that he means that GM could have agreed to keep the three plants open or move all production back to the United States from Mexico.
UAW wins and losses
“With collective bargaining, there’s never a knock- out,” Shaiken said. “But health care is a critical issue and temporary workers was a powerful issue, and there were gains there, but GM has considerable leverage in the fine print.”
The nuanced fine print is in the UAW’s “white book,” which was published on the UAW’s website around noon Friday.
The deal includes a path to permanent employment for temp workers and union control over their use. Work- ers’ cost for their health care plan, among the nation’s lowest, was left untouched.
Wayne State University’s Marick Masters said he believes the union mem- bership will ratify the deal because UAW leadership was careful to involve subcommittees in the negotia- tion process and, through them, the rank-and-file.
“They clearly had a voice in what was agreed to in the tentative package,” said Masters, director of labor at Wayne State. “Second, the workers have already been out on strike five weeks and will be out another week at least to vote on it. The psy- chology sets in that you prob- ably got the best deal you’ll get so if you reject this con- tract and try to go back to get a better one, the marginal gain will not be worth what you have to sacrifice.”
Plus, he and Shaiken said, the $11,000 ratification bonus — and $4,500 for temps — more than offsets the lost strike wages and comes at a ripe time, right before the holidays.
The big wins for the union, according to labor experts:
■ Health care: The benefit remains intact with no added costs to workers.
■ Wage increase: The members are guaranteed a 3% wage increase and 4% lump sum increases in alter- nating years. The ceiling was removed on profit-sharing too.
■ Temps and in-progression workers: There is a path- way for temps to become permanent workers and for newer hires to reach a full wage in a faster time. That top wage was increased to $32.32 per hour, as well.
■ Detroit-Hamtramck: Labor experts said this plant, site of the once-revolutionary but ultimately underselling Chevrolet Volt, should have idled as was planned. “That plant is sort of lucky it survived through the last contract,” said U-M’s Gordon. “The union did just fine.”
Of course, the big loss seen by many UAW members is that three of the plants GM said it would idle in November 2018 are indeed closing: Lordstown and Warren and Baltimore transmission plants. Gordon said that, sadly, no industry has job security anymore. Still, for many former Lordstown workers, that loss is a deal breaker for them and they have said they will not ratify the tentative agreement.
“There are things in there that will secure votes from our members nationwide, but for Local 1112 we knew our fate would come down to the negotiations,” said Tim O’Hara, president of Local 1112 for Lordstown. “So if the tentative agree- ment is ratified as it is, then our fate is sealed.”
O’Hara’s local has until 4 p.m. Friday to vote. He said if the tentative agreement is rejected, there was no discussion at Thursday’s National Council meeting on what would happen next.
O’Hara was at the meeting Thursday and said leaders discussed concerns about wanting to bring products GM builds in Mexico to the U.S. plants. But negotiators said GM would not agree to it.
“Financially, that’s a cash cow for them. They’re paying the workers down there a couple of dollars (per hour) and they’re building $60,000 vehicles,” said O’Hara.
GM impact
For GM, it’s too soon for the experts to say how this tentative agreement will impact its bottom line.
“The $13-an-hour gap will increase for sure,” said Colin Lightbody, referring to the all-in total labor cost gap between GM and the import brands that build in nonunion U.S. factories. GM’s estimated total labor cost per hour is $63 compared with those competitors paying $50.
Lightbody, pre s ident of consulting firm HR & Labor Guru Inc. and a former labor negotiator for Fiat Chrysler Automobiles for 20 years until he retired in 2018, said the all-in labor costs include things beyond wage increases. There may be some things in the agreement that, for example, help the company to lower health care costs.
“Or let’s say GM adds another shift to its assembly plant and adds 1,000 new production employees,” said Lightbody. “What remains to be seen is does GM have the ability to hire those 1,000 new employees as temps to initially staff that shift and keep them as temps for two years before making them full time employees? That would save them a ton of money.”
GM made a major concession in allowing the union a voice in how many temp workers it can add in the future.