The United Auto Workers and General Motors are back at the bargaining table, with the union demanding a larger slice of the $27.5 billion in profits generated by the automaker over a four-year period since the last contract was signed in 2015.
Around 48,000 GM workers on Monday began walking picket lines at 55 plants nationwide, with job security, pay and medical coverage the major issues behind the union'sagainst GM. The outcome is also expected to set the framework for coming UAW negotiations with Ford Motor Co. and Fiat Chrysler.
"Our members have been very clear about what they will and will not accept from this contract," UAW Vice President Terry Dittes told a news conference Sunday. "We are standing up for fair wages, we are standing up for affordable, quality health care. We are standing up for our share of the profits. We are standing up for job security for our members."
The walkout could cost the automaker about $50 million a day in earnings before interest and taxes, according to a Credit Suisse analyst cited by Bloomberg News. If the strike lasts more than 15 days, rank-and-file UAW members will get pay of $250 a week.
In an unusual action, GM on Sunday disclosed the major points of the company's offer to UAW leaders shortly before the strike was set to start. GM cited plans for $7 billion in investments in eight U.S. plants and more than 5,400 additional jobs, most of them new hires. It offered an $8,000 signing bonus once a contract is ratified by workers, the same amount it doled out in 2015. The automaker also put on the table what it called an "improved" profit-sharing formula, but did not provide details.
Late Monday, GM confirmed negotiations resumed with UAW earlier in the day, and said, "Our goal remains to reach an agreement that builds a stronger future for our employees and the company."
Wanted: Nearly $30 an hour
GM's statement didn't address a big sticking point for many UAW members: The company's use of lower-paid temporary workers and the eight years it takes for new workers to reach top-scale pay.
The union is calling for raises for entry-level workers, who currently begin at under $20 an hour, so they reach around $30 an hour in three to four years, instead of the current eight-year period. GM said workers would get lump-sum payments or pay hikes in all four years covered under its proposal, but didn't provide specifics.
The top production wage at GM is $33 an hour, while starting temp workers are paid as little as $15 an hour.
A cap on temp workers
The UAW wants to limit the number of temp workers GM can use, which in 2019 has averaged about 7% of its U.S. workforce. Temp workers are paid as little as $15 an hour, while employees brought on before 2007 make $30 to $33 an hour; entry-level hires employed after 2007 start at about $17 an hour.
"You could be on the line earning $33 and the person next to you is making $15 an hour as a temp worker," Harley Shaiken, a labor relations professor at the University of California at Berkeley, told CBS MoneyWatch. The varied pay levels and statuses are an ongoing blow to union solidarity, he noted.
Reopening closed plants
The UAW is also demanding that GM carry on production at four U.S. plants that the Detroit automaker has targeted for closure. That includes its shuttered Lordstown, Ohio, assembly plant, where the automaker stopped production in March, affecting more than 1,400 hourly employees. The union is suing GM over the move and others involving plants in Michigan and Maryland, saying GM had violated a contract signed by both sides in 2015.
GM said it planned to produce batteries for electric vehicles using UAW workers in Lordstown. The company's decision to idle the Lordstown plant and a subsequentonly served to inflame the UAW.
The automaker's Detroit-Hamtramck factory continues to build Cadillac and Chevrolet sedans, and GM is now proposing to save the plant and would give it a new vehicle to build as part of its latest offer.
A greater share of the profits
The UAW picked GM as its target automaker for contract negotiations because of how profitable the company has been — and because it had moved to close four plants despite being profitable.
GM reported annual revenue of $147 billion last year, up just 1% from 2017, but near-record profit of $12 billion. Despite those profits, GM said last November it needed to cut North American plant capacity and "unallocate" products as a first step toward closing four facilities. GM is trying to guard against a potential sales downturn in the U.S. and is on pace to cut $4.5 billion in costs by late 2020, including layoffs of white-collar workers, as part of the restructuring announced in November.
An unidentified union official at one GM factory recently told the Wall Street Journal that full-time hourly workers get profit-sharing checks from GM every February that have surpassed $10,000 in recent years, while temp workers get nothing. "That's the worst day of the year for me," the union official reportedly said.
Almost $1 billion a year for health care
UAW leaders are calling for "affordable quality health care," Dittes said on Sunday. GM spends about $900 million on health benefits for roughly 48,000 hourly employees and their 69,000 dependents, the company has previously stated.
GM's initial offer called for workers to cover 15% of their health costs, well beneath the national average of 28% but about five times higher than the 3% to 4% autoworkers now pay, according to Automotive News, which cited sources familiar with the talks. The UAW balked at the proposal, prompting GM to step back and offer to maintain the status quo, the industry publication reported.
GM's statement said its offer called for workers to "retain nationally-leading health care benefits," but did not provide specifics.