Jamie L. LaReau
Detroit Free Press
Published 8:50 PM EDT Sep 16, 2019
General Motors and the United Automobile Workers bargained into the evening Monday and had plans to continue Tuesday, amid a nationwide strike that is being closely watched across the country.
It’s the first national UAW strike since 2007. Discussions on Monday were tense and required some breaks, said some people familiar with the negotiations.
Cooler heads prevailed and bargaining continued into the night, sources said. Most observers didn’t expect a quick resolution.
“Negotiations have resumed,” GM spokesman David Barnas said in a statement Monday afternoon. “Our goal remains to reach an agreement that builds a stronger future for our employees and our business.”
The strike appeared to drive GM’s stock price down in trading all day, finishing off 4.25% at $37.21.
Wages and health care have emerged as contentious problems among several unresolved issues. Those briefed on discussions differ over what’s on the table.
One person said GM has proposed that workers pay 15% of their health care costs, up from the current estimated level of 3% of health expenses. Another person familiar with talks said GM’s offer preserves current health care benefits at the same cost.
GM and Ford, which will negotiate with the union after a deal is struck with GM, each spend $1 billion a year on worker health care, which some industry observers consider unsustainable. The average U.S. worker pays about 28% of health care costs, according to the Center for Automotive Research in Ann Arbor.
“We have many unresolved issues,” Terry Dittes, vice president of the UAW GM department, said early Monday in an interview with Bloomberg. “It’s not just a couple of things. How long will this take? I can’t say.”
Cost to both sides
Those close to the UAW believe it will be a long strike, perhaps lasting two to four weeks.
“People don’t realize how angry the workers are and that the health care proposal made them nuts,” said a person familiar with both sides who insisted on not being identified to preserve those relationships.
Others said the many unresolved issues could come together quickly if a few key issues get resolved.
GM took the unusual step Sunday of making public a version of what it said was its offer, which included $7 billion in investment and more than 5,000 new jobs over the four-year life of the contract, and an assertion that the company offered an improved profit-sharing formula and preservation of top-line health benefits.
Dittes said GM’s offer came to the union only two hours before Saturday night’s deadline, and had it come sooner, the strike might have been averted.
Harley Shaiken, a professor at University of California, Berkeley who is a labor export, saw some reason for optimism.
“There are two things that make me think that this strike could be shorter rather than longer,” he said. “First, they’re back at the table at 10 a.m. Monday.”
Shaiken said often during a strike both sides stay away from the table for a few days or call in a mediator.
“Second, the letter that Terry Dittes sent saying this is the first serious proposal, otherwise we might have had a settlement,” Shaiken said. “That’s saying what you’re proposing here, we could perhaps use as the basis of a settlement.”
The cost of a strike is hard on both GM and the UAW workers, who earn a strike wage of $250 a week.
Moody’s lead GM and auto analyst Bruce Clark said: “GM’s ability to contend with a short-duration strike (no more than one to two weeks) is comfortably supported by its 77 days of U.S. inventory, $17.5 billion of automotive cash, and $16.5 billion available under its credit facility. Beyond the initial one to two weeks, the financial burden of a strike will become more material and the prospects of a contract that avoids erosion of the company’s current competitive position is less likely.”
Likewise, Credit Suisse analyst Dan Levy said the impact of lost production alone will cost GM about $50 million each day the strike continues.
For the duration of the strike, the Teamsters union said it is honoring the UAW’s picket lines. So the approximately 1,000 Teamsters who transport GM vehicles will not be hauling them to dealerships. The Teamsters said that represents a significant portion of GM deliveries.
More: Biggest issues facing UAW, Detroit 3 as contract deadline nears
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The two sides have settled just 2% of the UAW’s “hundreds” of proposals, said two people briefed on the talks. Nearly a dozen major sticking points remain to be resolved.
In a letter to members Sunday, Dittes said a strike could have been avoided had GM presented its first substantive proposal sooner.
“We are disappointed that the company waited until just two hours before the contract expired to make what we regard as its first serious offer,” DIttes wrote. “Had we received this proposal earlier in the process, it may have been possible to reach a tentative agreement and avoid a strike.”
A spokesman for GM declined to comment on any specifics around bargaining.
Read more: ‘Pray for us,’ UAW hourly worker urges on Day 1 of the GM strike
He referred to GM’s statement Sunday: “We presented a strong offer that improves wages, benefits and grows U.S. jobs in substantive ways, and it is disappointing that the UAW leadership has chosen to strike at midnight tonight. We have negotiated in good faith and with a sense of urgency. Our goal remains to build a strong future for our employees and our business.”
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Union leaders voted early Sunday for its 46,000 UAW workers across GM’s 55 facilities in 10 states to strike at midnight. Dittes’ letter told members the remaining issues are:
Wage progression for new hires
Health care and prescription drug benefits
Skilled trades issues
“The treatment of temporary workers.”
In the letter, Dittes said, “We are willing to meet as frequently, and for as long as it takes, to reach an agreement that treats our members fairly.”
