General Motors Co. and the United Auto Workers have reached a tentative agreement on a new contract, and the union will decide Thursday whether to continue a more than month-long strike while the deal is voted on by members.
The accord, announced by the UAW on Wednesday, may bring an end to the union’s first national walkout against the carmaker in a dozen years. The UAW’s national council will decide whether to recommend the agreement for a ratification vote, and if the strike will continue in the meantime.
A resolution would come none too soon for GM, which analysts at Bank of America Merrill Lynch estimate has lost about US$2 billion, and its striking workers, who could be forgoing about US$2,000 of profit sharing. The strike has also become a political issue, arising in Tuesday night’s Democratic presidential debate in Ohio, which has lost thousands of auto-industry jobs.
The two sides moved closer to a deal over the weekend after a tense week of publicly exchanging barbs and blame for the strike dragging on. With most of the major issues settled, Barra and GM President Mark Reuss joined the talks Tuesday to try to get a final agreement over the line, according to people familiar with the situation who asked not to be identified.
GM shares rose as much 1 per cent to US$36.63 on Wednesday, the highest intraday in two weeks. The stock has slipped by about 6 per cent since the strike began.
One of the most contentious issues that was standing the way of a deal involved the treatment of temporary workers, some of whom have worked at GM for as long as four years. The two sides reached a compromise opening a path to full-time work after three consecutive years of employment, one of the people said. That three-year period could change before an agreement is final, the person cautioned.
If the two sides come to an agreement, the local union leaders will decide whether to take it to members for a vote, and if workers will return to work before or after ratification.
$2 Billion Blow
With plants across the U.S. idled and shutdowns spilling over into Mexico and Canada, the automaker is losing about US$100 million a day in earnings before interest and taxes, John Murphy, a BofA analyst who recommends buying GM shares, wrote in a research report Tuesday. And in addition to the profit-sharing they’ll miss, Murphy estimates UAW members have probably forgone as much as US$4,000 in net take-home pay.
“A prolonged strike could burn significant cash and bring GM to its knees,” Murphy wrote. “But investors likely will also react negatively if management is perceived to have caved into labor’s demands and GM’s long-term competitiveness is threatened.”
A GM spokesman declined to comment on the BofA report. The UAW has been striking over higher wages for entry-level workers, the temps issue and job security.
GM and the strike ended up being fodder for presidential candidates in Tuesday night’s Democratic debate in Westerville, Ohio, with New Jersey Senator Cory Booker criticizing trade deals that don’t put workers “at the center,” an oblique reference to U.S. President Donald Trump’s accord to replace Nafta.
Beto O’Rourke, the former congressman from Texas, said workers striking outside GM’s idled Chevy Cruze plant in Lordstown, Ohio — about 150 miles northeast from where the debate took place — had been “devastated by GM and their malfeasance.” The automaker ranks No. 72 among the largest employers in Ohio, one of the moderators noted; it was No. 1 less than 25 years ago.
Candidate Pete Buttigieg, the mayor of South Bend, Indiana, said it was common to see closed-down factories out the windows of his dad’s Chevy Cavalier during drives to school growing up. “Now I drive my own Chevy — it’s a Chevy Cruze, used to be built right in Lordstown — which is now one more symbol of the broken promises that this president has made to workers.”
It was still the most prominent role the auto industry has played in any of the debates thus far — despite Detroit hosting one of them in late July.