GM, UAW Reach Pact to End Crippling Strike
Moving to end the biggest work stoppage to rock the auto industry since 1970, General Motors Corp. and the United Auto Workers reached a tentative agreement Thursday to end a 17-day local strike that shut down most of GM’s vehicle production in North America.
The agreement came after nearly 48 hours of round-the-clock talks between the auto maker and union officials at GM’s Delphi Chassis Systems brake plants in Dayton, Ohio. About 3,000 workers struck GM in a dispute whose effects rapidly spread across North America.
Neither side would discuss details of the settlement. But it appeared that the negotiations had resulted in a limited local agreement and not a precedent-setting deal that would resolve the broader issue of GM’s desire to send more UAW work to lower-paying, often nonunion subcontractors.
Though limited to two small plants, the strike’s impact was quickly felt from Oshawa, Canada, to Juarez, Mexico, and threatened to significantly curtail U.S. economic growth. GM, the nation’s largest company, was forced to idle more than 177,000 assembly and parts workers. The company closed 26 of its 29 assembly plants and cut back work at 90 parts factories. Independent suppliers also laid off tens of thousands of workers.
The strike was played out against a backdrop of growing national angst over job security, corporate downsizing and declining living standards. As the dispute’s impact rippled through the nation, it drew the attention of the White House and Congress.
President Clinton, concerned with the economy’s health in an election year, applauded the settlement. “Both sides have worked hard to settle this dispute and I congratulate them for spending the long hours at the bargaining tables and arriving at a tentative agreement,” he said Thursday.
The settlement was announced by Richard Shoemaker, UAW vice president in charge of GM negotiations. A ratification vote by members of UAW Local 696 is to be held today. Strikers appeared eager to return to work.
“I’m confident that they probably got a good settlement,” said union member Jerry Bocock as he picketed Thursday in Dayton.
If the agreement is approved, the Dayton workers will begin producing brake parts and systems this afternoon. Assembly plants will restart operations as brake parts reach them. Some plants that make popular trucks are likely to begin production within two days, while some car plants could remain idled another week.
While the Dayton strike was over local issues, including safety, excess overtime and other contract disputes, its focal point became GM’s desire to award in-house work to outside suppliers. The practice, known as outsourcing, has become a major issue in much of American industry as it seeks to slash costs and become globally competitive.
The UAW sees the issue in terms of losing jobs; GM in terms of gaining competitiveness.
Union officials went out of their way Thursday to emphasize that the settlement involved only the local dispute and did not have broader ramifications for its relations with GM.
“It’s an agreement that deals with the Dayton local union and the issues that were here,” Shoemaker told reporters in Dayton. “This has nothing to do with the forthcoming negotiations.”
However, some auto industry and labor experts said that while the negotiations may not have resolved the broader outsourcing dispute, it probably yielded some behind-the-scenes understanding of how the two sides will work to a resolution later this year.
“Both sides probably got something out of this contract,” said Harley Shaiken, a labor professor at UC Berkeley. “But we are far from being done with the outsourcing issue in the auto industry or in the rest of U.S. manufacturing.”
Indeed, the UAW and the Big Three Detroit auto makers--GM, Ford and Chrysler--will begin negotiations this summer on a new three-year national labor contract, and outsourcing is expected to be a central issue.
This is the ninth local strike against GM in two years, most involving outsourcing and job security. Because the Dayton plant makes brake parts for 90% of GM’s cars and trucks, the walkout quickly led to plant shutdowns at assembly plants as they ran out of key components.
In the current dispute, the UAW objected to GM’s plans to give a contract for antilock brakes to Robert Bosch, a German-based supplier with a plant in South Carolina. Bosch has a nonunion work force that makes an average of about $18 an hour in wages and benefits, compared to $45 paid to UAW workers in Dayton. The supplier also offered a technologically advanced brake system.
In 1994, GM got approval to outsource that work in exchange for bringing in several hundred more jobs tied to new business for the Dayton plant. But the promised new jobs never materialized.
The company said that was because the workers did not meet productivity goals needed to attract new business. The union said GM failed to make the investment in technology and training needed to make them competitive.
The tentative agreement probably gives both sides some of what they wanted, labor experts said. GM likely won leeway for more work-rule flexibility in exchange for firm commitments on more investment and jobs.
Union sources said that GM won the right to keep the Bosch contract, while Reuters reported that in return, GM agreed to add up to 200 jobs to cut down on overtime at the Dayton plants.
GM shares closed at $53.625, up 12.5 cents after trading at a 52-week high of $54.75.
GM’s stock had held up well throughout the strike as investors applauded the company’s hard-nosed stance against the union. Although the strike would be costly, GM took the stance that there would be a bigger payoff down the road if it could take major steps to become more efficient.
The dispute will cost GM about 250,000 vehicles in lost production. Analysts and economists said the company can make up about 200,000 of those units if it wants to in the coming months. However, GM may not be able to make up production of its most profitable and popular trucks, since those plants have already been running at capacity with workers on overtime.
David Healy, an analyst for Burnham Investment Securities, said the strike could reduce GM earnings by $500 million to $600 million in the first quarter, or about 75 cents a share.
He noted that the company’s inventories were running about 200,000 vehicles above last year when the strike shut down its plants. So the work stoppage has pared their inventories to about where they normally should be.
The strike did not go long enough to have much impact on car dealers or customers. However, there could be some spot shortages of popular vehicles.
The work stoppage had little direct impact on California. GM produces cars at a plant in Fremont in a joint venture with Toyota. But the plant operates under a separate labor contract, and the UAW agreed to continue making parts in Dayton for the Fremont facility.
* LESS CLOUT: GM strike less powerful. D1
* SOUTH OF BORDER: Strike hit across Mexico. D2
