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GM, UAW Could Be Weeks From Deal

GM, UAW Could Be Weeks From Deal

General Motors and the United Auto Workers could be weeks away from inking a new collective bargaining agreement. Both sides are reportedly digging their heals in as nearly 49,000 hourly GM workers strike, leaving GM’s assembly plants to sit idle.

Most forecasters agree that GM is unlikely to cave soon, according to Automotive News. The automaker is reportedly losing $50 to $100 million per day during the strike, which is going on week two. Despite the hefty loss, GM is sitting on over $34 billion in cash, enough to weather a strike for weeks or even months without putting a huge dent in the bottom line.

GM added additional pressure to the UAW by swiftly offloading its 49,000 members from the company’s health care plan, shifting those responsibilities to the union. Starting next week the union will have to compensate members at a $250 per week rate and they’ve already started paying for the member’s health care. Both costs will come from the UAW emergency fund, which has about $700 million in it.

Pressure will also start mounting on GM from its supplier and dealership network. Nexteer Automotive has already warned it may have to implement temporary layoffs since GM isn’t buying parts right now. Dealerships may also start running out of parts, which could cripple their service departments.

Speaking of inventory, GM dealerships have a hefty national inventory of new vehicles to ride out the strike.

The current strike commenced after the UAW declined a last-minute offer from GM that included $7 billion of investment, 5,400 new employees and status quo health insurance benefits. The union says the proposal did not go far enough on most issues.





 

About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.
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  1. Tone
    Some further points from a university researcher who has explored why strikes used to work -- and probably won't this time: Why the United Auto Workers GM strike is headed for failure

    "In the process of our research we also gained an understanding of what makes an auto strike successful. Essentially, for a strike to achieve its aims, workers need sufficient leverage over production to be able to disrupt normal functioning for long enough that it would be cheaper for the company to offer the concessions. Put another way, workers have to cause the automaker enough pain to make it cry uncle."

    ...

    "Today GM carries large stockpiles of inventory, and its suppliers and assembly plants are located all over the world. Just 28% of its workforce is in the U.S., and its cars don’t rank high on an index measuring how much of a car is made in the United States.

    "The result of the current production structure is that while a national strike shuts down U.S. production, that is only a minor part of GM’s total capacity.

    "Further, the strike’s expected costs to GM are a drop in its bucket. Some analysts are estimating that the strike will cost GM US$50 million to $100 million per day. Even if the strike lasts a month, that’s a tiny fraction of GM’s $147 billion in 2018 sales."

    Read the whole article here: http://theconversation.com/why-the-united-auto-workers-gm-strike-is-headed-for-failure-123945
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