Strike over! UAW workers ratify contract with GM. Here's what's next

After a bruising six-week strike that was deeply costly to General Motors and 46,000 UAW workers, the union said Friday that its membership ratified a new four-year contract with GM by a 57% to 43% margin, bringing the strike to a close. 

The UAW made the declaration after the voting ended at 4 p.m. Friday.

“General Motors members have spoken,” said Terry Dittes, UAW vice president of the UAW-GM Department. “We are all so incredibly proud of UAW-GM members who captured the hearts and minds of a nation. Their sacrifice and courageous stand addressed the two-tier wages structure and permanent temporary worker classification that has plagued working-class Americans.”

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In announcing the ratification and end to the strike, the UAW said 23,389 members voted yes and 17,501 voted no on the proposed contract. 

The UAW said that workers will begin to report to work as instructed by GM. The union also announced Friday the next pattern bargaining company will be Ford.

GM, confirmed the contract ratification Friday saying it delivered a contract that recognizes employees for the important contributions they make to the company's success with a strong wage and benefit package and additional investment and job growth in U.S. operations.

"GM is proud to provide good-paying jobs to tens of thousands of employees in America and to grow our substantial investment in the U.S," said GM CEO Mary Barra, "As one team, we can move forward and stay focused on our priorities of safety and building high-quality cars, trucks and crossovers for our customers."

Separately, Aramark workers also ratified a contract for about 850 janitors at five GM locations in Michigan and Ohio.

The nearly 46,000 union members will receive $11,000 ratification bonuses from GM. Temporary workers are to get $4,500.

In an internal alert to GM employees, the carmaker said UAW employees will resume work on Monday with first shift. GM is calling workers at its Flint Assembly and Fort Wayne Assembly in Roanoke, Indiana, seeking volunteers to start production Saturday or Sunday at those two plants. GM builds its 2020 Chevrolet Silverado and 2020 GMC Sierra pickups at those two plants.

The strike cost the company $450 million a week, the Center for Automotive Research estimated, interrupted production of key vehicles and will delay delivery of the 2020 midengine Corvette Stingray. 

The strike's impact goes beyond the automaker.

Lear Corp. said Friday that the six-week strike represents $525 million in lost revenue for the seating and electronic systems supplier.

Lear, based in Southfield, also lowered its full-year financial outlook, according to Crain’s Detroit Business. Its third-quarter net income fell 15% to $216 million. GM is Lear's largest customer, accounting for 18% of Lear’s business last year.

Temporary workers

The union said the new contract will automatically make more than 900 temporary workers regular employees in January. After that, temps would get permanent jobs as they accrue time on the job under terms of the new contract. Their benefits improve, and the union has a voice in how many temporary workers the company can add. 

Likewise, all "in-progression" workers would get a raise within 52 weeks of their last raise. Under the old contract, those hired after 2007, dubbed in-progression workers, start at $17 an hour and could move up to $28 an hour after eight years. This new deal provides for them to reach $32.32 an hour by the time the new contract expires in 2023.

At Local 163, which represents GM Romulus Powertrain, 1,064 members out of about 1,100 voted, said Ralph Morris, president of the local. He said many workers live as far away as Flint and Toledo, but they drove in to vote.

But during the informational meetings, there were many “impassioned” questions around the contract, he said.

“Some liked that there were no increases to their health care, they liked that the cap was raised for wages to help in-progression employees move up,” said Morris, “But, it was a mixed bag. Was it a slam dunk? No, but a lot of them felt it was an improvement from the current plan and there was a pathway for temporary employees.”

GM will be calling some Local 163 skilled trades workers asking them to work Saturday and Sunday at Romulus, said Morris. They will be paid time-and-a-half for that work. Monday would be the full production day, he said.

Next up!

The UAW will move on to negotiating a new tentative agreement with Ford, using the GM contract as the template. 

A UAW Local leader at a GM plant said the union will face challenges at Ford and Fiat Chrysler Automobiles as they head into negotiations with those companies.

