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General Motors workers ratify contract, ending 40-day strike

United Auto Workers union members and their families rally
United Auto Workers union members and their families rally near a General Motors factory in Flint, Mich., on Oct. 13.
(Bill Pugliano / Getty Images)

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General Motors Co. workers voted 57.2% in favor of a new contract with the company, bringing an immediate end to a contentious 40-day strike that paralyzed the automaker’s U.S. factories.

Members of the United Auto Workers union voted 23,389 in favor of the deal, with 17,501 against it, the union announced Friday.

The union now will turn its attention to bargaining with GM crosstown rival Ford Motor Co.

For GM workers, the vote means putting down their picket signs and returning to their jobs. Some were expected to start as early as Friday night, and some production could resume Saturday.

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Skilled trades workers geared up to restart factories that were shut when 49,000 workers walked out Sept. 16.

The deal between GM and the union includes a mix of wage increases and lump-sum payments and an $11,000-per-person signing bonus. But GM will close three U.S. factories that make slow-selling cars and transmissions. Analysts estimate the strike cost the automaker more than $2 billion.

The five-week walkout was big enough to help push down September U.S. durable goods orders by 1.1%, the largest drop in four months.

On Friday evening, trades workers such as machinists and electricians were expected to enter the plants quickly, restarting boilers and preparing paint shops, robots and other equipment to restart production.

On the picket line at a transmission plant in Romulus, Mich., worker Tricia Pruitt said that the wage gains were worth staying off the job more than five weeks for, but that now she’s ready to return to work.

Pruitt, a 15-year GM employee, was happy that the contract brings workers hired after 2007 up to the same wage as older workers in four years.

She said she’d be glad to stop picketing. “Look at us now. We’re in coats,” she said on a gray, chilly Friday afternoon near Detroit. “We’d have been out here in the rain.”

Although GM dealers had stocked up on vehicles before the strike and many still have decent supplies, analysts say GM won’t be able to make up for the lost production. Had the strike been shorter, GM could have increased assembly line speeds and worked the plants on overtime to catch up and refill its stock. But many of the plants that make popular SUVs and pickup trucks already were working around the clock to keep up with demand before the strike began.

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Also, companies that supply parts to the factories and that halted production during the strike will need time to restart, although GM has some parts in stock.

Jeff Schuster, senior vice president of the consulting firm LMC Automotive, estimates that GM has lost production of 300,000 vehicles. He said maybe only a quarter of that can be made up.

“You can’t add days to the week and you can’t add hours to the day,” he said.

Some production losses will help thin inventory, especially of cars, Schuster said. But in late October and early November, GM is likely to run short of colors and models of trucks and SUVs that are in high demand until stocks are replenished, he said. Although truck and SUV buyers generally are loyal to a brand, customers in a hurry for a new vehicle could go elsewhere, Schuster said.

“There are definitely going to be some limitations on choice, and that is a risk,” Schuster said. “Consumers can opt to wait, or they can go down the street to their competitor.”

Now the union will move on to bargain with Ford, using the GM deal as a template. It’s not clear yet if there will be another strike, but Ford is unlikely to be happy about being stuck with the GM terms. Later on, Fiat Chrysler Automobiles also will need to reach a new labor contract.

GM traded the ability to close the three factories in Lordstown, Ohio; Warren, Mich.; and near Baltimore for higher labor costs, David Kudla, chief investment strategist for Mainstay Capital Management of Grand Blanc, Mich., wrote in a note to investors. The contract maintains worker health benefits with low premiums, something that both Ford and Fiat Chrysler wanted to change when negotiations began.

“Ford and FCA didn’t have three factories that they wanted to close, but will have to work around this new framework for higher wages and unchanged healthcare that the UAW and GM have set,” wrote Kudla, whose firm manages investments for many auto industry workers.

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Workers at factories that GM will close have been transferred to plants across the nation, and they campaigned against the deal, which was reached Oct. 16. Workers in Lordstown, for instance, voted 412 to 61 against the contract, with 88% of production workers voting no.

Across all locations, though, economic gains and a $7.7-billion GM investment pledge for U.S. factories were too much for the majority of voters to turn down.

Krisher writes for the Associated Press.


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