It is time for a deal

GM – UAW Negotiations Update

We are now into the fourth week of the strike, with no end in sight.  It is my understanding that the UAW has not responded to GM’s latest contract offer that was tabled on Monday morning.  At this stage of the game, one would expect that if the parties were closing in on a deal, that offers and counter-offers would be traded every few hours not every few days.  This is not a great sign but I am remaining positive because at least the two parties are still talking. As Daniel Howes, from the Detroit News points out in his article today, strikers must be getting both confused and frustrated by this strike. Daniel points out in his article, the outstanding issues that are being communicated by the UAW to its membership appear to change constantly.  It is almost as if there is a “flavor of the day” – those are my words not Daniel’s. Today’s flavor appears to be job security. 

I was encouraged the other day when UAW VP Terry Dittes indicated in his update to the membership that “Economic gains in this Agreement will mean nothing without job security.”  It was refreshing to see that perhaps the UAW leadership is taking a longer-term view of this round of negotiations. As I have said before, one of the best ways to achieve job security is to ensure that your labor costs are competitive.  Perhaps VP Dittes is finally trying to manage the expectations of the rank and file as I recommended in my blog back on September 30th, VP Dittes is trying to send a signal to the strikers that the economics of the deal may not be what they had hoped for, especially after a lengthy strike.  But you know what, that is ok, especially if the UAW is able to improve the job security for its members in the long run.

Strikes are not good for either side.  There is never a clear winner or loser – one side may declare a victory for this battle but then ultimately lose the war.  Both sides have suffered significantly – GM is losing tens of millions of dollars each day. By the end of the week, traditional production employees will likely have lost around $4,000 in income and it may be double that for skilled trades employees who routinely work significant amounts of overtime.  In addition, there is another lost pay element that no one seems to be talking about. With a profit-sharing formula that provides UAW members with $1 per $1 million of North America profit, employees are losing out on that too each day the strike goes on. If GM loses $1 billion in profits as a result of this strike, then UAW member’s profit-sharing checks will be $1,000 less this year. The longer that this strike goes on, the more pain and suffering that both parties will endure.

They say that the best collective agreements occur when neither party gets what they want.  Perhaps GM’s stretch goal during this round of bargaining was to gain permission from the UAW to utilize temporary workers for up to 25% of their workforce or to increase employee health care cost share from 3% to 15%.  Perhaps the UAW’s goal was to obtain 3% wage increases in every year of the agreement and to secure a path for temporary workers to attain full-time status. It is highly unlikely that either party will get exactly what they are looking for out of this agreement.  It really doesn’t matter at this point who is declared the outright winner – if the parties can come up with a compromise and meet each other part way on the key issues, then they are both winners.  

Hopefully GM and the UAW can reach a responsible agreement soon – let’s get everybody back to work. It is time for a deal.

If you are interested in learning more about bargaining preparations, development of negotiations costing models, bargaining strategy formulation or labor cost reduction strategies, visit our website at