Why the deal for striking GM workers is hardly a victory

A striking General Motors employee pickets outside the GM Lansing Delta Assembly plant for on October 16, 2019, in Lansing, Michigan. | Bill Pugliano/Getty Images

They didn’t get the one thing they really, really wanted.

The United Auto Workers union is trying to persuade its members to approve a tentative deal reached last week with General Motors. If a majority votes for it, then 48,000 workers will end their nearly six-week strike and return to work next week.

Both sides are under intense pressure to sign a deal. General Motors is losing as much as $90 million a day, and thousands of auto workers are draining their savings, having been out of work since September 16.

The union recently released details of the deal, and while it’s not terrible for workers, it’s hardly a victory. In fact, the tentative four-year contract would give striking workers four small wins and one major loss.

“This is not a slam dunk by any means,” Art Wheaton, a labor relations professor at Cornell University, told me. “No one is going to be running back to work excited about what they got. But it’s something you can live with.”

The strike surfaced a decade of employee frustration with the company, which severely cut back benefits and pay for workers during the Great Recession. Once the automaker began profiting handsomely, employees felt jilted. Unfortunately, the new deal does little to change that dynamic.

Four small wins for workers

  • Pay raises: Workers are guaranteed a 3 percent pay raise and 4 percent lump sum increase in alternating years. That’s not great, considering that employees got the same thing last time they negotiated a contract in 2015, without going on strike. One big difference is that GM agreed to lift the $12,000 cap on profit-sharing, so there’s no limit to the cut workers can get from GM’s profits. Right now, they each get $1,000 for every $1 billion the company earns.
  • Factory investments: The Detroit-Hamtramck factory was one of four slated for closure before the strike began. It will now stay open, and GM will build electric trucks and vans there. That’s a $3 billion investment in 2,225 jobs. The company will also invest $1 billion in two other factories — one in Tennessee and another in Michigan — to build mid-size SUVs.
  • Temps and transitional workers: There is now a process for temporary workers to become permanent employees and for newer hires to earn the full pay rate in less time. That top wage rate was increased from about $30 to $32 per hour.
  • Health care costs remain the same: The cost of workers’ health care plans, among the lowest in the nation, was left untouched. The company had announced plans to increase premiums, but backed down during the strike.

Permanent workers will also get an $11,000 signing bonus, and temporary workers will get $4,500. This isn’t really a win for workers. It basically covers the wages they lost during the strike.

All in all, the massive work stoppage did little to move the needle for employees.

One major loss for workers

Union negotiators were unable to get GM to move car production from Mexico to a shuttered factory in Ohio. The fate of the Lordstown, Ohio, plant, which once produced the Chevy Cruze, was perhaps the most sensitive issue on the table. Even President Donald Trump had a stake in the outcome.

General Motors caused an uproar in November when it announced plans to close up to five factories in the US and Canada and cut more than 6,000 jobs in the US. One of those factories was the Lordstown plant. It was terrible news for the 1,400 workers who have since been laid off (several hundred of them have accepted transfers to other factories).

Trump was also reportedly furious about the decision and threatened to cut electric car subsidies for GM vehicles. The president was upset because he promised Ohio workers during a rally in 2017 that he was going to bring factory jobs back to the area. That didn’t happen. Instead, the company ignored his demands and closed the Lordstown plant.

Now GM executives have promised to open an electric car battery factory near the Lordstown plant. That’s not what the union wanted, because it would only employ a few hundred people at lower wages.

The UAW wanted GM to build a new car in Lordstown, even if it meant moving the assembly of the Chevrolet Equinox, Blazer, and GMC Terrain SUVs from a factory in Mexico. But with labor costs so much cheaper in Mexico, GM leadership was unwilling to budge.

The forces of globalization proved to be stronger than the power of collective bargaining.

The strike is hurting both GM and striking workers

The strike has had a huge effect on the company’s bottom line. It has essentially stopped production at more than 30 GM factories and slowed production for auto parts suppliers in the US and Mexico. That’s costing GM anywhere from $50 million to $100 million a day from lost factory production.

Thousands of non-union factory workers in Mexico and the US have been temporarily laid off as a result. Meanwhile, car dealers are struggling to get replacement parts to fix vehicles, forcing some customers to wait weeks for service.

These losses are climbing by the day, writes Cristina Benton, director of marketing and industry at Anderson Economic Group, a Michigan research firm specializing in the auto industry. The firm estimates that GM has lost $1.5 billion during the first five weeks of the strike, and the costs will keep going up as they impact more dealers and parts suppliers.

Workers are also getting hit. AEG calculates that workers at GM and its suppliers have lost $835 million in wages in the past month they’ve been on strike. GM workers are getting a $275 weekly stipend from the union — hardly enough to pay all their bills. In Warren, Michigan, GM employees are collecting food, diapers, and baby formula to help striking workers get by.

This is creating a lot of pressure on workers to take whatever deal they can get. Some of the UAW affiliates have already voted on the contract, and most of them have voted in favor of the deal, according to the Detroit Free Press.

The union will announce the final results late Friday. If the deal goes through, employees will be back at work next week.