Howes: UAW strike exacts costs on GM, Michigan — as expected

When two of Detroit’s three automakers emerged from bankruptcy a decade ago, Michigan became the nation’s undisputed leader in vehicle production.

The United Auto Workers strike against General Motors Co., now in its 12th day, illustrates the downside of that proposition. The walkout is costing the automaker $25 million per day in lost profits, the East Lansing-based Anderson Economic Group estimated Thursday.

To date, it says GM has lost $113 million in profits. Striking workers, those at suppliers idled by the strike and small businesses that provide goods and services to the automaker have lost $266 million in direct earnings. And the federal government has lost $68 million in income and payroll taxes.

“As we move closer to two full weeks of a strike,” Brian Peterson, AEG’s director of public policy and economic analysis, said in a statement, "the effect on the economies of Michigan, Indiana, Ohio and Ontario has become acute, with both union and non-union workers suffering significant income losses. Even if the strike ends today, those losses will still be felt.”

All this, of course, is the point of a strike: exact economic pain, create inconvenience and deploy carefully curated rhetoric to sully the company, score PR points and get a better agreement for striking members. What that deal may look like remains to be seen, as both sides quicken the pace of exchanging proposals.

But now's when things traditionally get interesting. Negotiators exchange offers and counteroffers with increasing intensity; bargaining sessions lengthen, eventually morphing into round-the-clock sessions quarterbacked by the powerful UAW president; and confusion reigns, especially amid negotiations complicated by a federal investigation into union corruption targeting top leaders.

Case in point: In interviews with The Detroit News, local union leaders were uncertain how the strike would end; who would send a tentative agreement to the members for ratification — President Gary Jones or the UAW-GM Subcouncil; and whether members would be expected to ratify a tentative agreement before returning to work.

Still, the mere threat of the UAW's first national walkout since 1970 netted remarkable concessions from GM just 26 hours before the strike began almost two weekends ago. The automaker publicly released an outline of its offer to the UAW, signaling how intractable key issues are proving to be.

Before green-lighting the strike, UAW bargainers pocketed the rescue of GM's Detroit-Hamtramck Assembly Plant from closure next year. GM pledged to build a battery-cell manufacturing plant in northeast Ohio's Mahoning Valley to cushion the impact from the closure of Lordstown Assembly. The automaker agreed to raise base-wage rates 2% in two of the contract's four years; to pay lump-sum bonuses in the other two years; to retain 3% co-pays on the UAW's Cadillac health care.  

GM also reversed its plan to discontinue paying health-care premiums during the strike, despite knowing the union's strike fund would shoulder the expenses and ensure members did not go without coverage. The main reason: damaging optics of a Big, Bad GM easily turned into a rhetorical weapon for Democratic presidential candidates and other labor leaders to wield against GM, shredding its reputation further.

Besides dollars and cents, the biggest casualty in a strike like this is truth. Partisans predisposed to believe union complaints or company spin will believe their union complaints or their company spin. The result is few changed minds barring a walkout that stretches from a few weeks to months, which is highly unlikely.

Thundering from Vermont Sen. Bernie Sanders or cutting remarks from AFL-CIO President Richard Trumka about CEO Mary Barra and GM's obligations to its workers who "built, saved and rebuilt your company" don't reshape the hyper-competitive landscape facing GM and a union struggling to manage coming change.

Nor do they reckon with the fact that union-represented auto plants produce just more than half of the cars, trucks and SUVs built in the United States, that the union has failed to organize a single foreign-owned auto plant operating in the South or Midwest, that the continuing corruption crackdown is exposing self-dealing at the highest levels of the union.

Those are reality, too

daniel.howes@detroitnews.com

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.