General Motors Corp. became the strike target of the United Auto Workers on Tuesday, but GM welcomed the chance to be the powerful union’s top priority in bargaining for new auto industry contracts this month.
“We, after deliberation, came to the conclusion unanimously we would go to GM for the 1990 target,” UAW President Owen Bieber said after union management made its decision.
“GM wants to avoid being forced into an expensive agreement negotiated by another company,” said Wertheim Schroder & Co.'s auto industry analyst, John Casesa. “Being chosen gives them a say in their destiny.”
Contracts between the Big Three car makers and the UAW are among the biggest in U.S. manufacturing, covering 500,000 workers. They expire Sept. 14.
The target designation means that the GM talks will set the pattern for the industry, while also concentrating the union’s resources for a single showdown, if needed.
Ford and Chrysler also sought to be targeted. They felt that the advantage of being able to determine the parameters of an initial industry contract outweighed the disadvantage of a possible strike.
The selection of GM, the world’s biggest car maker, had been expected. Analysts said the key issue for the union, job security, applies most to GM.
Thousands of union members at GM have lost their jobs since the last contract was signed in 1987. The auto maker has closed a number of plants to bring production in line with dwindling sales.
GM publicly welcomed the UAW’s decision. Wall Street also appeared to approve, boosting GM’s shares $1.50 to $40.675 in active trading on the New York Stock Exchange.
Now that GM has been targeted, the UAW will break off talks with Ford and Chrysler and concentrate on working out an agreement with GM by the contract expiration date.
GM will now be in a position not only to negotiate an agreement that benefits itself but also one that puts its competitors at a disadvantage, analysts said.
GM said being the target company gives it “an opportunity to fashion an agreement which addresses the interests of all who have a stake in the success of GM, especially those of its employees.”
However, analysts said, GM’s selection is only a small victory in what could be an arduous battle to reach a settlement.
Analysts noted that a prolonged strike would probably benefit Japanese manufacturers, and the UAW does not want to cede jobs to Japanese plants in the United States because most are non-union.
GM agreed, saying that it believes that a settlement without a strike is the only outcome that makes sense, given the serious competitive issues facing GM and the UAW.