UAW's Gettelfinger: General Motors "Pushed Us Into a Strike"
September 24, 2007

Negotiators for General Motors and the United Auto Workers union were headed back to the bargaining table while workers walked the picket line in a strike that started at 11 a.m. Monday.

UAW President Ron Gettelfinger told a press conference that GM has treated the negotiations as "a one-way street," with the automaker expecting everything from union members while giving nothing back.

"GM pushed us into a strike," Gettelfinger said. He added that it appeared to the union bargaining team that GM, as of last Thursday, didn't care if the union went on strike.

Gettelfinger said the main open issue is job security, particularly related to plants like those in Fairfax, Kansas; Spring Hill, Tennessee; and Lordstown, Ohio, that have no future product planned. He emphasized the strike had absolutely nothing to do with the establishment of the union-run trust fund for retiree health care benefits, something the UAW has offered GM in previous negotiations but GM turned down, Gettelfinger revealed.

In the meantime, GM has issued a statement: "We are disappointed in the UAW's decision to call a national strike. The bargaining involves complex, difficult issues that affect the job security of our U.S. workforce and the long-term viability of the company. 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."

"We thought we would be able to accomplish this no later than this weekend, but our efforts have been to no avail," wrote Gettelfinger in an e-mail to union local officials, telling them to prepare to strike. "While we have made progress in many areas, GM has failed to address major concerns."

The UAW has not struck GM since 1998, when two Flint, Michigan, parts plants went on strike and shut down the automaker because the parts it made were used across the continent. The last national contract strike was in 1976.

GM Better Positioned To Bear a Strike

A strike is good for no one: not for GM, the UAW, the Detroit area and other GM towns, and the global economy.

Indeed, it will hurt GM. It will cost hundreds of millions of dollars at a time when GM's turnaround is just beginning to take hold, but remains fragile. It will hurt GM sales at a time when GM has had some sales momentum in specific areas, like the Saturn division and the crossover segment. And GM is on the eve of launching some critical new models, specifically the Chevrolet Malibu and Cadillac CTS.

The 1998 strike was debilitating to GM. The automaker lost money and market share -- share it never regained.

But GM is in a better position today. The economy and car market are soft, so it is as good a time as any to take a strike. GM has a reasonable stockpile of inventory. Edmunds.com's analysis shows GM's inventory amounts to about 87 days, above the industry norm of 60-65 days.

The automaker also has developed uniform processes for building vehicles and such so that, while it would be a cumbersome and expensive endeavor, the automaker could move assembly operations elsewhere.

Since 1991, GM has become a truly global automaker, with manufacturing operations around the globe -- and more than it needs in the U.S. A strike could give GM the excuse it needs to move vehicle production or shut down plants -- especially ones with cantankerous labor relations -- an easier decision.

Another factor is that impending fuel economy regulations will force automakers to produce and sell more small cars, which Detroit automakers can't do profitably in North America. A strike will spur efforts to build them offshore in low-cost countries.

And GM has the support of Wall Street and its other financial constituents, who already have calculated into the higher price of GM's stock the automaker's tough stance with the union. GM's stock was trading higher on news of the strike, likely in response to the automaker's tough stance with the union.

The UAW doesn't have much support. The UAW's membership -- and union membership generally -- has nosedived. The UAW has been unable to organize workers at the growing transplant operations of foreign manufacturers. And based on letters to the editor and e-mails to media outlets, union members are widely criticized for demanding far more than other Americans receive, such as traditional pensions and lifelong health care benefits.

History Won’t –- Can't –- Repeat Itself

The lengthy negotiations -- which have extended 10 days beyond the official contract expiration on September 14 -- and now the strike, illustrate the intensity of goals for both sides: GM’s goal is to cut costs, especially health care costs; the union’s mission is to protect jobs, pay and benefits.

GM appears to be sticking to its guns on the establishment of a union-run trust fund for retiree health care. The UAW has agreed in principle to such a fund. The debate has been over the amount of contributions. Issues of job security have also been at the forefront.

GM has to stick to its guns for its survival. No way will GM CEO Rick Wagoner sign a deal like the one former GM Chairman Bob Stempel did more than a decade ago. That one still reverberates on GM’s balance sheet.

In those 1990 negotiations, Stempel, so as not to bear a strike, was seen as caving to the union on issues of job security, and the Jobs Bank that pays people in full when they are displaced from their jobs but maintains pay and benefits, like health care coverage and pensions for active workers and retirees.

Subsequently, a boardroom coup led to the ouster of Stempel and GM President Lloyd Reuss, with the union contract at the top of the list of their transgressions.

GM is still paying for that contract today.

Posted by Michelle Krebs at 7:19 AM under Analysis , GM | Comments (3) | digg this | Seed Newsvine