In its statement to the media, GM offered an outline of its offer to the UAW:
More than $7 billion in investments and more than 5,400 Jobs.
Solutions for assembly plants in Michigan and Ohio scheduled to be idled.
Introduction of all-new electric trucks.
Opportunity to become the first union-represented battery cell manufacturing site in the U.S.
“Best-in-Class” wages and benefits:
Wage or lump sum increases in all four years
Improved profit sharing formula
Ratification payment of $8,000
Retain nationally leading health care benefits
New coverage for autism therapy care, chiropractic care and allergy testing
While it appears to be detailed, it left out a lot of detail. Key issues not mentioned in GM’s public description of its offer:
Creating a path for temporary workers to become permanent.
Eradicating the two-tier wage system by shortening the time it takes for a new hire to reach the same pay as someone hired before 2007.
Specifics on health care costs. Crain’s Detroit Business reported Monday that GM’s initial contract offer called for UAW workers to pay 15% of their health care costs. The national average is 28%. But the UAW rejected it and the offer dropped down to the 3%-4% the workers currently pay, sources say.
Besides the issues needing to be resolved, there are many unknowns facing carmakers that make it reaching a new contract quickly, a bit challenging.
“They’re facing much higher costs of health care, and that’s one of the contentious points in this negotiation, but also the trade impacts are costing them money, they don’t know what the new terms of trade will be in North America because USMCA has not yet passed, we’re waiting to see if there’s going to be new tariffs on cars and parts … we don’t yet know the fuel economy rules for 2021,” Kristin Dziczek with Ann Arbor’s Center for Automotive Research said Monday morning on NPR. “This negotiation is looking for certainty for the next four years for these workers.”
The strike does not include Ford Motor Co. and Fiat Chrysler Automobiles, whose UAW contracts were extended while the union tries to negotiate a deal with GM that would be a template for talks with the other two companies.
But at midnight Saturday, UAW-represented janitors who work for contractor Aramark went out on strike at five GM facilities over their contract dispute. Union insiders say the Aramark contract would likely need to be resolved around the same time as the GM contract, otherwise one side or the other might face crossing the picket line to return to work.
More: ‘Pray for us,’ UAW hourly worker urges on Day 1 of the GM strike
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What they know
Local union presidents who attended the UAW’s National Council meeting Sunday in Detroit, which voted unanimously to go on strike, said Dittes did not offer them details of GM’s offer or outline specific sticking points.
In GM’s proposal, besides offering $7 billion in new investments in the United States that would create about 5,400 jobs over the four-year life of a new contract, the company said it had “solutions for unallocated assembly plants in Michigan and Ohio.”
That’s a reference to GM’s announcement in November 2018 that it would indefinitely idle four U.S. plants. It “unallocated” product at Detroit-Hamtramck and Lordstown assembly plants and transmission plants in Warren and Baltimore. Of the four, only Detroit-Hamtramck continues to operate.
More: Detroit-Hamtramck workers want plant to get more product, temps to be permanent
Sources familiar with the talks said the proposed solution for Lordstown is to make part of the sprawling factory in Ohio into a battery cell manufacturing site. GM is also in talks to sell the plant to a group backed by electric-truck maker Workhorse. Sources say that offer is still in play.
“I read the statement that General Motors put out. As far as possibly doing something with batteries in Lordstown, our goal remains the same: That they allocate a new vehicle for the plant to build,” said Tim O’Hara, president of Local 1112 in Lordstown. “That remains our goal.”
GM had built the Chevrolet Cruze subcompact car in Lordstown until earlier this year. GM said it was focusing on SUVs and pickups because consumers’ preferences have moved away from small cars as gasoline prices remain low.
O’Hara said the UAW bargaining team knows the specifics of the proposals and counterproposals but has not shared it with him. He has a lot of questions about GM’s proposed solution for Lordstown.
“For our people to get their pensions, they have to remain GM employees, so it’s unclear if GM’s plans happen at Lordstown, would people be working for General Motors?” said O’Hara. “Or Workhorse? Or Lordstown Motors? There are too many what ifs for us to be excited about it. Our hope is for GM to allocate other products.”
As for Detroit-Hamtramck, sources say it would likely build GM’s future electric truck or possibly more electric vehicles. But it is also unclear what scale that would provide the plant and how many jobs, other than it is part of the 5,400 jobs GM referenced in its media statement.
The Warren and Baltimore transmission plants remain without proposed products at the moment, a source said.
On Monday, Michigan Gov. Gretchen Whitmer handed out doughnuts to GM UAW workers at GM’s Lansing Grand River plant and later tweeted her support for the union.
Also, U.S. Rep. Debbie Dingell, D-Dearborn, issued a statement of “standing in solidarity with UAW workers in their fight for fair wages, health care, pensions and strong benefits. Through thick and thin, UAW workers have devoted themselves to building quality product. Now GM must demonstrate their commitment to the hardworking men and women who have given everything to build for GM’s success. It’s time for both sides to sit down and work out an agreement.”
Contact Jamie L. LaReau: 313-222-2149 or email@example.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.