“Ford really wanted the health care cut down and Chrysler has the biggest problem with four levels of 10,000 temp workers. Chrysler is going to be very challenging,” the local officer said. “It’ll be interesting to see what Chrysler will do with 10,000 temp employees.”

This officer said Ford should have the easiest time because the union’s top negotiator for Ford, Rory Gamble, has a lot of experience and a good relationship with Ford’s negotiations team.

“They have a strong ability to work together, so they shouldn’t have any problems at all,” said the GM local leader.

Indeed, what worked for GM and the UAW in negotiations isn't necessarily a right fit for Ford and FCA, said David Kudla, CEO of Mainstay Capital Management.

"GM was able to concede wage growth and health care costs for the ability to close three factories," said Kudla. "Ford and FCA didn't have three factories that they wanted to close, but will have to work around this new framework for higher wages and unchanged health care that the UAW and GM have set." 

The union has said it has made significant progress on subcommittee issues with both automakers, but final economic provisions and production promises remain to be worked out. That means those contracts remain uncertain and both companies are still vulnerable to strikes if union negotiators want to play that card.

"Just because there was a GM strike does not mean the other two are off the hook," said Kristin Dziczek, vice president of the Center for Automotive Research in Ann Arbor. 

Separately, the UAW Mack Truck Council announced late Thursday that they have reached a tentative agreement, suspending a nearly two-week strike. Mack workers will be scheduled to return to their jobs. Mack Trucks has five facilities in Pennsylvania, Maryland and Florida. 

Lordstown's end

The ratification spells an end to GM’s now-idle Lordstown Assembly plant in Ohio.

GM is in talks to sell the facility to an investor group, Lordstown Motors, backed by electric truck maker Workhorse. But the local union members wanted GM to give the plant a new product to build after GM stopped building the Chevrolet Cruze compact car there in March.

The contract did not include a new product for Lordstown. It also does not include language to build a battery cell manufacturing facility near Lordstown, which was something GM proposed to the UAW during negotiations. But a GM spokesman confirmed the battery cell plant is still part of GM’s plans.

Local 1112, which represents Lordstown, voted to reject the proposed contract.

“Obviously, we’re all disappointed and angry over what happened,” said Tim O’Hara, president of Local 1112. “For our members, they have to make some decisions now that they hoped they didn’t have to make.  Many of them transferred to other plants and left their families behind hoping they’d return to Lordstown one day.”

In a statement, GM said it is moving forward with opportunities for future investments and job growth in the Mahoning Valley in Ohio. These investments are outside the national agreement:

•  An opportunity to bring battery cell production to the area, which would create 1,000 manufacturing jobs
• The sale of the GM Lordstown complex to Lordstown Motors Corp., which plans to create 400 manufacturing jobs initially.

Local 1112 now represents fewer than 20 workers at Mahoning County Jobs and Family Services and Infinite Synergy in Youngstown, Ohio.

“Obviously, we have a lot of decisions to make as far as the local union,” said O’Hara. “We’ll sit down internally and we’ll have discussions with people at the regional level to see where we go from here.”

The local has enough finances to make it into early next year, he said. The potential of Lordstown Motors buying the plant and GM building a battery cell maker are options given, “they’re saying they want their workers to be UAW,” said O’Hara.

But those are 18 to 24 months down the road, “so we can’t sustain ourselves financially that long. So I don’t know what that means for Local 1112.” 

The bitter battle 

The strike against GM has been  prolonged and at times painful. At one point, a public exchange of words saw GM insinuating the UAW was moving too slowly in negotiations and not responding to company proposals. The UAW fired back that GM was not taking the union seriously.

After that, it took the heavyweights coming to the table to re-ignite progress toward a deal. GM's  Barra and UAW President Gary Jones met with negotiators just days before the two sides finally reached a tentative agreement.

Many UAW leaders and labor experts said that despite the prolonged and sometimes-contentious negotiations, the agreement is a big win for UAW-represented workers at 55 GM facilities in 10 states who had been on strike since 12:01 a.m. Sept. 16.

The deal provides 4% lump sum wage payments in years one and three and 3% base wage increases in alternating years. It gets rid of long-term temporary worker status and holds hourly workers' share of health care costs to 3%, among other provisions.

