Howes: UAW leadership struggles to close deal with GM
One month into the longest United Auto Workers national strike against General Motors Co. since 1970, a former senior labor negotiator for a Detroit automaker is floating an obvious question:
“Does the UAW leadership have what it takes to close a deal,” Colin Lightbody, a retired bargainer for FCA, asked in a blog post headline Monday. He’s not sure. And it's safe to say, based on background chats the past few weeks, that not a lot of folks on the outside looking in are, either.
Lightbody's “red flags” include the federal investigation into union corruption, an “ever-changing list of outstanding issues” that appears to be frustrating and confusing the membership, and that “top UAW leaders have never really been to the ‘show’” of national contract talks with Detroit’s automakers.
He sees the union's decision to wage three strikes simultaneously at GM, at Aramark Corp., at Mack Trucks Inc. as at least an implied dilution of leadership attention. And continued signaling that the union could well decide to keep 46,000 GM members on strike between reaching a tentative agreement and a ratification vote signals confidence in leadership's ability to get a deal ratified — or maybe the precise opposite?
Based on the results so far, he’s asking fair questions. This lengthening walkout risks becoming an economic train wreck for GM, for the striking workers, for the Michigan economy, for the Detroit-based industry and for the union's ability to sell itself to would-be members in efforts to organize non-union automakers.
Sure, at least one Wall Street analyst is expressing scant concern, for now, anyway. In a note Monday, Adam Jonas of Morgan Stanley LLC wrote that GM investors are "comfortable" with an extended strike costing billions so long as the result preserves "long-term cost and strategic flexibility."
That remains to be seen. The automaker's unprecedented public commitments to save its Detroit-Hamtramck plant from closure, to build a battery-cell plant in northeast Ohio's Mahoning Valley, to hold health care cost-sharing to a tenth of the national average, to boost ratification bonuses above the previously confirmed $8,000, and to uncap the hourly profit-sharing formula won't come cheaply.
Strikes are intended to hurt, economically speaking. They're supposed to be more costly to the employer than to employees, to make material gains at the bargaining table worth the pain of the picket line and meager strike pay, to secure the long-term interests of employees even at the risk of increasing costs for employers.
Whether those calculations hold remains to be seen. Lost wages are recouped at the bargaining table, not with strike pay. Even if the UAW manages to retain enviable health care coverage, to gain a sweetened profit-sharing formula for members, to secure the $9 billion in capital investment already promised by GM in a pair of unprecedented public affirmations, other downsides loom.
Profit-sharing for 2019, payable next year, is certain to take a hit as U.S. losses from the strike mount. GM shares are down nearly 8% since the strike began last month, hitting shareholders — including the UAW's Retiree Health-Care Trust that owns roughly 7% of the Detroit automaker in the wake of its bankruptcy a decade ago.
Lost production of high-margin vehicles likely will be difficult to recoup the longer the strike lasts, elongating the strike's effect long after it is settled and a new contract ratified. And any corresponding hit to U.S. market share would exacerbate the excess capacity problem GM is trying to address by its controversial decision to move to idle four U.S. plants, including two in southeast Michigan.
Striking is the easy part for the UAW. The hard work for both sides comes in ending a walkout that shows just how little some parts of Old Detroit have changed.
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.