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GM strike 2019: General Motors could face first strike in 12 years

Contract negotiations between the United Auto Workers and Detroit automakers typically go down to the wire. But this go-round, chances of a walkout at General Motors are viewed as running about even.

“There is with little question a higher probability than in recent years of a strike, which is positively not saying there will be a strike,” Harley Shaiken, a labor relations professor at the University of California at Berkeley, told CBS MoneyWatch. 

GM and the UAW’s current four-year labor agreement expires Saturday at midnight. 

“At that time we will have a statement whether there is a proposed tentative agreement, an extension or a strike. But for now they are still negotiating,” a UAW spokesperson told CBS MoneyWatch by email. 

A GM spokesperson said talks with the labor group are “progressing.”

When negotiations between the UAW and GM started in July, the sides were far apart on issues including wages and job security, Shaiken said. “There’s an unusually restive membership, and UAW leaders now don’t just have to negotiate a contract, they have to get it ratified.” 

The UAW said earlier this month that more than 96% of GM workers had voted to authorize a strike. 

Stagnant wages

Average hourly wages in the U.S. auto industry peaked in 2010 and have since fallen roughly 2%, or 16% when adjusted for inflation, according to Kristin Dziczek, vice president of the industry and labor economics group at the Center for Automotive Research. Senior UAW workers have received two 3% wage increases over that period. 

Along with a boost in pay, the UAW wants to limit the ranks of temporary workers GM can use, a number that this year averaged about 7% of its U.S. workforce. Temp workers are paid as little as $15 an hour. Senior employees hired by GM before 2007 earn between $30 to $33 an hour, while entry-level hires brought in after 2007 start out at about $17 an hour, with an eight-year progression to become a senior worker. 

“You could be on the line earning $33 and the person next to you is making $15 an hour as a temp worker,” said Shaiken, noting that multiple wage levels and statuses can weaken union solidarity.

Preparing to strike

Signals that a strike is a distinct possibility come from both the union and GM, with the UAW preparing its members for a possible walkout and GM increasing its vehicle inventory ahead of a potential production slowdown.

“Historically, when Detroit automakers have a strike, they don’t try to operate the plants as some other industries have sought to do,” Shaiken said. “One thing they can do is increase their inventory — the more cars on dealers’ lots, the longer they can go when a strike kicks in.”

Automakers strive to have at least a 60-day supply of vehicles, and GM currently has a 77-day supply, Shaiken noted. 

The last strike against GM came in 2007 and ended after two days. Since then, American motorists have bought a record number of new vehicles and GM has racked in record profits, repurchasing $10 billion of its stock since coming out of bankruptcy in 2009. 

The UAW is looking for a greater piece of that pie and to fight the closures of four U.S. plants. GM, however, is readying for an economic slowdown in coming years and is resisting UAW efforts that would increase its long-term costs. 

General Motors shutters Ohio plant while promising jobs

GM has said the lion’s share of its investments are made in the U.S., where it has 33 plants operating compared with four facilities in Mexico. 

A federal corruption probe into the union adds another point of tension. FBI raids last month on the homes of Gary Jones, the current president of the United Auto Workers, and his predecessor, signaled a dramatic escalation of a four-year probe into illegal payments. The corruption investigation has so far led to the convictions of eight people. On Thursday, a regional director of the UAW was charged with embezzling union funds as part of the widening government investigation.

“While these allegations are very concerning, we strongly believe that the government has misconstrued any number of facts and emphasize that these are merely allegations, not proof of wrongdoing,” the UAW said in a statement Thursday. “We will not let this distract us from the critical negotiations underway with GM to gain better wages and benefits for the more the 400,000 members of our union.”

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