It also keeps GM's Detroit-Hamtramck plant running by adding an electric pickup and other electric trucks. GM will invest $3 billion in the plant, which also will assemble batteries, and bring in 2,225 new jobs when it's at full volume.

Warren Tech Center will get a new vehicle program, $200 million investment and retention of approximately 75 jobs under the agreement. Lansing Delta and Spring Hill, Tennessee, assembly plants get a next generation midsize SUV assembly worth $1 billion and 5,000 jobs.

Besides Lordstown Assembly Plant in Ohio, a transmission plant in Warren and Baltimore are to remain closed.

Strike fallout

The ratification vote comes at a crucial time. The strike has already cost GM nearly a half-billion dollars a week. Anderson Economic Group in East Lansing said it cost GM another $400 million for the entire next week that the union remained out conducting ratification meetings with ballots due by Oct. 25.

GM has had to temporarily shutter other North American plants. On Oct. 19, GM halted production of its new 2020 Chevrolet Blazer SUV at its Ramos Arizpe Vehicle Assembly in Mexico because of a parts shortage from the UAW nationwide strike.

GM's decision to build the Blazer in Mexico instead of a U.S. plant was a sore point with the UAW, as is low-cost Mexican production in general. 

Also, GM's production of the 2020 Chevrolet Silverado and GMC Sierra pickups at its Silao Assembly Plant in Mexico, along with production of the previous generation pickups at GM's Oshawa plant in Ontario, both went down during the strike because of a parts shortage. 

GM declined to comment specifically on Mexico production. A spokesman said the company wants to get all its U.S. production up as soon as possible. Those plants will make the parts to get GM's plants in Mexico back up. 

The Corvette plant in Bowling Green, Kentucky, was to be retooled this month to build the much-anticipated 2020 Stingray, but that will be delayed while it finishes orders for the 2019 model. 

Many of GM's car dealers complained of a lack of parts to perform repairs in the service lanes. And, 100,000 related workers saw their income impacted because of the strike, economists said.

Likewise, UAW workers were getting by on $250 a week for almost a month until the union raised the strike wage to $275 a week on week Oct. 13. The cost to UAW workers was $14 million per day while they were on strike and not working, Anderson Economic Group said.

The terms

Here are a few highlights of the new contract:

• UAW-represented GM workers will get a bonus of $11,000 upon ratification of the deal. Temporary workers get $4,500. 
• So-called in-progression workers hired after 2007 get a faster path to top pay. Under the previous contract, those workers started at $17 an hour, reaching $28/hour after eight years. Under the proposal, that is shortened to four years.
• Temporary workers, who have been paid $15-19 an hour with inferior benefits to permanent autoworkers, get a path to a permanent role starting next year. Part-time workers get a path to regular status starting in 2021. These workers also get improved paid and unpaid time off. 
• The union has full approval authority and the ability to monitor the number of temporary employees working in the plants. Furthermore, the company now must have approval of the union to supplement the workforce for straight time, overtime or weekend work in any plant covered by the UAW GM National Agreement. The company may use part-time temporary employees only with UAW approval.
• GM will invest $7.7 billion in U.S. facilities to create or retain 9,000 jobs. 
• Newer union workers with two weeks' vacation a year will get to take one of those weeks at their choosing rather than having to take both paid vacation weeks during scheduled plant shutdowns.
• The profit-sharing formula of $1,000 for workers for each $1 billion in North American pretax profit is unchanged but the $12,000 cap is removed.
• There are assistance packages for workers at Lordstown, Warren and Baltimore transmission plants, including $75,000 payments for eligible production workers and $85,000 for skilled workers who retire.  There are also buyout options for those not eligible to retire.
• Although joint activities focused on health and safety and other issues between the union and GM continue, the UAW-GM Center for Human Resources would be dissolved under a memorandum of understanding. The center has become embroiled in the UAW corruption scandal and several people connected to the running of the center stand accused of misusing funds. The Free Press had earlier reported on the likelihood of the closure.

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Contact Jamie L. LaReau: 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.