GM Can’t Shed Labor Trouble

GM Can't Shed Labor Trouble
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After decades of being the UAW’s toy, General Motors top management must have thought they’d finally rid themselves of the routine blackmail the United Auto Workers have played on the company since the late 1960’s. At vast expense – perhaps fatal expense – the company paid billions and billions to shed workers and accumulated liabilities, culminating in the VEBA deal that was part of the contract reached only months ago with the unionized work force.

But, no. All GM did was shift the suicidal attack of the United Auto Workers to a different front: the suppliers.

Bent on organized self-destruction, the United Auto Workers is now challenging GM indirectly, through attacks on its suppliers and attacks on its individual plants.

The main front in the UAW’s battle is a company called American Axle. The union has struck that company because it has had the temerity to suggest that the UAW should cut about the same deal with them that it did with GM, Ford, and Chrysler.

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Of course, without axles, manufacturers don’t build vehicles and GM is captive to American Axle, at least for its big SUV and truck lines. But the company also makes essential brake parts for other GM vehicles, including the new and hot-selling Malibu.

Though the American Axle strike has caused production interruptions at various GM plants, the lost production to date has mostly been in lines, large trucks and SUVs, in which GM doesn’t mind losing production. GM has, consequently, made a point of distancing itself from the supplier strike. But now, because American Axle also makes other components, such as brake parts, that are used in some of GM’s hotter selling new models, including the Chevy Malibu, the strike is threatening to impact GM in a way that could cause real pain.

It’s another example of past GM decisions which haven’t worked out too well. American Axle was, like Delphi – a company still struggling to emerge from Chapter Eleven bankruptcy – once a part of GM itself. So, GM does not have control over the company or the company’s production and the company does not have the benefit of GM’s larger bargaining power with the union.

Still, American Axle appears unwilling to cave to the UAW. The company already produces products in Mexico and has bluntly told the UAW that if it continues the union’s reckless demands, the company will simply move the remaining U.S. production to that country.

The UAW, for some unaccountable reason, however, seems determined to fight with American Axle precisely the fight it elected not to have with the major automakers, and with other parts suppliers, such as Dana, as well.

Meantime, GM estimates that it has lost production of 80,000 vehicles and that the strike is costing it $890 million per month, to date. If the effect of the strike cuts into production of more GM vehicles – and it has already resulted in multiple plant closings due to parts shortages – it could, in the short term, end up costing GM vastly more.

But, in the end, it will be the union that will pay. GM may briefly lose some production, but the UAW will permanently lose its members jobs.

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