GM and UAW set to restart talks to resolve nationwide strike

Autoworkers strike becomes political issue with Trump urging both sides to "get together and make a deal".

    The UAW wants to stop GM from closing a facility in Lordstown and an assembly plant in Detroit, and says workers deserve higher pay after years of record profits for GM in North America [Rebecca Cook/Reuters]
    The UAW wants to stop GM from closing a facility in Lordstown and an assembly plant in Detroit, and says workers deserve higher pay after years of record profits for GM in North America [Rebecca Cook/Reuters]

    Negotiators for General Motors Co and the United Automobile Workers (UAW) union are scheduled to restart bargaining Monday to resolve a strike that shut down the automaker's highly profitable United States operations.

    The UAW on Sunday launched the first company-wide strike at GM in 12 years, saying negotiations towards a new national agreement covering about 48,000 hourly workers had hit an impasse.

    Workers took to picket lines outside GM factories, waving signs declaring "UAW On Strike". During the walkout, UAW members will get $250 a week from the union's strike fund.

    The UAW and GM said talks would resume at 10am US eastern standard time (14:00 GMT) on Monday. Lost production could cost GM as much as $40m to $50m a day, RBC Capital Markets estimated in a note Monday. GM could make up the lost production with overtime work after a settlement.

    The strike quickly became a political issue, as both US President Donald Trump and Democrats who want to unseat him in 2020 weighed in. Trump and Democrats see the votes of UAW members in the Midwest region of the US as critical to victory.

    Trump on Sunday took to Twitter to urge the UAW and GM to "get together and make a deal!"

    GM spokesman Tony Cervone said the automaker "couldn't agree more" with Trump's call.

    GM Chief Executive Mary Barra met with Trump ahead of the strike deadline. Trump has attacked GM for Barra's decision to stop building small cars at an assembly plant in Lordstown, Ohio. The state is pivotal to Trump's re-election.

    The union wants to stop GM from closing Lordstown and an assembly plant in Detroit. The UAW has said workers deserve higher pay after years of record profits for GM in North America.

    GM argues the plant shutdowns are necessary responses to market shifts, and that UAW wages and benefits are expensive compared with competing non-union auto plants in southern US states.

    In a statement Sunday, GM outlined its offer to the union, saying the package included solutions for the Michigan and Ohio assembly plants currently lacking products, $7bn in US investment and a signing bonus of $8,000 per worker.

    A person familiar with GM's offer said the company could produce a future electric vehicle at the Detroit-Hamtramck plant that now has no future assignment.

    GM could also build an electric vehicle battery plant in Lordstown, and go through with the proposed sale of the plant to a group affiliated with electric vehicle startup Workhorse Group Inc.

    A new battery plant could give some UAW workers at Lordstown the chance to remain with GM.

    The UAW's top negotiator at GM said the proposal came just two hours before the strike deadline, and laid blame for the strike on the automaker.

    "Had we received this proposal earlier in the process, it may have been possible to reach a tentative agreement and avoid a strike," UAW Vice President Terry Dittes wrote in a letter to GM on Sunday, according to a copy viewed by Reuters news agency.

    GM shares were down nearly three percent in early trading on Monday.

    Economic ripples

    A strike will very quickly shut down GM's operations across North America and could hurt the broader US economy. Prolonged industrial action would also cause hardship for GM hourly workers on greatly reduced strike pay. Suppliers of parts and services to GM's US operations could also suffer from a long shutdown, as could dealers and consumers.

    The International Brotherhood of Teamsters, which transports some GM vehicles to dealerships, said it would honor the UAW's GM picket lines.

    GM's workers last went out on a brief two-day strike in 2007 during contract talks. A more painful strike occurred in Flint, Michigan, in 1998, lasting 54 days and costing the number one US automaker more than $2bn.

    Democratic presidential candidates weighed in to back the union, including Senators Bernie Sanders and Kamala Harris, former Vice President Joe Biden and Representative Tim Ryan.

    The UAW has framed the plant closures as a betrayal of workers who made concessions in 2009 to help GM through its government-led bankruptcy.

    Some of those concessions are now matters of disagreement. The union wants to limit GM's use of temporary workers in its plants, and narrow the pay gap between new hires and veteran workers.

    The strike will test both the union and GM at a time when the US auto industry is facing slowing sales and rising costs associated with launching electric vehicles and curbing emissions.

    Kristin Dziczek, vice president of industry, labour and economics at the Ann Arbor, Michigan-based Center for Automotive Research, said the strike at GM's US facilities will also shut its plants in Canada and Mexico as the automaker's supply chain is so integrated.

    "That's going to have a big effect on the economy," she said.

    The impact of the strike on dealers and car shoppers will be delayed. GM started off the strike with healthy levels of inventory of some its key, high-margin vehicles.

    As of September 1, the automaker had a 96-day supply of its Chevrolet Silverado pickup truck, a 59-day supply of its Chevrolet Equinox SUV and more than a 100-day supply of the Cadillac Escalade.

    The automaker has 12 vehicle assembly plants, 12 engine and power train facilities and a handful of US stamping plants and other facilities.

    SOURCE: Reuters news agency