Union sets strike deadline at GM
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Union sets strike deadline at GM
NEW YORK (CNNMoney.com) -- The United Auto Workers union set an 11 a.m. ET Monday strike deadline for its 73,000 members at General Motors late Sunday night, although talks between the union and the company were still ongoing.
The union has kept its members on the job at the automaker on an hour-by-hour contract extension since the previous pact with GM (Charts, Fortune 500) expired Sept. 14. But Sunday, as talks were reportedly making progress, the union leadership felt the need to call for a strike.
The company said in a statement that it was still hopeful of reaching a deal to avoid a shutdown. A company official told CNNMoney.com at 5:20 a.m. ET that the talks were continuing.
"The 2007 contract talks involved complex, difficult issues that affect the job security of our us work force and the long-term viability of our company," said GM spokesman Dan Flores. "We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors. We will continue focusing our efforts on reaching an agreement as soon as possible."
The strike call does not affect operations at Ford Motor (Charts, Fortune 500) or Chrysler Group. The union has granted those companies more formal extensions that require a three-day notice to end while they focused their efforts on reaching an agreement with GM.
Neither side would comment on the sticking point in the talks, although GM has been seeking to close its cost gap with nonunion automakers such as Toyota Motor (Charts) and Honda Motor (Charts) by shifting $51 billion in future retiree health care costs to a union-controlled trust fund.
Chris "Tiny" Sherwood, president of Local 652 in Lansing, Mich., said he got a call with the strike deadline just before 11 p.m. ET Sunday. He had not had any signal that there were problems before that call.
"They just said unless we're told otherwise, we're on strike as of 11 a.m.," he said "I guess they hit some kind of impasse. We'll be ready."
Sherwood's local about 3,000 of more than 4,500 members working at a GM plant in Lansing.
While most analysts have said that a long strike at General Motors would be a crippling blow for the automaker's efforts to return its North American operations to profitability, the automaker is probably in relatively good position to weather a short strike.
David Healy, analyst with Burnham Securities, said he believes GM could take a strike of up to a month without a significant problem.
"It's sort of an odd thing, the first thing that happens with an automaker in case of a strike is their cash increases, as their payroll stops, and they still keep collecting cash for the cars that have been shipped," said Healy.
He believes the two sides are close enough that a strike, if it does in fact start, will be a short one.
"Days, not weeks or months, that would be my guess," he said.
If there is a strike, it would be the nation's largest since 87,000 workers at Verizon Communications (Charts, Fortune 500) walked off the job in August 2000, but that action did not shut down the company.
GM was last hit by a strike at its Flint, Mich., locals in 1998, a work stoppage by only 9,200 workers that was felt across most of GM's North American operations since they couldn't get the parts they needed to keep making cars and trucks.
The last strike by more than 70,000 workers that shut down a company's operations was the 1997 strike by 185,000 Teamsters at United Parcel Service. (Charts, Fortune 500)
The union has kept its members on the job at the automaker on an hour-by-hour contract extension since the previous pact with GM (Charts, Fortune 500) expired Sept. 14. But Sunday, as talks were reportedly making progress, the union leadership felt the need to call for a strike.
The company said in a statement that it was still hopeful of reaching a deal to avoid a shutdown. A company official told CNNMoney.com at 5:20 a.m. ET that the talks were continuing.
"The 2007 contract talks involved complex, difficult issues that affect the job security of our us work force and the long-term viability of our company," said GM spokesman Dan Flores. "We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors. We will continue focusing our efforts on reaching an agreement as soon as possible."
The strike call does not affect operations at Ford Motor (Charts, Fortune 500) or Chrysler Group. The union has granted those companies more formal extensions that require a three-day notice to end while they focused their efforts on reaching an agreement with GM.
Neither side would comment on the sticking point in the talks, although GM has been seeking to close its cost gap with nonunion automakers such as Toyota Motor (Charts) and Honda Motor (Charts) by shifting $51 billion in future retiree health care costs to a union-controlled trust fund.
Chris "Tiny" Sherwood, president of Local 652 in Lansing, Mich., said he got a call with the strike deadline just before 11 p.m. ET Sunday. He had not had any signal that there were problems before that call.
"They just said unless we're told otherwise, we're on strike as of 11 a.m.," he said "I guess they hit some kind of impasse. We'll be ready."
Sherwood's local about 3,000 of more than 4,500 members working at a GM plant in Lansing.
While most analysts have said that a long strike at General Motors would be a crippling blow for the automaker's efforts to return its North American operations to profitability, the automaker is probably in relatively good position to weather a short strike.
