WSJ Editorial: The Price of the Union at GM

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Thread: WSJ Editorial: The Price of the Union at GM

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    WSJ Editorial: The Price of the Union at GM

    The Wall Street Journal
    October 19, 2019

    The Price of the Union at GM: The UAW made itself look relevant but workers get little.

    Remind us again why the United Auto Workers went on strike for five weeks against General Motors? The terms of the tentative deal struck this week show that the union made itself look relevant at the cost of lost wages and perhaps future profit-sharing for workers.

    UAW leaders this week agreed to a new four-year labor contract with GM, though 46,000 workers won’t return to work unless they ratify the deal by next Friday. Most will have lost more in pay during the strike than they appear to have gained in the new contract.

    The strike caused more than 75,000 workers at GM suppliers across North America to be laid off or lose pay, which underlines how auto supply chains are globally interconnected. The union also forced GM to idle production at plants in Canada and Mexico where it manufactures trucks that are highly profitable.

    By some estimates the strike has cost GM $2.5 billion in profit, which will reduce the annual profit-sharing bonuses that go to workers. While the labor deal includes an $11,000 per worker ratification bonus—$3,000 more than what GM originally offered—we calculate that workers lost between roughly $5,100 to $8,200 in pay during the strike, based on their hourly wage rate.

    The UAW says it won a faster wage progression for newer hires and a path to permanent status for temporary employees. Workers with fewer than 10 years of employment will make $32 an hour after four years instead of eight years under the old contract. It also obtained two 4% annual lump sum bonuses and 3% annual wage increases, but it’s not clear whether this is better than GM’s earlier offers.

    GM plans to offset these higher labor costs by offering buyouts and incentives for early retirement to thousands of higher-paid workers. This will allow GM to become leaner amid a global slowdown in auto sales, as well as invest more in electric and self-driving cars. But the contract is still likely to make GM less globally competitive. The company’s labor costs average $63 per hour, compared with an average of $50 for non-unionized foreign auto makers that operate in America’s southern states. Higher labor costs haven’t hurt GM much in recent years, since Ford and Fiat Chrysler have similar deals with the UAW. Foreign auto makers also make mostly small cars, which account for a tiny share of GM profits.

    But foreign companies are trying to become more competitive in SUVs and trucks. So are Tesla and electric-truck startups such as Rivian and Workhorse. GM has committed under the new deal to build an electric truck at a plant slated to close in Detroit, though the UAW had pushed for commitments to produce more internal combustion vehicles that require more parts and labor.

    The deal includes a moratorium on plant closings and a new labor-management committee that will review new technologies. The union will also be able to veto the use of temporary or part-time workers. None of this will help GM to adapt to changes in technology and consumer preferences or to future economic slowdowns. GM will have to keep running factories even if the cars they make don’t sell, though perhaps it is betting government electric-car mandates will ensure steady production.

    The UAW’s leaders wanted to make the show of a strike to reestablish some credibility with workers amid a federal probe into union corruption. GM is betting that labor peace for four years is worth the price, but then that’s what it said about the deals that helped drive it into bankruptcy a decade ago. Don’t think it can’t happen again.









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    Re: WSJ Editorial: The Price of the Union at GM

    The UAW’s leaders wanted to make the show of a strike to reestablish some credibility with workers amid a federal probe into union corruption. GM is betting that labor peace for four years is worth the price, but then that’s what it said about the deals that helped drive it into bankruptcy a decade ago. Don’t think it can’t happen again.
    GM will have to keep running factories even if the cars they make don’t sell...
    Interesting how this reads when you move those sentences around. Excuse me, but I have to check what year this is; for some reason I think we are back in 2007...









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    Re: WSJ Editorial: The Price of the Union at GM

    The UAW says it won a faster wage progression for newer hires and a path to permanent status for temporary employees. Workers with fewer than 10 years of employment will make $32 an hour after four years instead of eight years under the old contract. It also obtained two 4% annual lump sum bonuses and 3% annual wage increases, but it’s not clear whether this is better than GM’s earlier offers.
    Yeah, if GM is still competitive, this is all pie in the sky, if the cow has no milk, where is your cheese going to come from? You can promise all the Cheese all you want.
    If I was GM negotiator, the offer would have gotten worse and worse with every striking day gone by. Simple. The GM negotiators are idiots, so is the Union.
    What did the Union do to make the Ohio plant competitive? Nothing??

