UAW Initiates Work Stoppage amid Breakdown of Negotiations with General Motors (NYSE:GM)

Khemraj Singh - September 16, 2019

On Sunday night, the United Auto Workers union initiated a strike against General Motors (NYSE:GM). Approximately 46,000 workers at over 50 GM facilities downed their tools for the first time in 12 years. Notably, the work stoppage came into effect after UAW and GM failed to agree on a new labor deal.

Putting profits ahead of employees

Before the strike was called, UAW and GM were engaged in negotiations to protect workers and to negotiate a pay rise. The last time UAW and GM negotiated terms for workers was in 2015 and it ended in a win for the workers. However, the environment is different today with issues like the US-China trade war digging into GM’s sales. Further, GM is facing tough competition from ‘new boys’ like Tesla and Waymo.

Nonetheless, the biggest sticking point in the latest negotiations is GM’s idling of four factories across three states. As a result, UAW accused GM for letting down workers who helped to turn the company around after coming out of a major decline. According to UAW officials, GM is putting profits ahead of employees. “We are united in our efforts to get an agreement our members and their families deserve,” said Terry Dittes, UAW Vice President.

It is a lose-lose situation

In addition to opposing the closure of the four factories in Maryland, Ohio, and Michigan, UAW members are demanding a higher hourly wage ranging from $17 to $30. Further, the new contract should retain the generous healthcare coverage, according to UAW demands.

However, analysts think that GM might be unable to meet such demands given its plans to cut labor costs. In the just expired contract, UAW workers only pay 3% of their healthcare costs and GM shoulders the rest. Comparably, non-UAW workers pay between 20% and 30% in copay. According to the Center for Automotive Research, healthcare costs are quite high and as a result, GM and other automakers “are pushing to bring benefits and salary for union members closer to those of non-members.” Resultantly, analysts think that the situation before GM and UAW workers could be lose-lose.

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