UAW tentative deal with GM delivers gains — raises, $9B in investments
Detroit-Hamtramck Assembly paint shop-repair worker Scott Ferguson talks about the 31-day UAW strike Wednesday afternoon, October 16, 2019. The Detroit News
The United Auto Workers’ month-long strike against General Motors Co. could be nearing an end after they reached a proposed tentative agreement Wednesday that is expected to deliver base-wage increases, uncapped profit-sharing and other gains even as three U.S. plants are likely to be shuttered.
Two sources familiar with the situation said the agreement follows the broad contours of the proposals GM publicly detailed twice over the last month. It is expected to include at least $9 billion in new investment, the creation of 9,000 jobs, preserved health insurance benefits without increases to out-of-pocket costs, ratification bonuses of $11,000, uncapped profit-sharing payouts, 3% base-wage increases in two of the years and 4% lump-sum bonuses in the other two years of the proposed four-year contract.
Under the proposed deal, temporary workers — now about 7% of GM's hourly workforce — would become permanent employees after three years, one of the sources said, answering a concern widely voiced by the UAW and many of its members. Temporary workers also would receive $4,500 ratification bonuses.
The agreement also is expected to confirm the wind-down of three plants identified last November for closure, the people said. Those plants include Lordstown Assembly in northeast Ohio, Baltimore Operations in Maryland and Warren Transmission in southeast Michigan. Detroit-Hamtramck Assembly would continue to operate, building a new electric truck.
The more than 48,000 GM-UAW employees, including 17,000 in Michigan, have been off the job for 31 days — the longest national strike against GM since 1970. The work stoppage, which is not yet over and potentially could continue for another two weeks, is estimated to have cost the automaker more than $1.5 billion in lost profits and tens of thousands of affected workers hundreds of millions in lost wages.
The potential resolution to the strike comes amid the years-long federal investigation into union corruption that has charged 11 individuals and convicted nine, including a retired UAW vice president. The continuing probe also has implicated UAW President Gary Jones and his predecessor, Dennis Williams, and included coordinated government raids on their respective homes. Neither of them have been charged.
About 200 local union leaders representing GM employees are expected to convene Thursday in Detroit for a national council meeting to vote on whether to send the tentative agreement to the UAW membership and when to end the strike.
"It's been tough on everybody here," Victor Felice, 55, said Wednesday outside the Detroit-Hamtramck Assembly Plant while donning a poncho and carrying a "UAW on strike" sign in lieu of an umbrella. "We've been five weeks without a check." He said he was prepared for the walkout, "but not for it to last this long."
In a letter to UAW members, Vice President Terry Dittes told UAW-GM members to continue picketing until after the national council meeting scheduled for 10:30 a.m. Thursday in the Ambassador Ballroom of the Marriott Hotel in the Renaissance Center. Then they will receive further instructions.
“The number one priority of the national negotiation team has been to secure a strong and fair contract that our members deserve,” Dittes said in a statement. Out of respect for the members, the union said it would refrain from commenting on the agreement's details until Thursday's gathering.
Added Jones, the union's president: "I could not be prouder of our brothers and sisters, our National Negotiators, and the National Council as they continue to fight one day longer to secure the best deal for our members."
GM in a statement confirmed the proposed tentative agreement had been reached and that additional details "would be provided at the appropriate time." The company's shares closed up 1.1% Wednesday while major market indexes were down. GM shares are down nearly 6% since Sept. 13 before the strike began.
Job security, product allocation and decreasing an eight-year window for permanent new hires to reach the top of the pay scale were some of the final issues being hammered out, along with the economics of the deal. The union and its members have said health care, wages, job security and securing a pathway for temporary workers to reach permanent seniority were some of their top priorities.
The council is expected to review all the details of the proposed tentative agreement and then vote on whether to send the deal to the membership, said Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research. The council also will vote on whether members will stay on strike until a new contract is ratified.
It generally takes about two weeks for the local leaders to educate their membership on what's in the agreement and for voting to take place in locals around the country, Dziczek said.
“It is more painful but may be more prudent to continue the strike just in case it doesn’t ratify,” she said. “If there’s any thought at all that the members might not vote overwhelmingly in favor, it maintains their leverage if they stay out on strike while they consider the tentative agreement.”
GM has lost more than $1.5 billion in profits because of the strike, East Lansing's Anderson Economic Group said Wednesday, though some Wall Street analysts have said it could be more than $2 billion in pre-tax earnings. Thousands of affected workers in Indiana, Michigan, Missouri, Ohio and Texas have lost more than $835 million, according to the East Lansing firm. It also estimates lost federal income and payroll tax revenue on wages alone total $313 million and that Michigan has lost $18.5 million in income tax revenue.
The UAW chose GM to set the pattern for contracts with the Detroit Three after it posted $27.5 billion in profit over the past four years and identified last November the four U.S. plants to be "unallocated," a first step toward plant closures that the union considered a violation of its contract.
At least one of the plants GM plans to close under the proposed deal has a potential buyer. Lordstown Motors Corp. is a newly formed electric vehicle startup backed partly by Cincinnati-based Workhorse Group Inc., another electric vehicle startup. It wants to use Lordstown Assembly plant as its headquarters, research and manufacturing site for an electric truck it plans to call the Endurance.
GM does plan to build a battery-cell manufacturing plant as a part of a joint venture in northeast Ohio's Mahoning Valley, home to Lordstown. The union-represented facility would be part of its promised investment in the proposed agreement, two sources familiar with the situation said, but it would not be specifically included in the union's master agreement with GM.
Negotiators for both sides made progress over the past weekend after a tumultuous press war the week prior. The automaker and UAW have been in talks since mid-July. Discussions intensified when the two sides failed to reach a tentative agreement before the Sept. 14 contract deadline, and the union ordered a strike.
Since then, a number of proposals had been shot down. A proposal from the automaker on Oct. 7 included higher wages, secured the union's health care benefits and gave temporary employees a path to permanent employment, GM said.
A counterproposal from the union included "all of your outstanding proposals that are at the main table and unsettled," Dittes wrote in a letter to local union leaders Friday.
The tentative agreement comes after GM CEO Mary Barra and President Mark Reuss joined negotiators Tuesday morning at the bargaining table for the first time.
The UAW-GM strike isn't the only walkout the union is overseeing as it works through the negotiation process with two other companies: Aramark Corp. and Mack Trucks Inc. The UAW's 850 members employed by Aramark, which provides maintenance at five GM facilities — Hamtramck, Warren, Flint, Grand Blanc and Parma, Ohio — have been on strike since Sept. 15.
More than 3,600 UAW members employed by Mack Trucks walked off the job Sunday over issues including wage increases, job security, wage progression and health and safety.
Staff Writer James David Dickson contributed.