UAW Local 598 members sing during 50th anniversary of 1969 strike at Fisher Body Plant 2 in Flint while remembering he longest strike in GM history. Ryan Garza, Detroit Free Press
Wednesday was the 10th day of the UAW’s strike against General Motors, with costs mounting and thousands of workers at suppliers and Canadian plants laid off.
The UAW said Wednesday afternoon that all proposals had moved to the main table after days of talks going into the evening and then breaking.
A resolution would be welcome on both sides — the strike is the UAW’s longest since 12 days against Chrysler in 1985, according to information from Ann Arbor’s Center for Automotive Research.
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So what does it mean that it’s taking so long to reach agreement?
Just like trying to gauge a jury’s deliberations, no one really knows for sure, say two former labor negotiators for the Detroit Three. One thing is certain after 10 days of talks that end in evening recesses:
“It indicates that they’re not agreeing with each other,” said Art Schwartz, former general director of GM’s Labor Relations. “I don’t think there’s a lot of issues left. But the temporary worker issue is a tough one and the plant issue is another.”
Going home each night
Schwartz is referring to GM’s decision last fall to idle four of its U.S. factories: Detroit-Hamtramck, Lordstown Assembly in Ohio, and a transmission plant in Warren and one in Baltimore.
As for the temporary worker issue, the UAW wants a pathway to make them permanent and give them better benefits along the way. Temporary workers comprise about 7% to 10%, or 4,100, of GM’s U.S. hourly workers. They often do the same work as permanent workers, but for less pay and less benefits, and can remain classified as temporary for many years.
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GM wants to ensure its ability to tap a temporary workforce. Using lower-paid temporary workers saves money and gives GM flexibility to reduce staff when the market slows. Also, using more temps will allow GM to be more cost competitive with foreign-based companies that build vehicles in the United States.
GM’s average hourly labor cost in the United States is $63 an hour — this is not the hourly wage or wages plus benefits paid to individual workers, but rather the sum of all labor costs divided by all hours worked. But Honda, Nissan and Toyota international automakers in the United States spend about $50 an hour, according to the Center for Automotive Research. The Japanese carmakers usually employ more temp workers than the Detroit Three.
With those hot issues, along with UAW members wanting a higher wage increase than the 2% that GM initially offered, a resolution is slow in coming.
“Your signal that they’re getting reasonably close to a deal is when they don’t go home at night,” said Schwartz. “The settlement will usually come in the middle of the night.”
‘Symbolic gesture’
Schwartz retired in January 2010, but he spent 24 years doing labor for GM and has bargained on seven national contracts. Schwartz said he’s been in talks where discussions have gone on all night for several nights in a row. “That’s no fun.”
He’s watched these latest negotiations closely and noted they have been atypical from the start. For one thing, GM’s detailed public statement of what it initially offered the UAW two hours before the contract expired on Sept. 14 was unusual, he said.
But he was not surprised that GM stopped paying health care for striking workers, shifting responsibility to the union’s strike fund.
“The contract expired and there is no obligation to pay for health care,” said Schwartz. “They knew the UAW would pick it up. The members won’t be harmed by this. They’re mad, but more at the symbolic gesture, than the actual event.”
The union has said it is also frustrated that it gave concessions a decade ago as GM headed to bankruptcy and tried to come back. It said workers have never recouped those losses even as the company reaped tens of billions in profit.
Schwartz worked on the 2007 national negotiations between GM and the UAW when the two-tier wage system was put in place. He also worked on negotiations in 2009 when GM entered bankruptcy. He said the union did make some concessions, such as ending the jobs bank and eliminating a cost of living allowance. But, “Nobody took a pay cut, a health care or pension cut, and that is extraordinary in a bankruptcy.”
The UAW did strike GM for two days in 2007, but it was nothing like this strike, said Schwartz.
“There appear to be issues the membership is upset about,” said Schwartz. “GM was hoping to keep bargaining and not have a strike this time, obviously. But the union membership was in that kind of mood. They’re upset by a lot of things and a strike is the result of it.”
Sanders appearance
Meanwhile, Democratic presidential candidate Bernie Sanders appeared at Detroit-Hamtramck.
The crowd outside the plant near I-94 swelled as the senator from Vermont arrived and walked the picket line, much as Sen. Elizabeth Warren, who is also running for president, did on Sunday.
Sanders hoisted a red and white “UAW on Strike” sign as UAW members, media and onlookers pressed in to get a glimpse.
