GM inventories falling enough to deal with UAW
GM stocked up on cars and parts before going into negotiations with the UAW, readying themselves for the long haul. Now, the company is starting to make concessions—one of which may affect its chief American competitor more than itself. That one is health benefits.
GM had tried to raise hourly workers’ share of medical insurance from 3% to 15%, but the UAW’s position on that was intractable: they had made other concessions for decades to protect the cost of insurance. Many assembly-line jobs are physically abusive to the workers, making insurance a priority. GM has finally agreed, after five weeks, to abandon that demand. Given “pattern bargaining,” where one company is chosen as a strike target and the others are expected to conform to those negotiations, this means that Ford and FCA will likely also keep health insurance benefits unchanged.
Currently, Ford employs nearly 10,000 more people in the U.S. than GM; indeed, even FCA has over a thousand more U.S. employees than GM.
All three automakers have been earning healthy profits, but all three also expect a recession and have been cutting back on costs. Each has a large number of temporary workers who do not get the lavish benefits of full-fledged UAW workers; one of the issues the UAW is fighting for is the reduction of temporary workers. The temporary workers also make far less money, between $15 and $19, while mainline UAW workers earn between $17 and $28 per hour (growing over eight years). Those hired before 2007 can earn up to $33 per hour, with skilled workers going up to $36.
GM can still hold out comfortably for around one more month, in terms of cars and trucks on the ground; whether it can keep fixing customers’ cars with parts plants down is another question, one which may spur GM to deal more quickly. In any case, the largest gap between GM and the UAW, health insurance, was dealt with by GM abruptly caving in.
The fate of two plants is another question; GM has no intention of keeping Lordstown, though they promised a smaller electric-vehicle-related plant in the area. The union has asked GM to keep car production in the US where possible; GM has responded that they will use Mexico as their go-to country for cheap labor. Customers don’t seem to have objected to GM’s reliance on Mexican labor, and they still have around two months worth of cars available, so the strike may keep on going for a while… unless customers start reacting by switching to FCA or Ford.
Clark Westfield grew up fixing up and driving past-their-prime American cars, including various GM and Mopar V8s. He has ghostwritten auto news for the last few years, lives in Farmingdale, New York, and can be reached at +1.516-531-4021.