Oct 16, 2019

GM and union reach tentative deal that could end strike

Posted Oct 16, 2019 4:15 PM

DETROIT (AP) — Bargainers for General Motors and the United Auto Workers reached a tentative contract deal on Wednesday that could end a monthlong strike that brought the company's U.S. factories to a standstill.


The deal, which the union says offers "major gains" for workers, was hammered out after months of bargaining but won't bring an immediate end to the strike by 49,000 hourly workers. They will likely stay on the picket lines for at least two more days as two union committees vote on the deal, after which the members will have to approve.


Terms of the tentative four-year contract were not released, but it's likely to include some pay raises, lump sum payments to workers, and requirements that GM build new vehicles in U.S. factories. Early on, GM offered new products in Detroit and Lordstown, Ohio, two of the four U.S. cities where it planned to close factories.


The company offered to build a new electric pickup truck to keep the Detroit-Hamtramck plant open and to build an electric vehicle battery factory in or near Lordstown, Ohio, where GM is closing an assembly plant. The battery factory would employ far fewer workers and pay less money than the assembly plant.


GM and the union have been negotiating at a time of troubling uncertainty for the U.S. auto industry. Driven up by the longest economic expansion in American history, auto sales appear to have peaked and are now heading in the other direction. GM and other carmakers are also struggling to make the transition to electric and autonomous vehicles.


Meanwhile, President Donald Trump's trade war with China and his tariffs on imported steel and aluminum have raised costs for auto companies. A revamped North American free trade deal is stalled in Congress, raising doubts about the future of America's trade in autos and auto parts with Canada and Mexico, which last year came to $257 billion.


Amid that uncertainty, GM workers have wanted to lock in as much as they can before things get ugly. They argue that they had given up pay raises and made other concessions to keep GM afloat during its 2009 trip through bankruptcy protection. Now that GM has been nursed back to health — earning $2.42 billion in its latest quarter — they want a bigger share.


If approved, the contract agreement will set the pattern for negotiations at Fiat Chrysler and Ford. It wasn't clear which company the union would bargain with next, or whether there would be another strike.


The union's bargainers have voted to recommend the deal to the UAW International Executive Board, which will vote on the agreement. Union leaders from factories nationwide will travel to Detroit for a vote on Thursday. The earliest workers could return would be after that.


In past years, it's taken a minimum of three or four days and as long as several weeks for the national ratification vote. Workers took almost two weeks to finish voting on their last GM agreement, in October of 2015. Then skilled trades workers rejected it, causing further delays.

"The No. 1 priority of the national negotiation team has been to secure a strong and fair contract that our members deserve," union Vice President Terry Dittes, the chief bargainer with GM, said in a statement Wednesday. The agreement, he said, has "major gains" for UAW workers.


This time around — with a federal corruption investigation that has implicated the past two UAW presidents and brought convictions of five union officials — many union members don't trust the leadership and likely won't want to return to work until they've gotten a chance to vote on the deal themselves.


In August, the FBI raided the suburban Detroit home of UAW President Gary Jones. He has not been charged and has not commented on the raid. Earlier this month, Jones' successor as union regional director in Missouri was charged in a $600,000 embezzlement scheme, and another UAW official pleaded guilty to taking kickbacks from union vendors. Eight other people — including five UAW officials — have been convicted over the past two years of looting a jointly run Fiat Chrysler-UAW training center for blue-collar workers. Another official was charged in September.


There's also no guarantee that the first contract deal with GM will pass. Some workers on the picket lines have said they may not vote for the first offer.


"We're not just going to take the first thing that they give us," worker Tina Black said last month from the picket line at an engine and transmission plant in Romulus, Michigan, near Detroit's main airport.

But Louis Rocha, president of a UAW local in Orion Township, Michigan, said recently that union bargainers have taken strong positions against the company. "I think we're going to be OK," he said of the ratification vote.

The strike had shut down 33 GM manufacturing plants in nine states across the U.S. It was the first national strike by the union since a two-day walkout in 2007 that had little impact on the company.



