Howes: Detroit past and future battle in UAW-GM strike
The United Auto Workers strike against General Motors Co., entering its 16th day, is the union’s longest walkout on the Detroit automaker since 1970.
A lot has changed in those 49 years. The union’s 46,000 GM employees are a fraction of the 340,000 who walked off the job for 67 days. Non-union foreign rivals now account for a majority of vehicles sold in the United States. And GM collapsed into a federally induced bankruptcy thanks in part to high fixed labor costs.
A decade later, Detroit’s No. 1 automaker still has the highest hourly labor costs among automakers operating in the United States despite its historic bankruptcy. That's a key reason a tentative agreement to end the strike is proving so elusive: GM wants to narrow the gap with its rivals and the UAW essentially wants to widen it.
What hasn't changed are expectations. In the Old Detroit calculus, GM's strong North American profits and record profit-sharing payouts of the past three years mean the automaker can afford to increase wage rates, to maintain Cadillac health care benefits, to reduce its use of temps and hire more full-time, dues-paying members to manage staffing.
But this isn't Old Detroit anymore. It's dead — or should be, buried by denial and the ignominy of begging Congress and two administrations for taxpayer money to avert the uncontrolled collapse of GM and the old Chrysler Group. Reviving the haggard, discredited thinking that helped precipitate those bankruptcies would be an epic mistake, proof that some people never learn.
Strip away all the jargon about temporary and “in-progression” employees, health care co-pays and wage rates. The UAW-GM bargaining battle is a fight over dollars and cents and the scope of contractual guarantees as the automaker prepares to navigate a cooling U.S. market, trade and environmental uncertainty, flat-lining growth in China, Europe and South America, and the transformational change promised by electrification and self-driving technologies.
The Center for Automotive Research says GM's hourly labor costs are $13 an hour higher than the $50 an hour average for non-union, foreign-owned automakers operating in the Midwest and the South. Rival Ford Motor Co. is $11 an hour higher, and Fiat Chrysler Automobiles NV runs $5 an hour above the average for foreign automakers.
The gap is unsustainable in the hyper-competitive global auto industry. It's also indefensible, a metaphorical slap to salaried employees, to the taxpayers who financed GM's rescue, and to the shareholders looking for evidence the new GM is more disciplined and more realistic than its predecessor.
And it's a major reason GM produces more vehicles in Mexico than any other automaker; why it imports the Buick Envision from China and other models from Germany and South Korea; why it uses more temp workers on its U.S. assembly lines than its crosstown competitors, but a whole lot less percentage-wise than rival Toyota Motor Corp.
Bargaining to curtail, even end, those practices, as the UAW says its wants to do, risks one of two unintended consequences: widening the labor cost gap and reducing competitiveness, or necessitating the use of more temps and more off-shore production in a bid to restrain overall costs.
Why is that so hard to understand? It actually isn't; it's just a set of inconvenient truths that challenges the UAW's basic tenet of "the same pay for the same work." It also upends the assumption that good times should always equate to getting more, more, more at the main table.
As much as union and GM bargainers may agree that the Trumpian political zeitgeist and the presidential political calendar exact a unique price for Detroit's foreign investments, the policy uncertainty on trade and emissions produced by an erratic White House is real. And that promises more uncertainty ahead for the next four-year UAW contract.
That's especially true with the coming wave of electrification. It portends radical change for the production of transmissions, internal-combustion engines and all the relevant parts and subsystems — and the UAW knows it, according to a white paper produced by its research department last year.
"The production of new EV components could shift business and employment to non-auto companies that lack a large U.S. manufacturing base," the paper warned. "This could undermine auto job quality by shifting work to employers with a poor history of labor relations or companies more likely to import components."
It also could increase competition, the relentless force continuing to strain the decades-old UAW-GM relationship to its breaking point.
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.