Strike continues as GM workers consider tentative agreement with UAW
Despite reaching a tentative agreement, United Auto Workers members employed by General Motors Co. will stay on strike for another week after local union leaders on Thursday voted to keep picket lines going until a new contract is ratified.
The walkout began 32 days ago — already the longest national strike against the Detroit automaker since 1970, estimated to have cost the company about $2 billion and affected workers hundreds of millions in wages. The UAW said it wants ballot totals from local unions on the tentative agreement by 4 p.m. Oct. 25.
After meeting for more than six hours, the roughly 200 union officials voted to send more than 48,000 UAW-GM employees the agreement that promises permanent jobs for temporary employees, record ratification bonuses and the elimination of a cap on profit sharing.
The proposed contract would give 3% base-wage increases in the second and fourth years of the contract and would pay 4% lump-sum bonuses in the first and third years, according to a union contract summary. A ratification bonus of $11,000 -- which the UAW called a "record" amount -- would be paid to permanent employees, while temporary workers who have worked at least 90 days would receive a bonus of $4,500 for ratification.
Neither UAW President Gary Jones nor Vice President Terry Dittes attended the press conference following the national council meeting. Members will begin voting on the agreement Saturday, UAW spokesman Brian Rothenberg said.
"Ultimately, UAW members will make the decision to ratify the agreement," Dittes wrote in a statement. "Their unity and solidarity brought us to this moment."
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 Jones and his predecessor, Dennis Williams, and included coordinated government raids on their respective homes. Neither has been charged.
Education sessions at local union halls will begin soon to answer members' questions about the deal. The outline shared Thursday with local presidents did not include any information regarding GM's proposed investment in its U.S. plants or future product allocation. GM has committed to $7.7 billion in direct investments, Rothenberg said.
"The union got a lot of the things they were working for," said Kristin Dziczek, vice president of industry, labor and economics for the Center for Automotive Research in Ann Arbor. "They lost three plants and a parts plant, though."
Higher base wage rates likely will increase GM's hourly labor costs, which already are $13 per hour per employee above that of foreign automakers operating in the United States. But GM could save millions from the plant closures. GM had multiple plants running below 80%, the break-even point for a manufacturing plant, in 2018, according to LMC Automotive US Inc. GM used 73% of its overall U.S. capacity.
"You have look to look at the net across what the higher and lower costs out of this contract are," Dzizcek said. Investors did not appear enthusiastic: GM's shares closed down 1.3% Thursday while major market indexes were up. The company's stock has fallen nearly 7% since Sept. 13 before the strike began.
GM said in a statement the agreement reflects its commitment to U.S. manufacturing: "We encourage the UAW to move as quickly as possible through the ratification process, so we can resume operations and get back to producing vehicles for our customers," the company said.
Under the proposed deal, temporary workers — now on average 7% of GM's hourly workforce — would become permanent employees after three years starting Jan. 6, answering a concern widely voiced by the UAW and many of its members. Part-time temporary employees would be converted to regular status starting Jan. 1, 2021, after two years of continuous service. Time worked as a temp would be credited toward wage rates. Temporary employees who work more than a year also would receive some paid and unpaid time off.
Once base-wage increases are paid, top production pay for eligible permanent employees would rise to $32.32 by the end of the four-year contract. Meanwhile, all seniority employees hired prior to the effective date of the 2019 agreement would be eligible for top pay by the end of the four years of the contract, which cuts in half the current time window.
"I am happy they were able to get so much for us this far along and that all of this wasn't done in vain," said Julaynne Trusel, a team leader and picket captain at GM's Detroit-Hamtramck Assembly Plant. "Health care is really important so it's good that's not going to change and the profit-sharing cap removal is really nice. I don't think we've ever been offered that large of signing bonuses."
Additionally, the agreement dissolves the GM Center for Human Resources, a jointly operated training center with the union that is funded by the automaker. The decision comes after the federal corruption investigation found officials misused the funds for bribes and defrauding workers, according to prosecutors. The existing building overlooking the Detroit River will be sold.
The agreement also confirms the wind-down of three plants identified last November for closure. 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.
"It is with sadness that, with this agreement, three of those four facilities will close," the summary says. "But we are pleased that Detroit Hamtramck will remain open with new product." A customer care and aftersales plant in Fontana, California, also would close during the term of the agreement.
The proposed agreement includes a retirement incentive payment of up to $85,000 for employees affected by the closures in Baltimore, Lordstown and Warren. The company also is offering a buy-out up to $75,000 and training assistance up to $8,400.
Health care would remain unchanged with no additional costs to members. UAW-GM members pay 3% of their health care costs, compared to a national average of roughly 28%. The automaker has said it paid $900 million in health care costs for UAW members in 2018.
A $12,000 profit-sharing cap, which had yet to be reached in previous years, has been removed. Employees will continue to receive $1,000 for every $1 billion in pre-tax earnings the automaker makes in North America.
"GM paid a lot to endure that strike, and agreed to very rich contract for its 46,000 UAW workers in the US, but now it has a chance to succeed even when auto sales slow down further" because of the plant closures, Patrick Anderson, CEO of the Anderson Economic Group in East Lansing, said in a statement Thursday.
Anderson estimates an additional week of the strike will cost GM $400 million, UAW members $14 million, and other affected workers nearly $21 million. A typical UAW-GM employee has lost $7,000 over the past month. Lost wages from all affected workers already total more than $835 million.
The union's summary of the proposal does not mention any investment or jobs commitment by GM, but the UAW's Rothenberg said the company has committed to $7.7 billion in direct investments, which includes the electric truck at Detroit-Hamtramck.
"That’s really surprising that’s not in there," Dzizcek said. "Since 2007, GM has been putting that in the highlighter as a way to convey that they are going to put some money into a plant's body shop or build a new paint shop or invest in new product. That is a signal the plant might be around for you to have a job there."
Skilled trades employees, who account for 15% of GM's hourly workforce, would receive $1,000 in tool allowance in 2019 and 2021.
Legacy workers hired before Oct. 15, 2007, who have pensions also will receive a one-time company contribution of $1,000. Additionally, up to 2,000 legacy production employees and up to 60 skilled trades members will have an early retirement option between Dec. 31 and Feb. 28, 2020. They would receive a gross cash payment of $60,000.
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. The union reached a proposed tentative agreement with Aramark on Thursday.
The UAW reached a proposed tentative agreement with the Pennsylvania-based company on Wednesday, a UAW spokesman said. Details were not immediately available. 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 Sarah Rahal contributed.