General Motors Co. wants to hire more temporary workers at U.S. plants and trim its healthcare costs, said people familiar with the automaker’s thinking. Its union — still steaming over the carmaker’s plans to close four U.S. factories — has little interest in obliging.
That sets up a hot summer of negotiations for the United Auto Workers and GM as the two try to hash out a new four-year labor deal in the coming months. The last contract was bargained over in better times, when auto sales were growing from financial crisis lows to all-time highs and GM was marching toward record profits.
This year will be much different. The U.S. auto market may still be healthy but is widely expected to shrink for the second time in three years. GM has put four U.S. plants with 2,800 employees on death watch, forcing some workers to decide between transferring to out-of-state factories or leaving the company.
The UAW isn’t nearly as satisfied as President Trump was with GM’s efforts to offload one of the plants in Ohio to a tiny company with a scant track record of profitably manufacturing vehicles.
GM’s argument is all dollars and cents. Workers at plants run by Japanese rivals Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. make $50 an hour in wages and benefits. GM workers cost $63 an hour, said the people, who asked not to be named because the company’s labor negotiations are private.
GM argues that if it can hire more temporary workers who are paid less and aren’t on the same health care plan, the automaker can offer job security for its unionized employees. GM would also like to find ways to reduce its roughly $900-million annual healthcare bill for union employees, including by getting greater contributions from workers, the people said.
Right now, Japanese automakers staff their plants with about 20% temporary workers. By comparison, about 7% of GM’s staff are temps. Those workers have no road to becoming full-time GM employees, which rankles the UAW and will be an issue this summer.
“The big thing is temporary workers,” said Ryan Buchalski, president of UAW Local 598 in Flint, Mich., where 4,800 workers make heavy-duty pickup trucks. “They used to just be here for summer help. Now they are here all year.”
GM is looking for more factories to adopt agreements like the one used by its electric-car plant in Orion, Mich. There, workers employed by a subsidiary called GM Subsystems are paid less for jobs such as handling parts and materials before they go to the assembly line. Four of GM’s 33 U.S. plants have such contracts now.
Temps and lower-wage work will be an issue for a union that already wants GM to increase investment in U.S. plants. The UAW is hoping to get vehicles allocated to a plant near Detroit in Hamtramck and another in Lordstown, Ohio, though the latter looks increasingly unlikely. The automaker is in discussions to sell the factory to electric truck maker Workhorse Group Inc.
GM could bring products back from plants in Mexico, where it’s the largest automaker with 16,000 workers. The UAW was particularly angered that GM started building the Chevrolet Blazer sport utility vehicle in Mexico just as the company was deciding to idle Lordstown.
Harley Shaiken, a labor relations professor at the UC Berkeley, said that even if GM doesn’t need more production for the U.S. auto market, the company is a major exporter from Mexico and could shift models to the U.S. as part of the bargaining. The carmaker’s existing labor contract expires at midnight Sept. 14.
For its part, GM has argued that its $23-billion investment in the U.S. since 2009 is almost five times what it has spent in Mexico. The company’s 48,000 union workforce is triple what it has in Mexico.
That won’t settle the UAW’s desire for more jobs. When GM announced a $300-million investment in Orion, UAW Vice President Terry Dittes was on hand for the announcement. When taking the podium, he was as interested in the plants GM is idling as he was in Orion.
“These four plants will not be forgotten,” Dittes said.