Afterward, he climbed onto an elevated platform and addressed the crowd, thanking UAW members for having the courage to stand up to corporate greed. He referenced GM CEO Mary Barra’s almost $22 million in compensation in 2018, the auto bailout during the financial crisis and the company’s tens of billions of dollars in profits in recent years.
Working people are not looking sympathetically at GM, he said, noting that people are tired of working multiple jobs, seeing healthcare benefits cut and CEOs getting huge compensation packages.
“They’re tired of working in factories for decades and waking up one day and seeing that factory move to Mexico, where people are paid $3 an hour,” Sanders said, as he listed concerns he has with GM. “What the workers here are saying and the workers all over America are saying is, ‘Enough is enough.’”
Sanders said what’s happening in Detroit is happening across the country:
“And what we’re saying to the 1% (is), ‘You cannot have it all. We need an economy that works for working people, not just for billionaires.’”
Pat Fromm of Jackson was among the crowd who came to hear Sanders speak. She’s part of a pro-union family and a retiree from UAW Local 6000, state employees.
“I love Bernie. I’m all in for Bernie,” Fromm said, predicting that GM’s decision on healthcare during the strike would bolster support for workers.
“The company is making huge money, and it’s time to compensate the employees,” Fromm said.
Former UAW President Bob King was also on hand for Sanders’ appearance. He could be seen walking the picket line and autographing a picketer’s sign. He declined a Free Press request to be interviewed.
The pain
The longer the strike lingers, the more intense the pain on both sides and eventually the wider community. Schwartz recalled the 1998 UAW strike that cost GM $2 billion. He said the company can try to make up that lost production in overtime after the strike ends, but that’s expensive too. This current strike is going to hurt GM’s bottom line in the third quarter, he said.
Former labor contract negotiator for Fiat Chrysler Automobiles Colin Lightbody has done the math on what’s at stake for GM. He estimates the automaker stands to save about a $500 million in future annual labor costs.
Lightbody was FCA’s director of labor economics until he retired in 2018. He is now president of HR & Labor Guru Inc., a consulting firm in Windsor. He spent 20 years with FCA and worked on five national negotiations in the United States and seven in Canada with its autoworker unions.
Lightbody said watching these negotiations and the long strike, “There doesn’t seem to be a sense of urgency in getting it done. Typically at this time, you’d be working past 8 o’clock at night. It sounds like both parties are pretty dug in to their positions. With a strike this long and the clock ticking, you’d be combining brain power to come to a solution at this point and it doesn’t seem like that they are so that indicates they’re pretty far apart.”
In part that’s because there’s a lot of money at stake. Lightbody said GM has 47,000 hourly employees, the figure he uses. The UAW and GM said at the outset of the strike that the figure is 46,000. Those workers work an average of 2,000 hours per year, or about 100 million hours worked per year total, said Lightbody.
If GM wants to have 20-25% temps in a new workplace composition and increase the amount workers pay for health care to 15% from the current 3%, that would be worth at least $5 an hour in reducing GM’s labor costs to improve its competitiveness with Honda, Toyota and Nissan.
Sources familiar with GM’s initial offer to the UAW said GM proposed that union members pay 15% of total health care costs, up from the current 3%, and the UAW rejected it. GM then walked back the offer to the 3%.
More: How GM’s profit sharing offer to UAW workers missed the mark
“I don’t believe the UAW would go to the 15%, but there are less intrusive ways of saving health care costs that would translate into tens of millions of savings to the company,” said Lightbody, such as mandatory disease management or “anywhere that you encourage employees to be better consumers of health care.”
“The things that GM is standing firm on, temps and health care, if those are in fact the two issues … some combination of those things could result in a savings of $5 an hour, that’s $500 million a year,” said Lightbody. “That’s a lot of money and that’s why GM is willing to hold out.”
Some analysts have estimated it’s costing GM $50 million to $100 million a day to have its production halted, which means at a 10-day strike, GM breaks even at $500 million.
“At some point, GM may say, ‘Fine we’re going to cut bait and settle,'” said Lightbody. “The UAW will win the battle, but they’ll lose the war because GM will cut costs in different ways and it may mean re-sourcing production over time and using less labor in the process. You’ve got to keep the labor costs competitive. If you don’t, then the cost of labor is too high you have to reduce the number of employees you’re using or move your production. So they may win the battle, but I don’t think they’ll win the war.”
Contact Jamie L. LaReau at 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Eric D. Lawrence contributed to this report.
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