Little Apparently Accomplished With Costly GM Strike
As striking General Motors Corp. workers headed back to work Friday after overwhelmingly ratifying a new labor agreement, it appeared the 17-day strike that crippled GM’s operations and cost $600 million in lost profit did little but maintain the status quo.
The United Auto Workers said it won a commitment for several hundred new jobs at two parts plants in Dayton, Ohio. But GM had promised about the same number of jobs two years ago and never delivered.
GM said it obtained the flexibility to source work where it saw fit and established that competitiveness is the key for awarding future business in-house. But these principles are already in the national GM-UAW contract.
One potential gain, a source said, may lie in the agreement to form a high-level GM-UAW committee to study outsourcing--the transfer of in-house work to outside suppliers, the strike’s central issue. UAW Vice President Richard Shoemaker and GM Vice Chairman Harry Pearce are on the committee, a source said, though both sides refused to discuss it.
This could provide a unique vehicle for working out a broader agreement on outsourcing before the beginning of national contract talks this summer, the source said. But others said naming a committee is a sure sign that both sides wanted to delay dealing comprehensively with the issue.
“It really looks like a standoff,” said David Healy, analyst for Burnham Investment Research. “After two weeks and 200,000 units of lost production, the UAW gets some jobs and GM gets to outsource, just like before the strike.”
The price of GM stock, which has been steady to slightly stronger during the walkout, closed down 25 cents at $53.375 on the New York Stock Exchange.
The labor dispute was the largest to hit GM since 1970, when the UAW called a 68-day national strike against the auto maker. This year’s strike involved only 3,000 workers at two GM Delphi Chassis Plants in Dayton that make brake parts for 90% of GM’s vehicles.
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With few components stockpiled, the strike quickly disrupted vehicle production throughout GM’s system. Before ratification of the settlement Friday by members of Local 696, GM had closed 26 assembly plants and curtailed operations at 90 parts plants.
More than 178,000 GM workers were furloughed, and scores of independent suppliers laid off tens of thousands of employees. The strike is expected to have a short-term negative impact on the nation’s economy.
The Dayton plants restarted operations Friday afternoon. GM’s Saturn division, whose small sedans are in short supply, also resumed production late Friday. GM said it hopes to open a truck plant today and 12 other assembly plants Monday, including some that make its profitable sport-utility vehicles. All operations could be back to normal by Thursday, the company said.
Although the strike was a local one, it quickly became a national focus of the battle over outsourcing. For the UAW, outsourcing is a hot button for job security; for GM, it is a buzzword for global competitiveness.
Unlike other recent labor disputes in which GM backed down, the auto maker confronted the UAW with a newfound aggressiveness. Top GM officials said the company is determined to become more efficient and competitive.
GM seemed to be spoiling for a national showdown on outsourcing. But its tough talk could only go so far. With losses mounting daily, it engaged the UAW in marathon talks that led to a settlement.
As spelled out by the union, the deal provides up to 514 jobs over several years. But some of those jobs are for work previously contracted, and other job openings are to be created by attrition. So the number of new jobs actually added to the payrolls is likely to be only a small fraction of the total.
An important concession in the settlement was GM’s agreement to pay $5.6 million--or about $1,700 to each employee--for violations of the contract’s outsourcing provisions.
The UAW argued that GM had failed to properly notify the union of its plans to outsource antilock brake work to Robert Bosch, a German supplier. Under the national contract, the company must give the union 120 days notice of plans to outsource and allow the local 60 days to make proposals to keep the work in-house. Under the settlement, GM can still outsource to Bosch.
“This was all about promises that GM did not keep,” a UAW spokesman said.
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The broken commitment by GM is the main reason that Shoemaker insisted Pearce come to Dayton to formally sign and shake hands on the settlement, sources said.
Harley Shaiken, a labor professor at UC Berkeley, said the UAW triumphed in Dayton. The union won jobs, an admission from GM that it violated outsourcing rules, and made a statement it would fight hard for job security.
“GM sent a $1-billion message that they are tough, but it’s unclear what they got out of it,” Shaiken said. “The UAW sent a less-expensive message that they would protect jobs and got something for it.”
A GM spokesman said the company clearly established two principles: “GM has retained its flexibility on sourcing and reaffirmed that competitiveness was a requirement of future business.”
But analysts and union officials countered that those concepts are already contained in the national labor agreement.
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Terms of GM Pact
Here are highlights of the General Motors-United Auto Workers agreement ending the strike in Dayton, Ohio, as outlined by union, company and other sources:
-- Secures 122 existing Dayton jobs for work on certain antilock brake systems through 2004.
-- Adds 275 production employees to address work force needs and 117 skilled trade jobs.
-- Commits GM to pay $5.6 million, about $1,700 to each employee, for violations of thecontract’s outsourcing provisions.
-- Preserves GM’s contract to buy other antilock brake systems from the German firm Robert Bosch, at a cost of 125 jobs.
-- Preserves GM’s general right to outsource, or award contracts to outside firms, when they can do the work more competitively than its own divisions.
--Establishes a high-level committee to explore solutions to the issue of outsourcing at GM.