David Healy, analyst with Burnham Securities, said he believes GM could take a strike of up to a month without a significant problem.
"It's sort of an odd thing, the first thing that happens with an automaker in case of a strike is their cash increases, as their payroll stops, and they still keep collecting cash for the cars that have been shipped," said Healy.
He believes the two sides are close enough that a strike, if it does in fact start, will be a short one.
"Days, not weeks or months, that would be my guess," he said.
If there is a strike, it would be the nation's largest since 87,000 workers at Verizon Communications (Charts, Fortune 500) walked off the job in August 2000, but that action did not shut down the company.
GM was last hit by a strike at its Flint, Mich., locals in 1998, a work stoppage by only 9,200 workers that was felt across most of GM's North American operations since they couldn't get the parts they needed to keep making cars and trucks.
The last strike by more than 70,000 workers that shut down a company's operations was the 1997 strike by 185,000 Teamsters at United Parcel Service. (Charts, Fortune 500)
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Unless they already have a deal, this will be comical when 11 rolls around here and they 'change' their mind about going on strike.
At that point they lost what little clout they still have if GM see's they won't even follow through on threats to strike.
At that point they lost what little clout they still have if GM see's they won't even follow through on threats to strike.
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Assuming this isn't just a ploy on their part, should the UAW be stupid enough to pursue a strike, they will very likely be signing their own death warrant and one for GM domestic manufacturing as well.
It’s time for the UAW to stop worrying about their “power” and actually do what is best for their industry and the members they take money from each paycheck.
It’s time for the UAW to stop worrying about their “power” and actually do what is best for their industry and the members they take money from each paycheck.
Last edited by Robert_Nashville; Sep 24, 2007 at 09:30 AM.
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They are protecting workers who have for years received high wages and benefits that most of the rest of America -- "workers" and white-collar folks alike -- just don't get anymore. Things like paid private health care for retirees are just unheard-of most everywhere else. At the same time, I get why they don't want to give these things up, and I sympathize, but... reality just isn't with them anymore.
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This is interesting. We'll se how this plays out. I wonder how long will it last. And I wonder how long it would take before GM tried hiring replacement workers. I bet it would have to go on for quite a while.
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The last time the UAW went on a strike this big, it was in the 1970s.
At that time, the union was collecting dues from 1.5 million members.
Today, the UAW is collecting alot less dues from a mere 538,000 members.
Health care costs increases since the 1970s has increased at a far greater rate than inflation has, and has acceletated even more the past few years.
After 1 week, company financed health care benefits stop, and it falls to the unions.
GM isn't paying workers while they are on strike. While on strike, workers rely on the union for allowances.
GM has enough stockpiled vehicles to last at least a month.
GM has enough stockpiled cash to last at least a month.
GM may actually save money if the strike lasts a month since labor cost will drop dramatically, stockpiled vehicles will be able to be sold off (likely without incentives since there is no pressure to both clear the lots and keep factories going).
So, you have the biggest strike since the 1970s being attempted by a union with 1/3 of the members it had back then, with health care costs probally about 6-10 times more, against a company that has been losing money the past few years that (ironically) has a pretty large cash stockpile that is being handed an opportunity to clear alot of cars at a model year changeover at the same time they are trying to essentially end incentives on the vehicles it sells.
Doesn't take alot to see how this is going to end up if it continues.
The UAW can handle roughly a month before they begin to suffer damage (cash & image) that's going to be hard to recover from. GM seems to be set up to handle at least a 1 month shutdown, and may actually see benefit in shutting down at least a month before diminishing returns starts about a month and a half.
The UAW has fair wages (unlike many here, I don't think they're overpaid). Also, the UAW bears no responsibility in any of the US automakers current problems. They didn't make Ford kill off the line of new cars on the drawing boards at the start of the decade. They didn't hire the marketing department at Chrysler whose policy was ignore the change in the US market and keep making vehicles that dealers couldn't sell, and they didn't entice GM to hand the car market over to Toyota, Honda, Hyundai, and every other import in favor of trucks (despite it's venerability to fuel price jumps).
Job security, good working conditions, and fair pay is the basis & the DNA of the union. Although there may be some here that feel that they simply have a degree, they should be paid more and have better coverage than someone working in a craft or in manual labor. I strongly disagree. There is no reason for UAW or any union to abandon their basics for existing because the very nature of business is to get more at less cost. Because labor is usually the largest share of cost in any manufacturing business (from airplanes to pizzas), every time cost cutting comes up, whether for survival or simply to get bigger bonuses, labor is always going to be the first target.
