General Motors (NYSE:GM)
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6 Months : From Jul 2019 to Jan 2020
By Nora Naughton and Mike Colias
The United Auto Workers will continue to picket General Motors Co.'s U.S. factories until workers have approved a new labor deal, prolonging a costly nationwide strike that is already the company's longest in decades.
In a rare step, a council of union-hall leaders meeting in Detroit voted to extend the walkout, in its 32nd day as of Thursday. The vote came after negotiators reached a tentative agreement with GM Wednesday for more than 46,000 UAW-represented workers at the company's U.S. facilities. Typically, when bargainers reach a deal, UAW leaders call off the strike.
The union's last contract with GM expired in mid-September, which left members without a labor agreement to work under if they had returned to work.
GM's hourly workers must still ratify the proposed four-year contract through a majority vote, a process that is expected to take a little over a week, lengthening a work stoppage that analysts estimate has so far cost the company $2 billion or more in lost earnings. UAW members at dozens of GM plants, parts warehouses and distribution centers across the country will start voting on the proposed contract Saturday.
GM, in a statement Thursday, said it encourages the UAW to move as quickly as possible through the ratification process, so it can resume operations.
The strike -- one of America's largest private-sector walkouts in years -- has caused parts shortages at dealer repair shops, stifled the auto-parts supply chain and led to temporary layoffs for more than 10,000 non-UAW factory workers at GM in the U.S., Mexico and Canada.
The decision to lengthen the walkout comes even as the UAW scored several wins on wages, health care and temporary workers in the new labor accord. But GM will move forward with plans to close three idled U.S. factories, including a plant in Lordstown, Ohio, that President Trump and UAW leaders had pressed the company to keep open. GM intends to sell the Ohio factory to a startup electric-truck builder.
Ratification of the new contract isn't guaranteed, and rank-and-file members could vote down the first proposed agreement as Fiat Chrysler Automobiles NV factory workers did in 2015.
The agreement struck by union and company bargainers Wednesday will move newer workers to the top wage in four years rather than the eight years now, provide wage increases and lump-sum bonuses of 3% to 4% in each year of the contract and give temporary workers full-time status after three years, according to details made public Thursday.
The proposed contract also includes a $11,000 bonus for full-time workers if the deal is ratified, as well as a $4,500 signing bonus for temporary workers, more than double their bonus in 2015. The UAW succeeded in holding the line on health care, with the 3% contribution workers pay for their benefits unchanged.
While analysts say the deal is likely to increase GM's labor costs, the contract would let GM trim excess factory capacity in the U.S., long a drag on its bottom line.
UAW leaders had also pressed GM during talks to move more factory production from Mexico to the U.S., but no such commitments were made in the final deal.
Missing from the UAW's contract summary was a breakdown of the money GM will invest in U.S. factories, which the union has made sure to highlight in past contract deals. As part of this agreement, GM has pledged roughly $7.7 billion in new investments for its U.S. factories, creating or preserving around 9,000 jobs, a UAW spokesman confirmed.
Kristin Dziczek, an economist and labor specialist at the Ann Arbor, Mich.-based Center for Automotive Research, said she was surprised the UAW didn't provide details on the new company investment. "That has been how they convey job security to workers," she said. "I don't know how that will go over."
The UAW spokesman declined to comment on why GM's investments weren't included in the summary.
Several GM workers said they were underwhelmed by the details released Thursday on the new labor pact. It just seems like they threw a bunch of money at us and expected us to sign off on it," said Greg Volker, 39 years old, who works at GM's factory in Spring Hill, Tenn.
Others said they wanted more clarity on the language around temporary workers.
"They need to explain it better," said Satoria Kemp, 27, a temporary worker at a GM plant in Flint, Mich., who believes the new contract could make her permanent in January but wasn't sure yet. "They can be very tricky with their words."
The factory cuts are central to a restructuring plan GM laid out last year, aimed at boosting cash flow by $6 billion annually. A fourth plant that GM had slated for closure will remain open, eventually to build an electric pickup truck, people close to the talks said.
"We see the agreement to close three out of the four plants initially targeted as a 'win' for GM, keeping their restructuring plan on track," said Jefferies analyst Philippe Houchois in an investor note Thursday. Still, any increase in labor costs for GM will likely be replicated at Ford Motor Co. and Fiat Chrysler Automobiles, with the UAW bargainers seeking to use the GM contract as a template to reach similar agreements. GM shares fell 1.3% Thursday and have fallen about 6% since the strike began.
--Ben Foldy contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
October 17, 2019 18:59 ET (22:59 GMT)
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