    Well, where are those workers now?

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    Re: WSJ Editorial: The Price of the Union at GM

    Cutting your own throat, in the long run (but who cares about that, all the brass will be retired/fled to non-extradition* countries/in prison a few years down the pike) to look tough. Yeah, that makes sense.

    * July 31, 2015 at 4:00 PM CDT - Updated July 3 at 8:31 AM

    These countries currently have no extradition treaty with the United States:

    Afghanistan, Algeria, Andorra, Angola, Armenia, Bahrain, Bangladesh, Belarus, Bosnia and

    Herzegovina, Brunei, Burkina Faso, Burma, Burundi, Cambodia, Cameroon, Cape Verde, the Central

    African Republic, Chad, Mainland China, Comoros, Congo (Kinshasa), Congo (Brazzaville), Djibouti, Equatorial

    Guinea, Eritrea, Ethiopia, Gabon, Guinea, Guinea-Bissau, Indonesia, Ivory Coast, Kazakhstan,

    Kosovo, Kuwait, Laos, Lebanon, Libya, Macedonia, Madagascar, Maldives, Mali, Marshall Islands,

    Mauritania, Micronesia, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nepal,

    Niger, Oman, Qatar, Russia, Rwanda, Samoa, São Tomé & Príncipe, Saudi Arabia, Senegal, Serbia,

    Somalia, Sudan, Syria, Togo, Tunisia, Uganda, Ukraine, United Arab Emirates, Uzbekistan, Vanuatu,

    Vatican, Vietnam and Yemen.

    https://www.wsfa.com/story/22665099/...reaty-with-us/
    Last edited by Neanderthal; 10-19-2019 at 03:53 PM.
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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by mbukukanyau View Post
    Yeah, if GM is still competitive, this is all pie in the sky, if the cow has no milk, where is your cheese going to come from? You can promise all the Cheese all you want.
    If I was GM negotiator, the offer would have gotten worse and worse with every striking day gone by. Simple. The GM negotiators are idiots, so is the Union.
    What did the Union do to make the Ohio plant competitive? Nothing??

    Well, where are those workers now?
    GM is massively profitable and even more so after this contract is signed.
    The cow has lots of milk but a lot more of it now comes from Mexico
    and by giving up on unprofitable car plants, the UAW is now part of
    a much stronger, more profitable GM.

    Regarding negotiations,
    You're conflating the unreal expectations of some radical line workers with the cool pragmatism of the actual negotiating team. What the UAW really wanted was realistic achievable goals of stability for 9,000 casual workers, at least one or two plant to continue with new products and yes better pay and profit sharing cap lifted.

    The biggest fail here was that GM's negotiators let the UAW leave the table and go close down their business, that's massively disruptive compared to the small potatoes that the UAW wanted.

    But in the end, GM still achieved some major objectives, three plants still stay closed and a whole bunch of Utility production comes from low cost non-UAW Mexican plants.

    Set in motion four years ago,
    GM played the UAW from four years back, they knew then that four car plants would close and lots of new production would go South of the border and guess what, GM will have even more bad news for the UAW in another four years. I know that the UAW is not ready for what's coming, how can they as it signals they are slowly circling the drain..

    So who really got who....

    The cost,
    The strike is a pain but GM still gets to sell lots of vehicles and work down its inventory, who cares what happened at GM's suppliers, they have insurance for for that in their contracts and any loss of supplies will be picked up in the next few months (mostly but not all).
    Last edited by jpd80; 10-19-2019 at 07:08 PM.

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by Neanderthal View Post
    Cutting your own throat, in the long run (but who cares about that, all the brass will be retired/fled to non-extradition* countries/in prison a few years down the pike) to look tough. Yeah, that makes sense.
    GM actually achieved huge reform over the last four years and continues with this contract.

    Consider this,
    - three of four unprofitable car plants stay closed
    - newer more profitable Utilities come mostly from low cost Mexico (no UAW)
    - UAW agrees to financial terms that GM offered
    - GM gets to reduce UAW's influence further in the next four years..

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by mbukukanyau View Post
    Yeah, if GM is still competitive, this is all pie in the sky, if the cow has no milk, where is your cheese going to come from? You can promise all the Cheese all you want.
    If I was GM negotiator, the offer would have gotten worse and worse with every striking day gone by. Simple. The GM negotiators are idiots, so is the Union.

    What did the Union do to make the Ohio plant competitive? Nothing??

