GM, workers reach tentative contract
Vote Thursday could end monthlong strike
General Motors and the autoworkers’ union said Wednesday that they had reached a tentative agreement on a labor contract that could end the monthlong strike that has idled GM plants across the Midwest and the South.
Details were not released, although the union, the United Automobile Workers, said it had “achieved major wins.” After the union’s announcement of the tentative accord, GM put out a twosentence announcement of confirmation.
Officials of the union’s GM locals will gather Thursday in Detroit, and if they accept the tentative agreement, they could vote to end the strike immediately. They could also continue the walkout until the deal is ratified by a majority of the 49,000 UAW members employed by GM.
“Out of respect for our members, we will refrain from commenting on the details until the UAW GM leaders gather together and receive all details,” Terry Dittes, the union’s chief GM negotiator, said in a statement.
The walkout, the first against a Detroit automaker’s nationwide operations since 2007, has left a mounting economic toll since it began Sept. 16. It has cost the union, its members and GM itself hundreds of millions of dollars in lost dues, wages and revenue, as well as idling truckers and suppliers that serve the automaker.
The tentative agreement, if it becomes final, would solve the most immediate challenge facing CEO Mary Barra, and should provide certainty in calculating
labor costs over the next four years. But she must contend with issues on other fronts, including a sales slowdown in the United States and China, and the need for big investments in electric vehicles and selfdriving cars. And like other automakers, GM has continued to feel heat from President Trump over decisions on plant closings and foreign production.
The stakes were also high for the union. It faced discontent in its ranks over what members saw as a failure to win a fair share of the gains GM has made since its bankruptcy a decade ago.
The union was hoping to improve wages and benefits for temporary workers and more recent hires, who are on a pay scale that does not reach the top UAW wage of $31 an hour. It pointed to GM’s record profits in North America and more than $10 billion in stock buybacks since 2015.
The union wanted GM to make firm commitments to producing future vehicles in U.S. plants, but said the company had resisted doing so.
GM entered the talks hoping to reduce its health care costs and limit increases in wages and benefits. It offered to invest $7 billion in U.S. factories, including a proposed battery plant, built with a partner, that would hire union workers under a separate contract. It proposed to locate that plant near Lordstown, Ohio, where a GM factory assembling the Chevrolet Cruze ceased production this year.
Wiley Turnage, president of Local 22, which represents 700 workers at GM’s DetroitHamtramck plant, said he hoped that his members could get back to the assembly line quickly. But he said he needed to review the details of the tentative agreement before deciding whether to vote in favor of it Thursday.
“It has to be fair to our members,” he said.
GM is scheduled to close the Hamtramck plant in January but has discussed using it to assemble a new electric SUV. Turnage said he had not yet been informed whether the tentative agreement calls for keeping the factory.
If the General Motors contract is ratified, the UAW will turn its focus to Ford Motor Co. or Fiat Chrysler. Contracts with those manufacturers expired Sept. 14, but workers have continued reporting to assembly lines while the union negotiated with GM.
The UAW is likely to try to hammer out similar terms with Ford and Fiat Chrysler, a standard practice known as pattern bargaining.
The union chose GM as its target because the company has closed plants in the United States this year, and over the last several years has substantially increased production of vehicles at its four plants in Mexico.
Talks with Ford and Fiat Chrysler may be smoother because those companies have done less than GM to shift production south of the border. Ford, in fact, canceled plans to build a new plant in Mexico and Fiat Chrysler has chosen to build a new Jeep factory in Detroit.
In the past five years, as American consumers flocked to highmargin trucks and SUVs, both GM and its unionized workforce have prospered. In the past three years, GM has made $35 billion in profit in North America, and workers have been given annual profitsharing checks averaging $11,000.
But even though GM was scaled down in bankruptcy, it still has excess production capacity. The company has enough plants to make about 1 million more vehicles than it is selling, according to the Center for Automotive Research, an independent, nonprofit group.
At the same time, GM is spending heavily to develop electric vehicles and selfdriving technology, and its business outlook is uncertain. Auto sales have slowed in the United States, and some analysts expect a substantial decline in newvehicle sales in 2020. Sales in China, the world’s largest auto market, have also softened.
Mark Wakefield, a managing director at AlixPartners, a consulting firm with a large automotive practice, said automakers were expected to spend some $225 billion over the next five years on development of electric and selfdriving vehicles.
“Industry profit is still good, but it’s down from its peak of a few years ago,” he said. The combination of heavy spending and slowing sales “has created some problems for them.”
That is one reason that GM has been eager to retain flexibility in the size and deployment of its workforce. Among the issues in dispute was the extent of GM’s use of temporary workers — now 7% of its head count — and their path to fulltime status.
Marisol GonzalezBowers worked for GM at Lordstown, Ohio, for about 24 years, most recently in “materials,” transporting parts to the assembly line. Relocating after the shutdown, she recently took a job at the company’s Lansing Delta Township plant in Michigan, where she was trained to assemble the insides of doors — the wires and plugs. Her trainers were almost all classified as temporary workers, she said, though they had been there four years.
“They’re working their butts off,” GonzalezBowers said — and “making half my wages.”
Most temporary workers earn $15 an hour, compared with roughly $31 an hour for workers hired before 2007. Most permanent workers hired after 2007, known as “in progression” workers, earn about $17 to $25 an hour.
Veteran workers are guaranteed pensions in retirement. Inprogression and temporary workers have 401(k) accounts to which they contribute.
Robin Sweet, an employee at a Ford Ranger plant in Wayne, Mich., said workers were upset at both the automakers and the union for not doing more to make them whole after the concessions made during the last downturn.
“We want that money back in our pay,” Sweet said in a text message.
The agreement with GM, even if followed by accords with Ford and Fiat Chrysler, will not end the strain on UAW President Gary Jones and several of his top lieutenants. A federal criminal investigation has yielded corruption charges against several union officials over the last four years, including a union vice president who was sentenced to 15 months in prison.
The scandal “is concerning to the membership,” said Kristin Dziczek, vice president for industry, labor and economics at the Center for Automotive Research. “It’s cast a shadow, and hangs over the union, and appears to ensnare highranking officials.”
The GM strike was the latest push by labor for a larger share of the billions of dollars in wealth created as the United States recovered from the recession of a decade ago.
On Saturday, about 3,600 UAW members went on strike at Mack Truck plants in three states, demanding better wages and benefits.
Last year, teachers in West Virginia, Oklahoma, and North Carolina secured better working conditions after walking off the job. And grocery workers in Southern California narrowly averted a strike this month when the United Food and Commercial Workers union reached a deal with several California supermarkets. The new contract includes wage increases totaling $1.55 to $1.65 an hour over three years, as well as improved health care benefits and pension contributions.