-----------


DETROIT (AP) — General Motors CEO Mary Barra joined negotiators at the bargaining table, an indication that a deal may be near to end a monthlong strike by the United Auto Workers union that has paralyzed the company's factories.


Barra and GM President Mark Reuss were in the bargaining room early Tuesday, a person briefed on the talks said, but they left later in the morning as committees began work on specific contract language. The person didn't want to be identified because the talks are confidential.

The appearance of two key executives is a strong sign that bargainers are closing in on a contract agreement that would end the strike, which began on Sept. 16.


Another person briefed on the talks said the only issues that remain are faster pay increases for workers hired after 2007, apprenticeships for skilled trades workers, and the specifics of winding down a joint union-company training center. The person also didn't want to be identified because the talks are ongoing.


The union has summoned its national council of factory-level leaders to Detroit for a meeting Thursday billed as an update on contract talks. The group could be assembling to vote on a tentative agreement. It also will decide if workers should return to their jobs before or after they vote on the deal.

"I don't think Mary Barra would have returned unless they were making progress," said Art Wheaton, an auto industry expert at the Worker Institute at Cornell University. "And I don't think they'd have told everybody to return to Detroit on Thursday."


The strike, now in its 30th day, is the longest against an automaker since a 54-day strike in 1998 in Flint, Michigan. That strike cost GM $2 billion. The union also went on a brief two-day strike against General Motors in 2007.


Both sides are under pressure to end the walkout, which has cost GM close to $2 billion in profits and forced workers to live on $250 per week, about one fifth of their base pay. Last week, with the strike dragging on, the union said it would increase strike pay to $275 per week.

Shares of GM rose on news of a potential settlement, closing Tuesday up 2.1% at 36.26.

Negotiators last week appeared to be deadlocked and each side issued letters or statements accusing the other of failing to bargain in good faith. A quiet period began over the weekend and negotiators worked into the night to resolve most of the remaining issues, according to both people briefed on the talks.


A union demand that all vehicles sold in the U.S. be built here apparently has been resolved, but terms are unknown. The company did offer $9 billion worth of investments at U.S. factories, $7.7 billion from the company and another $1.3 billion from joint ventures. The $1.3 billion includes a battery cell factory near Lordstown, Ohio, where GM wants to close an assembly plant.


They also apparently have agreed on wages and lump-sum payments, although the amounts are unknown. A company offer last week would give workers lump sums equal to 4% of their base pay in the first and third years of the four-year contract, with 3% pay raises in the second and fourth years. This would be in addition to annual profit-sharing checks. This year workers got checks for $10,750 each. GM also offered to lift the $12,000 cap on profit-sharing checks. The union also sought sweeter retirement benefits.


After initially trying to cut health care costs, GM agreed to leave benefits and payments untouched. Union members pay 3% premiums while most workers at large companies in the U.S. pay over 30%, according to the Kaiser Family Foundation.


Both sides also have agreed on a path for temporary workers to get permanent jobs. GM had proposed that they become permanent after three uninterrupted years of work, but that was shortened. GM initially offered an $8,000 bonus to workers to sign the contract, but sweetened that to $9,000.


Last week the Center for Automotive Research, an industry think tank, estimated that GM is losing $450 million every week due to production shutdowns. The total loss likely has reached $2 billion. The strike immediately silenced about 30 GM factories in the U.S. and has brought down two plants in Mexico and one in Canada. Parts companies that supply GM have had to lay off thousands of workers.


If there's an agreement, the strike would not end immediately. Bargainers would have to vote on a deal, followed by union officers and regional directors. Then factory-level leaders, including local presidents and bargaining chairmen, also will vote. If they approve it, then this group would also decide if workers would put down picket signs and go back to work. Workers could stay on strike until after all members vote on the contract. That voting could take a week or longer.


But Wheaton said the union might decide to return to work during the ratification vote because temperatures are starting to get colder, and it might not make sense for them to stay on the picket lines.