    Well, where are those workers now?
    The plant was competitive, it was the product that was lacking......................
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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by Ed753 View Post
    The plant was competitive, it was the product that was lacking......................
    Against popular wisdom, GM was adamant that NG Cruze could be
    built profitably at Lodstown. In reality, I bet they knew it wasn't
    but just said OK knowing the 2015 Contract would include it.
    Last edited by jpd80; 10-19-2019 at 07:57 PM.

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by jpd80 View Post
    GM is massively profitable and even more so after this contract is signed.
    The cow has lots of milk but a lot more of it now comes from Mexico
    and by giving up on unprofitable car plants, the UAW is now part of
    a much stronger, more profitable GM.

    Regarding negotiations,
    You're conflating the unreal expectations of some radical line workers with the cool pragmatism of the actual negotiating team. What the UAW really wanted was realistic achievable goals of stability for 9,000 casual workers, at least one or two plant to continue with new products and yes better pay and profit sharing cap lifted.

    The biggest fail here was that GM's negotiators let the UAW leave the table and go close down their business, that's massively disruptive compared to the small potatoes that the UAW wanted.

    But in the end, GM still achieved some major objectives, three plants still stay closed and a whole bunch of Utility production comes from low cost non-UAW Mexican plants.

    Set in motion four years ago,
    GM played the UAW from four years back, they knew then that four car plants would close and lots of new production would go South of the border and guess what, GM will have even more bad news for the UAW in another four years. I know that the UAW is not ready for what's coming, how can they as it signals they are slowly circling the drain..

    So who really got who....

    The cost,
    The strike is a pain but GM still gets to sell lots of vehicles and work down its inventory, who cares what happened at GM's suppliers, they have insurance for for that in their contracts and any loss of supplies will be picked up in the next few months (mostly but not all).
    The only problem I have with that is that if this plant was indeed so competitive, why didn't GM give its employees and their union a decent product to keep the ship alive rather than closing it and its competitive workers going away. Guess the competitive workers were expendable in GM's long range goals.

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by Ed753 View Post
    The plant was competitive, it was the product that was lacking......................
    Why do you say the plant was competitive vs. not? Meaning how do you know?

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by 1958carnut View Post
    The only problem I have with that is that if this plant was indeed so competitive, why didn't GM give its employees and their union a decent product to keep the ship alive rather than closing it and its competitive workers going away. Guess the competitive workers were expendable in GM's long range goals.
    GM maximizing profits with cheap Mexican labor?
    Most of the employees were offered transfers to other plants

    It was too easy to put the NG Cruze into an existing Cruze production line
    and it served a means to an end, the Cruze was still selling well enough
    back in 2014 and that allowed for a fairly peaceful agreement in 2015.

    but GM knew that car sales were going away even back then and it was
    those continuing rising material costs that made Cruze less profitable
    more so than the demands of workers..

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    Re: WSJ Editorial: The Price of the Union at GM

    During the past few weeks of the strike, most of the media had been silent on the continuing UAW corruption, Federal criminal investigations - which has resulted in 11 indictments and 9 convictions to date.

    I hope the media resumes its reporting of the continuing investigation.

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by 1999 White C5 Coupe View Post
    During the past few weeks of the strike, most of the media had been silent on the continuing UAW corruption, Federal criminal investigations - which has resulted in 11 indictments and 9 convictions to date.

    I hope the media resumes its reporting of the continuing investigation.
    They can only report if further developments are released by investigators,
    those investigators may still be pulling on threads that lead to even more
    investigations. The whole house of cars will be brought down.

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    Re: WSJ Editorial: The Price of the Union at GM

    Quote Originally Posted by jpd80 View Post
    They can only report if further developments are released by investigators,
    those investigators may still be pulling on threads that lead to even more
    investigations. The whole house of cars will be brought down.
    I see what you did there. Pretty clever of ya.

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    Re: WSJ Editorial: The Price of the Union at GM

    GM asked for this. They closed Lordstown and stopped producing Compact cars, ticking off their customers and Americans who agreed with the bailout and who don't favor companies too gutless to compete with the likes of Honda, Toyota, Hyundai, etc. They keep and expand production in Mexico yet cut it here.
    Those of us who used to call out the unions as being greedy and foolish to hurt the company they work for are now saying HA!
    Mary, you're an inept CEO. Step down and let someone with guts and vision take over.

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