But at the same time, the UAW isn't anywhere near as powerful as they used to be, even 5 years ago. Although Canada's currency now equals that of the US, Canadian national health care makes production there cheaper. To compete against countries that have companies that don't health care coverage in their budgets because their governments do, there's going to need to be some type of compromises. They have to admit that the Job Bank needs to be eliminated and those on it found other jobs or removed & compensated. Workplace rules can no longer be rigid. Workers can no longer do a single job, and need to have a separate UAW member sweep up after them or tend to the outside landscaping.
Although the UAW didn't create the current mess that Ford's in the middle of, GM's crawling out of, or that prompted Daimler to sell most all intrest in Chrysler, they have to realize that this is one fight that they really can't win. I know that they need to save face, flex their muscles, and do something to keep their offices. There are plenty of vocal (and quite honestly, stupid) lower and mid-level union officers who are more confrontational than the national leaders are, but they have to put on a show for them.
This is either going to be a turning point for the UAW or their disinegration. They will never disappear, they won't vanish. But if they aren't careful, they will soon be so minute in numbers that even todays small fraction of their former selves will seem like a massive army of the good old days.
They better play carefully & think fully every move they make from this point on.
At that time, the union was collecting dues from 1.5 million members.
Today, the UAW is collecting alot less dues from a mere 538,000 members.
Health care costs increases since the 1970s has increased at a far greater rate than inflation has, and has acceletated even more the past few years.
After 1 week, company financed health care benefits stop, and it falls to the unions.
GM isn't paying workers while they are on strike. While on strike, workers rely on the union for allowances.
GM has enough stockpiled vehicles to last at least a month.
GM has enough stockpiled cash to last at least a month.
GM may actually save money if the strike lasts a month since labor cost will drop dramatically, stockpiled vehicles will be able to be sold off (likely without incentives since there is no pressure to both clear the lots and keep factories going).
So, you have the biggest strike since the 1970s being attempted by a union with 1/3 of the members it had back then, with health care costs probally about 6-10 times more, against a company that has been losing money the past few years that (ironically) has a pretty large cash stockpile that is being handed an opportunity to clear alot of cars at a model year changeover at the same time they are trying to essentially end incentives on the vehicles it sells.
Doesn't take alot to see how this is going to end up if it continues.
The UAW can handle roughly a month before they begin to suffer damage (cash & image) that's going to be hard to recover from. GM seems to be set up to handle at least a 1 month shutdown, and may actually see benefit in shutting down at least a month before diminishing returns starts about a month and a half.
The UAW has fair wages (unlike many here, I don't think they're overpaid). Also, the UAW bears no responsibility in any of the US automakers current problems. They didn't make Ford kill off the line of new cars on the drawing boards at the start of the decade. They didn't hire the marketing department at Chrysler whose policy was ignore the change in the US market and keep making vehicles that dealers couldn't sell, and they didn't entice GM to hand the car market over to Toyota, Honda, Hyundai, and every other import in favor of trucks (despite it's venerability to fuel price jumps).
Job security, good working conditions, and fair pay is the basis & the DNA of the union. Although there may be some here that feel that they simply have a degree, they should be paid more and have better coverage than someone working in a craft or in manual labor. I strongly disagree. There is no reason for UAW or any union to abandon their basics for existing because the very nature of business is to get more at less cost. Because labor is usually the largest share of cost in any manufacturing business (from airplanes to pizzas), every time cost cutting comes up, whether for survival or simply to get bigger bonuses, labor is always going to be the first target.
But at the same time, the UAW isn't anywhere near as powerful as they used to be, even 5 years ago. Although Canada's currency now equals that of the US, Canadian national health care makes production there cheaper. To compete against countries that have companies that don't health care coverage in their budgets because their governments do, there's going to need to be some type of compromises. They have to admit that the Job Bank needs to be eliminated and those on it found other jobs or removed & compensated. Workplace rules can no longer be rigid. Workers can no longer do a single job, and need to have a separate UAW member sweep up after them or tend to the outside landscaping.
Although the UAW didn't create the current mess that Ford's in the middle of, GM's crawling out of, or that prompted Daimler to sell most all intrest in Chrysler, they have to realize that this is one fight that they really can't win. I know that they need to save face, flex their muscles, and do something to keep their offices. There are plenty of vocal (and quite honestly, stupid) lower and mid-level union officers who are more confrontational than the national leaders are, but they have to put on a show for them.
This is either going to be a turning point for the UAW or their disinegration. They will never disappear, they won't vanish. But if they aren't careful, they will soon be so minute in numbers that even todays small fraction of their former selves will seem like a massive army of the good old days.
They better play carefully & think fully every move they make from this point on.