Cars

UAW Strikes, Potentially Crippling GM

General Motors first United Auto Workers strike in 12 years started this morning, with 46,000 workers set to man picket lines. Additionally, the Teamsters have said they’ll honor the strike in solidarity with their UAW workers and not deliver vehicles to dealerships. So, not only are the plants shut down, nothing will get delivered, which could be just as big of a problem for GM in the short term.

Strike Shuts Down 33 Plants

Credit: Chevrolet

The GM strike shuts down 33 plants and 22 parts warehouses. Even if the strike continues for a few weeks—which we hope won’t be the case, GM has on average a 77-day inventory of vehicles. There are enough vehicles in car banks that there should not be any disruption in shipments to dealers in the short term, but with the 1,000-member Teamsters joining the strike this puts in jeopardy whether deliveries can be made.

Automotive News reports that GM is making public its offers to the union. They outline 5,400 new jobs will be generated, that it will invest more than $7 billion in eight plants in four states, and better profit sharing and benefits. In addition, Gm says it can use the shuttered Lordstown, Ohio, plant to build batteries and the Detroit-Hamtramck plant for electric truck assembly.

Hamtramck currently makes Chevy and Cadillac sedans but is scheduled to close down in 2020. It’s unusual for GM to make any part of its offer public, but this strike is as much about optics as anything else.

GM has been taking heat from many directions including from the president, over it’s shutting down of the Lordstown, Ohio, assembly plant. The plant had been building Chevy Cruze cars. 

President Trump’s tweets chastising GM prompted a one-on-one meeting with GM CEO Mary Barra a few weeks ago. The possibility of a strike has been looming for months.

Strike Comes While GM Sees Record Profits

Credit: Cadillac

Since the bailout in 2010, GM has been reporting record profits while the current union contract, which made concessions as a result of GM’s bankruptcy, was not up for renewal until last night. Though negotiations have been ongoing, the union says GM was not bargaining in good faith and that the two are far apart on many issues.

One of the hot points between the union and GM has been the assembly of vehicles in Mexico. The union has stated that GM could have kept production assigned to Mexican plants in the US. So the hostility by the union is centered around plant closing, assembly being taken out of the country, and that when GM was in trouble the union made concessions. Now that they are healthy the union wants its members to share in the profits.

The last GM strike took place in 2007 and was for two days. Each day of lost production costs GM $50 million in earnings. There seemed to be some room for optimism when UAW Vice President Terry Dittes said that two hours before the strike was to commence GM made what he calls “its first serious offer.” As negotiations are ongoing this morning it is hoped that they can come to terms with the contract and the strike will not be necessary.

Cloud Over UAW

While all of this is taking place there is a cloud over the UAW as a corruption probe by federal investigators have taken in some of the UAW’s highest figures including the indictment of Regional Director Vance Pearson, while implicating UAW President Gary Jones and former president Dennis Williams. Supposedly they racked up tens of thousands of dollars in extravagant purchases at golf clubs and resorts in Palm Springs, California. If true this would be a tough one to explain to both the union members and the general public. 

We hope to have a conclusion of the strike to report soon.