GM’s Smith Optimistic on UAW Talks
General Motors may be able to accept, with some modifications, a labor contract patterned after the new agreement hammered out between Ford and the United Auto Workers, GM Chairman Roger B. Smith said Monday.
Striking a surprisingly conciliatory tone just three days before GM is scheduled to resume intensive negotiations with the UAW, Smith said that he believes the two sides can reach a settlement similar to the Ford pact and avoid a costly nationwide strike.
At a press conference here Monday, Smith said he believes the key job-security provisions of the Ford agreement are flexible enough to be acceptable. He pointed out that the agreement allows for layoffs during sales slumps.
“We are in a cyclical industry, and we do have to recognize that and make adjustments for that . . . and I believe, from what I’ve seen of the Ford agreement, there is that recognition that we are in a cyclical industry,” Smith said. “I’m hopeful and I’m optimistic . . . that we can use a Ford contract as a springboard to adapt it to the differences between Ford and General Motors in a General Motors contract.”
Limit on Job Losses
Under the Ford settlement, reached earlier this month, Ford agreed to impose a moratorium on plant closings and to provide job protection for its current workers during the life of the three-year contract. At the same time, Ford and the UAW half of all workers who leave through attrition would be replaced.
While Smith stressed that he believes the job security elements of the Ford pact may be flexible enough for GM, the Ford contract does provide much tougher restrictions on layoffs than previously existed at any of the auto companies. It effectively limits job losses to those caused by a sharp drop in auto sales.
The contract also calls for a 3% raise for Ford workers in the first year, with lump-sum payments equal to 3% of base wages provided in the second and third years. Management prefers lump-sum payments to percentage raises because they aren’t permanently included in base wages.
Talks between GM and the UAW have been on hold for the last few weeks while the union has focused its efforts on reaching a new contract with Ford. UAW members at Ford are now in the process of voting on the new contract, and are reportedly giving their overwhelming approval to the new pact.
The final results of the ratification vote at Ford will be released on Wednesday, and UAW President Owen Bieber is expected to return to GM to resume negotiations there on Thursday. Union members have been working without a contract at GM since Sept. 15, but union officials say the UAW is likely to announce a mid-October strike deadline soon after full-scale talks resume at GM.
Bieber has stressed that the UAW will seek to use the Ford contract as a pattern for an agreement at GM, so Smith’s comments Monday would seem to offer hope that a strike might be averted.
UAW officials refused on Monday to respond to Smith’s statements. But Smith’s kind words for the Ford pact clearly came as a surprise. Ever since the Ford settlement was reached, industry observers had predicted that GM would prefer a strike to an agreement like Ford’s. And, since GM is now plagued with slumping sales, many observers in Detroit believed that GM wouldn’t mind shutting down its assembly plants for awhile to reduce its bloated inventories of unsold cars.
Differences Noted
But Smith denied any interest in taking a strike. “That is the worst way I can think of to control inventories,” he said.
Smith said, however, that the UAW must be willing to modify the Ford contract to take into account the fact that GM’s U.S. hourly employment is more than three times greater than Ford’s, and that GM makes many more of its own parts than does Ford.
GM makes about 70% of its own parts, while Ford produces only between 40% and 50%. But GM has been losing money in its components operations, and wants to spin off more of that work to outside suppliers, both in the United States and overseas. As a result, Smith believes, GM can’t give up the flexibility to reduce its production capacity if its sales slip further.
Asked whether he could “live with” a Ford-type contract, Smith said: “There has to be a recognition of the differences in (manufacturing) integration (between GM and Ford), but I believe if we get the modifications we need . . . the recognition that this is a cyclical industry (in the Ford contract) would make that possible.”
