Why did they bother?
Less than 48 hours after calling a strike against General Motors, the United Auto Workers called it off. At 4 a.m. Wednesday morning, UAW President Ron Gettelfinger announced that the union had reached a “tentative” agreement with GM, ending the strike. It is “tentative” because it must still be ratified by a majority of the GM union members.
The contract terms being reported seem to follow closely the lines of the GM position, though the details remain vague and it is impossible to calculate how much it is going to benefit either side. It is anticipated, however, that the UAW will expect similar terms from Ford and Chrysler.
Agreement in such a short time is going to confirm the view taken cy some analysts, who saw the strike as a stunt to make union leadership look tough for the members, a public relations move designed to sell union members on a give-back contract.
Contract details still have not been fully outlined, but here’s what the Detroit Free Press is reporting that it includes:
As predicted, a VEBA that shifts health care costs for retired workers off GM in exchange for a lump sum payment by the company. The amount of that payment has not been stated and, of course, is a key aspect of the agreement. There was also no indication about whether the company would retain responsibility for additional funding if health care costs increased more rapidly than projected.
- No wage increases. No surprise, there.
- $3,000 “signing bonus” for workers. No further information on that, either.
- A “two-tier” wage and benefit scale for new hires. This is something the UAW had accepted in contracts with auto suppliers, but had opposed at GM and the other automakers. It is not, however, a dramatic change because the union had previously agreed to a category of “temporary” workers who were on a lower tier of pay and benefits.
- A new “two-tier” pay scale for current workers holding “non core” jobs, generally expected to mean non-assembly line jobs. Currently, janitors are paid the same scale and benefits as line workers. GM has wanted either to outsource those jobs to subcontractors or pay less to the union workers holding them. This has been a key issue for the union and, though the devil is in the details, looks like a win – a big one – for GM.
- A special attrition program designed to eventually eliminate GM workers who fit into the new lower-tier “non core” job category. Details are, again, unclear. But, it sounds like it’s a plan to pay lump-sum severance packages to non-core workers who leave the company.
- Lastly, quoting the Free Press, “the possibility of the automaker maintaining the same level of its U.S. manufacturing workforce.”
At least on the surface, that last point makes it look very much like GM got what it wanted in this contract. In announcing the strike, Gettelfinger had explained that the issue was GM’s refusal to bargain over “job security” for UAW members. Before the strike, Gettelfinger and other union officials had publicly stated their first priority was job security.
The word “possibility” suggests that there is not a firm, by the numbers, commitment from GM on this issue. It may be that there has been a contingent commitment made, one that obliges the automaker to retain domestic production if certain targets are met. If so, that would seem to give the automaker most of the control.
It remains, of course, to be seen whether this contract will cut the costs of GM’s domestic production enough to make it profitable and free up enough cash for GM to invest in new models that will be competitive in the North American market. GM will certainly have no excuses with this contract. If they cannot make and sell cars profitably under this new contract, it will be clear that they will never be able to do it.
The more immediate question, however, is whether the members will ratify it. UAW members are not going to like this contract. While public sentiment, in both the nation and Michigan, has heavily favored the automaker, with the UAW frequently derided for wanting to live in the past, the only viewpoint that matters is that of the union’s members. They have been very suspicious about both GM and their own leaders. The culture of the union has long been based on antagonism to the company and the notion that, were it not for the union, workers would all be victims of the greedy and overpaid management.
Acceptance by the union of a second tier of pay and benefits for current workers is going to be very controversial among members.
On one hand, it pits one group of workers against another: those whose pay is cut versus those for whom it is preserved. Even those whose jobs are considered “core” will certainly realize that once the principle of two pay scales is adopted, they could be next.
Ultimately, though, there may be enough of a collective sigh of relief among members that the contract is ratified. A vote of more than 50% of members is all that is required.