GM strike, day 16: UAW rejects another offer, submits counterproposal to GM

Breana Noble
The Detroit News

Disagreements over health care, wages and temporary workers separate General Motors Co. and the United Auto Workers, the union said Tuesday on the 16th day of its national strike against the Detroit automaker.

The UAW rejected another "comprehensive proposal" from GM that "did not satisfy your contract demands or needs," UAW Vice President Terry Dittes wrote in a letter to local union leaders Tuesday. The UAW submitted a counterproposal and was awaiting GM's response.

"There were many areas that came up short like health care, wages, temporary employees, skilled trades and job security to name a few," Dittes, director of the union's GM department, said of the offer GM submitted at 9:45 p.m. Monday. "Additionally, concessionary proposals still remain in the company's proposals as of last night."

GM issued a statement after the letter was released stating: “We continue to negotiate and exchange proposals, and remain committed to reaching an agreement that builds a stronger future for our employees and our company."

Neither party shared further details of their proposals. The issues listed by Dittes are mostly the same as those he identified when the union announced on Sept. 15 that its members would go on strike.

"My guess is the UAW is pushing harder, harder on the economic offer in order to justify this lengthy strike to their members," said Colin Lightbody, a former Fiat Chrysler Automobiles NV labor negotiator and president of HR and Labor Guru Inc., a consulting firm. "And GM is likely having no part of it unless the UAW is willing to entertain some of their cost-offset proposals. It appears to be your classic standoff."

Talks between the Detroit automaker and the UAW went until 8 p.m. Tuesday and are to resume Wednesday morning. Negotiations had ended shortly after 10 p.m. Monday. The union had not provided any official updates since all unsettled issues were brought last Wednesday to the "main table." 

"It remains encouraging that both parties are at the table and are both hammering away at getting an agreement," said Kristin Dziczek, vice president of industry, labor and economics at the Ann Arbor-based Center for Automotive Research. 

During a visit to picketers Sunday at the Romulus powertrain plant, UAW Region 1A Director Chuck Browning said creating a path to permanent employment for temporary workers continues to be an area of emphasis. He added negotiators are also pushing for investment in U.S. plants, better product allocation and to keep health care costs low for employees.

The UAW's counterproposal comes as GM idles its assembly and transmission plants in Silao, Mexico. A parts shortage is affecting approximately 6,000 employees, GM spokesman Dan Flores said Tuesday. As the walkout continues to create ripple effects up the automotive supply chain, the strike has furloughed almost 10,000 non-UAW GM employees in Mexico, Ohio and Ontario.

The United Auto Workers strike against General Motors Co. is now in its 16th day. Eric Scharrer, 32, of Davison holds his fist in the air in solidarity while waving an American flag alongside his friend Dell Williston, 32, of Grand Blanc.

The Silao plant assembles the Chevrolet Silverado and Cheyenne and GMC Sierra pickup trucks — popular and profit-rich vehicles for the automaker.

Vacation benefits will cover compensation for the affected workers in Mexico, Flores said. For those who do not have any remaining vacation, they will receive a portion of their pay, he said.

GM already laid off 525 employees at the DMax Ltd. plant in Moraine, Ohio; 700 employees at its St. Catharines Propulsion Plant in Ontario; and 2,000 employees at the Oshawa Assembly plant in Ontario since the strike began.

Wall Street analysts now predict GM will be unable to make up lost production this year because of the strike. During the first two weeks of the work stoppage, GM's losses could total more than $1 billion, J.P. Morgan analyst Ryan Brinkman wrote in a note to investors this week.

The strike could place a $1.5 billion burden on the automaker's free cash flow, Jefferies analyst Philippe Houchois also said in a note, which could limit the automaker's flexibility to make investments. "Even assuming a prompt return to production," he wrote, "tight capacity in key segments suggests GM may not recoup all lost production" this year.

Some production will be recovered in the final three months of the year, J.P. Morgan's Brinkman said, adding: "The automaker will also likely be limited in its ability to add production for vehicles already in high demand or in launch mode (such as its high profit full-size “heavy duty” pickup trucks)."

A GM spokesman declined to comment.

Estimated losses have varied widely since the strike began Sept. 16. Houchois estimated the first two weeks cost GM about $800 million. East Lansing-based Anderson Economic Group pegged losses to the company in the first two weeks at about $113 million.

The sticking points Dittes identified Tuesday consist mostly of fixed costs that compound on themselves. Fixed costs contribute to the $13 per hour per employee more in overall labor costs GM pays than its foreign-owned rivals operating in the United States.

"A competitive labor cost penalty of $13 per hour translates into (a roughly) $5 billion disadvantage for the company over a four-year contract period," Lightbody wrote Tuesday on his blog. "The proposed new economics of this deal will only serve to increase that gap so it is absolutely crucial for GM to negotiate some level of economic offsets in order to improve its competitiveness." 

Additionally, GM faces uncertainty around declining sales, a trade war with China and the time when automakers will recoup investments in autonomous and electric vehicles. But the message of the picket line is that UAW members, especially temporary workers, deserve a greater piece of the profits GM has earned over the past four years.

The UAW argues that the Detroit Three use line workers designated "temporary" for years as though they are full-time employees without a clear path to a permanent, higher-paid position. The starting wages for temporary production employees at GM is $15.78 per hour.

They're meant to be employees who fill in when someone's absent, the UAW has said. Temporary workers make up less than 10% of each of the Detroit Three's total UAW workforce. At GM, they represent 7% of it.

The 46,000 hourly UAW-GM employees on strike — 17,000 of them in Michigan — began collecting their strike checks of up to $250 on Monday. Strike pay is taxed, but taxes are not deducted from the checks. Members pay taxes later when they claim strike pay on their tax returns. The UAW issues a tax form after it has given $600 in strike pay to a member.

In comparison to strike pay, top-paid production employees earn $30.46 per hour, or about $1,218 per week.

It's unclear if a tentative agreement would send UAW members back to work. Members could remain off the job for several more days if a subcouncil of the bargaining committee and local union leaders decides to wait to end the national strike until after UAW members ratify the contract. The walkout already is the longest against GM since 1970, which was 67 days.

The strike is the UAW's first since the Great Recession and GM's bankruptcy in 2009. Now in its third week, it has left a lasting economic impact, experts have said. How much of an impact it has had is expected to be revealed in the months to come.

Staff writer Ian Thibodeau contributed.