Will this strike provide GM-UAW members with a good Return On Investment?

GM – UAW Negotiations Update

We are now into Day 16 of the strike, with no end in sight.  Just after the UAW went on strike, Terry Dittes, the GM-UAW Vice-President suggested that the strike may have been averted if GM’s negotiators had not waited until two hours before the strike deadline to put their “first serious offer” on the table. Really? The parties have had 16 days to tweak the deal, what’s up?  The clock is ticking. Every day that this strike goes on, there is a really good chance that the UAW striker’s Return On Investment is diminishing. 

Look at what is at stake for GM.  A competitive labor cost penalty of $13 per hour translates into a ~$5B disadvantage for the company over a four-year contract period. The proposed new economics of this deal will only serve to increase that gap so it is absolutely crucial for GM to negotiate some level of economic offsets in order to improve its competitiveness. As I have mentioned previously in other blogs, like the one on temporary workers, or the one on healthcare (https://hrandlaborguru.com/blogs/news/why-do-temporary-employees-matter-and-can-there-be-a-compromise or https://hrandlaborguru.com/blogs/news/detroit-3-automakers-uaw-bargaining-update-healthcare-costs-and-chronic-absenteeism-the-pareto-principle), there are opportunities for compromise solutions relative to these key issues. This isn’t rocket science - there are many options available that can generate cost savings for the company while minimizing intrusiveness on the vast majority of UAW members.  As an example, keeping healthcare coverage intact while asking UAW members to just be better shoppers for healthcare services should not be seen as concessionary. In addition, the parties should be able to come to an agreement with respect to finding a path for temporary workers to become full-time employees.  For the most part, it is really more of a timing issue for the temporary workers – at some point they will become permanent employees. Nonetheless, the parties should be able to iron these issues out.

As time goes on, I am not convinced that this is mostly about principle-based issues such as temporary employees as portrayed publicly by the UAW.  I am starting to believe that the UAW vastly underestimated GM’s resolve in becoming more competitive in terms of labor costs during this round of bargaining.  My guess is that the UAW fully expected GM to drop their management proposals and to cave into their economic demands after a couple of days. Accordingly, I suspect that this may now be more about trying to squeeze more economics out of GM in order to save face with their membership and justify this lengthy strike.  Absent any movement by the UAW on any cost offset proposals that have been tabled by GM, I am not convinced that the UAW strikers will see any improvement in the economics that have already been proposed. Therefore, as mentioned earlier, every day that this strike goes on, there is a really good chance that the UAW striker’s Return On Investment is diminishing.  Secondly, if this strike goes on for too long and the UAW leadership decides to last one hour longer than GM, the striker’s long-term Return On Investment may be at risk, in the event that GM decides that it is no longer financially practical to build vehicles in the United States.

At some point, the GM strikers are going to get fed up with the UAW’s “All for One and One for All” mantra and worry more about their own pocketbooks.  The media appears to be underestimating the loss of income for strikers, especially for those employees like skilled trades who routinely work six or seven days a week.  How long do you think that they will be willing to fall on their sword for the temporary workers who represent only 7% of the plant population today? As I mentioned recently, it is time for the UAW to begin managing the expectations of their GM rank and file.  Otherwise, it will be very difficult to ratify any tentative agreement that is even marginally below their pre-conceived expectations.

Finally, a concerned reader emailed me today and reminded me that we shouldn’t lose sight of the devastating impact that this strike has had on others as well (suppliers, trucking companies, warehousing, etc.).  Let’s not forget about them. Hopefully GM and the UAW can reach a responsible agreement soon – let’s get everybody back to work.

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 www.hrandlaborguru.com.