GM has tentative deal with UAW, though strike may continue

Strike has cost automaker about US$2 billion inearnings
By David Welch
||Last Updated: 10/22/2019
Labour strike
If the UAW decides to continue the strike until the deal is ratified, the union may be pressured to expedite the process, said Art Schwartz, a former GM labour negotiator. Shutterstock

DETROIT (Bloomberg) — General Motors (GM) and the United Auto Workers (UAW) have reached a tentative agreement on a new contract, paving the way for a decision Thursday on whether to continue a more than month-long strike.

The accord, announced by the UAW on Wednesday, may bring an end to the union’s first national walkout against the carmaker in a dozen years. The stakes were rising for both sides as the strike entered a fifth week, costing GM billions, forcing workers to live on US$275 a week and denting the economy in Michigan and the Midwest.

“The number one priority of the national negotiation team has been to secure a strong and fair contract that our members deserve,” UAW Vice President Terry Dittes said in a statement. He said the union’s bargaining committee recommends that the GM National Council — comprised of presidents and chairmen of locals around the country — vote in favor of putting the deal up for a ratification vote.

GM confirmed a tentative agreement had been reached, but neither the company nor the union provided details on what’s included in the deal. GM shares rose as much as 2.6 per cent to US$37.22, the highest intraday in two weeks.

Analysts at Bank of America Merrill Lynch estimate the strike has cost GM about US$2 billion of earnings and its striking workers may have lost US$2,000 of profit sharing and as much as US$4,000 in take-home pay. The walkout also become a national political issue, coming up during Tuesday night’s Democratic presidential debate in Ohio, which has lost thousands of auto industry jobs.

If the UAW decides to continue the strike until the deal is ratified, the union may be pressured to expedite the process, said Art Schwartz, a former GM labour negotiator.

“If they keep them out, I’m sure they will speed ratification up,” said Schwartz, who’s now a consultant in Ann Arbor, Michigan. “Usually, it takes about two weeks, but it doesn’t have to, they can do it quicker and I think they would.”

After exchanging blame last week, GM and the union made rapid progress over the weekend. Chief Executive Officer Mary Barra and President Mark Reuss showed up in person at the main bargaining table on Tuesday. And in an early sign a possible deal was in the works, UAW bosses summoned local presidents and chairmen to Detroit for a meeting Thursday.

GM and union officials reached a key compromise on a path to full-time employment for temporary staffers after three consecutive years of work, people familiar with the situation said. The treatment of temps, some of whom have worked at GM for as long as four years, had been one of the most contentious issues standing the way of a deal.

The UAW’s national council will decide Thursday whether to recommend the agreement for a ratification vote and if the strike will continue while members cast ballots.

Getting the new four-year agreement approved by the rank-and-file could be a challenge. GM outraged union workers last year by threatening four U.S. plants with possible closure, though it’s offered to keep at least one of those factories open.

UAW leaders also have credibility problems. President Gary Jones was implicated last month by federal prosecutors in an indictment of a former confidant who conspired to embezzle member dues and spend the money on stays at luxury villas, golf gear and cigars.

Once the UAW’s GM membership ratifies the contract, the union will turn its attention to either Ford Motor or Fiat Chrysler Automobiles. The UAW typically tries to use the first agreement as a pattern for the others. The union extended its contracts with Ford and Fiat Chrysler on Sept. 13 to focus on GM.

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