UAW touts 'major gains' — but has won few breakthroughs

Labor talks likely took longer than usual because the UAW is under investigation for a pay-for-play corruption scandal that has sent a number of its officials to prison for taking bribes.
Image: GM, UAW auto strike
General Motors employees Bobby Caughel, from left, and Flint resident James Crump, shout out as they protest with other GM employees, UAW members and labor supporters outside of the Flint Assembly Plant in Flint, Mich. on Sept. 16, 2019.Jake May / The Flint Journal via AP

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By Paul A. Eisenstein

The picket lines are still in place but, after more than a month, the end of the longest walkout in 50 years to shut down General Motors’ U.S. operations appears close, now that bargainers for the United Automobile Workers Union have accepted the company’s tentative contract offer.

An official summary was released by the UAW on Thursday following a meeting of the National GM Council made up of local leaders, ahead of a vote by the 46,000 member rank-and-file.

Ahead of the national leadership meeting, union officials touted "major gains" as they announced a deal was in hand. Observers said that would be necessary to win worker approval after such a lengthy strike.

Among the more significant elements of the deal, GM has agreed to make $9 billion in investments in the U.S. for new plants and products, including at least one all-electric pickup that will go to a Detroit plant the automaker said last November it would close.

Not all details were released, and the union wouldn't discuss some of the issues that had been on the bargaining table at various times, but sources told NBC News the UAW was able to beat back a proposal by GM that would have required workers to pay more than they currently do for medical care. The UAW has long had one of the nation’s best health care programs, requiring few out-of-pocket expenses.

Other financial details include raises of up to 3 percent coming during the first and third years of the agreement, with 4 percent lump-sum bonuses in years two and four. Meanwhile, numerous sources confirmed that GM’s U.S. UAW employees will receive signing bonuses averaging around $11,000 apiece. Profit-sharing bonuses also will be uncapped.

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One of the key concerns for the union as it began bargaining for a new four-year contract last summer centered around the various levels of workers GM currently employs. Long-time veterans, referred to as “legacy workers,” have plush agreements that run not only at the top of the pay scale but have such perks as defined pension programs.

A second group, with lesser seniority, is known as “in-progress” workers. They start out with lower pay and benefits, requiring nearly a decade to reach the maximum — though some classic benefits have been replaced, with a 401(k) retirement plan now substituting for the defined pensions. Under the new deal, the maximum pay level of $32.32 takes eight years to reach. That will be halved to four years.

Perhaps the biggest sticking point concerned the contract workers who received significantly lower pay and far fewer benefits and who had little in the way of job guarantees. Contract workers who have clocked three years with GM will become full-time, in-progress employees as of Jan. 6, 2020. Temps will get a $4,500 signing bonus once the contract is ratified.

The union didn’t get everything on its wish list. While the Detroit-Hamtramck Assembly Plant will remain open, the already-shuttered line in Lordstown, Ohio, won’t be saved, nor will parts operations in Baltimore and the Detroit suburb of Warren. A third assembly plant covered by last November’s announcement, near Toronto, is covered by a separate contract between GM and its Canadian union.

GM hasn’t faced a national strike of this magnitude since 1970. Few observers were surprised when the two sides missed their contract deadline, though the length of the latest confrontation did drag on longer than most had forecast.

“The union may have been moving slowly because they had this cloud hanging over them,” said Arthur R. Schwartz, a consultant and head of Labor and Economics Associates, and a long-time GM negotiator who retired at the beginning of the decade.

He was referring to the pay-for-play corruption scandal that has sent a number of UAW officials to prison for taking bribes. Shortly before the deadline, the situation was compounded by a sweeping probe that saw the FBI raid a number of homes owned by union leaders, including the UAW’s current and immediate past president.

Conversations with workers on the line found many skeptical about whether their leaders would be tougher this time and, said Schwartz, that meant “they had to be very transparent.” Where much of the bargaining normally would have been done in small groups, he added, there were often 20 or more union representatives on hand this time around, “and when you add that many people, it slows everything down.”

For its part, GM insiders said the company was determined not to write a blank check that would raise its labor costs from an average of around $63 an hour, according to data from the Center for Automotive Research. By comparison, foreign-owned factories, such as the Honda plant in Marysville, Ohio, spend about $50 for hourly workers, including wages and benefits.

That said, Bank of America analysts this week estimated the strike had already cost GM about $2 billion. There were signs that some in the financial community were growing wary, with Moody’s hinting it could downgrade the automaker.

But GM also was given encouragement not to fold. "A prolonged strike could burn significant cash and bring GM to its knees, but investors likely will also react negatively if management is perceived to have caved in to labor's demands and GM's long-term competitiveness is threatened," BoA analyst John Murphy wrote investors on Tuesday.

Exactly what broke the logjam isn’t clear, but former negotiator Schwartz said GM's CEO “Mary Barra showing up didn’t hurt,” referring to the meeting in recent days between the automaker's chief executive and top union leaders.

Whatever it took, the settlement reached midday Wednesday will now face a worker vote that could see picket lines come down shortly.