‘96 Pact at Center of GM’s Woes
Two strikes by the United Auto Workers that threaten to bring General Motors Corp. to its knees stem in part from ambiguities in the 1996 national contract that provides job guarantees to the union while giving GM leeway to downsize.
“They never resolved these conflicting issues,” said Sean McAlinden, a labor economist with the University of Michigan. “The result is this destructive round of strikes.”
About 9,200 union members walked out of two parts plants in Flint, Mich., on June 5 and June 12 in disputes over job security, work conditions and plant efficiency. Talks ended Monday with no progress reported; they are to resume this morning.
The strikes’ impact is rippling through GM’s operations in the United States, Canada and Mexico, resulting in full or partial closure of 16 assembly plants and dozens of parts facilities. GM has idled 63,100 hourly workers.
Analysts estimate that the strikes are costing GM about $40 million a day and say they could halt all North American production within a week.
UAW leadership touted the national contract reached in the fall of 1996 as a victory for the union because GM, Ford and Chrysler agreed to unprecedented job guarantees--a pledge to keep union jobs at 95% of current levels.
This was no problem for Ford and Chrysler. Both had downsized their work forces in the 1980s and have been hiring new workers to keep up with booming production in recent years.
GM, however, began its restructuring later. Its painful drive for efficiency has meant paring tens of thousands of union jobs. This has raised the ire of UAW locals who see the downsizing as violating the national contract.
The auto maker, however, argues that it is abiding by the loosely worded terms of the contract as it moves to close or sell inefficient plants, reduce its work force through attrition and upgrade old plants with new technologies.
“There is a lot of room for interpretation in the contract,” said Joseph Phillippi, analyst with Lehman Bros. in New York.
For instance, while GM agreed to keep 95% of its hourly work force, the company was granted several exceptions and given flexibility to abide by the terms of the contract.
Some inefficient parts plants slated for sale were exempted from the agreement. The company also was allowed to group plants by area or specialty. Thus all stamping plants could be considered as one group, allowing the closing of one as long as the layoffs did not exceed 5% of the group’s total.
The contract also gave GM room to cut jobs when new technology was introduced to make a plant more efficient. This is an issue at the striking Flint stamping plant, where GM wants to install new equipment that would require 200 fewer jobs.
GM has accomplished much of its job reductions through retirements. The contract requires the company to replace those workers, but it can do so by paying new hires lower wages and benefits.
Sources familiar with the agreement said it has certain “hidden clauses” that allow GM to lower the number of jobs it guarantees. For example, new hires and those contributing to greater productivity count disproportionally when calculating the job guarantee level.
The national contract also provides guidelines for outsourcing--contracting work to nonunion suppliers. It requires that UAW plants be given an opportunity to rebid on work slated to be moved to outside parts makers.
Labor experts said the union’s hard line may be a bold attempt to reopen bargaining on the national agreement a year before it expires to resolve debate on the sticky issues before negotiations on the next contract begin.
