The United Auto Workers union and General Motors have approved a new labor agreement that ended the union's strike against the auto maker. Automotive News labor reporter Mike Martinez has been following the negotiations since day one and has some thoughts on who stands to benefit—and who won't—in the wake of the new agreement. Automotive News is a sister publication to Rubber & Plastics News.
At the handshake ceremony to formally open negotiations, UAW President Gary Jones demanded that GM CEO Mary Barra keep open four plants in the U.S. it had "unallocated" last November.
"We call on GM to keep these plants open and allocate more products on American soil," Jones said in July. "It can be done."
It was. To an extent.
While GM won the ability to close plants in Ohio, Michigan and Maryland, the union secured a big win in keeping open Detroit-Hamtramck Assembly, which was scheduled to close in January. Workers there will get the opportunity to build electric trucks, vans and battery modules, which represents a $3 billion commitment. While the union has voiced concern over electric vehicles, and while EVs remain a tiny portion of the market, the allocation cements job security for up to 2,225 people at full capacity. If that doesn't secure their "yes" votes, nothing will.
Older workers at the three plants slated to close
It's never good when a company closes your plant. But if a company is going to close your plant, the best you can hope for is a generous buyout package, and that's what they're getting. According to the tentative deal, workers displaced by the closure of the plants in Ohio, Michigan and Maryland can elect a $75,000 retirement incentive ($85,000 for skilled trades), a buyout of up to $75,000 depending on their level of seniority or several other options.
For someone weighing an early retirement against the prospect of uprooting their family or drastically increasing their commute to another facility, it's certainly an attractive option. It might be safe to assume most workers at these plants will vote to reject the deal, but older employees mulling their financial future might add a few "yes" votes to the tally.
GM in 2018 became Mexico's largest producer of automobiles. The country accounted for more than a quarter of all the company's estimated North American production, according to the Automotive News Data Center.
It's likely to retain that title this year.
The union, predictably, thought that was no bueno and sought to return production to this side of the Rio Grande over the course of the 2019 contract. In that regard, it failed. There's no mention of any product returning from Mexico in either the union's contract highlights or full white book.
To add insult to injury, GM's production numbers in Mexico are likely to grow in 2019, thanks to a full year's worth of production of the Chevrolet Blazer. If workers vote "no," this is likely to be at the top of their list of grievances.
Ford and Fiat Chrysler
Detroit's other two automakers likely aren't pleased with GM's decision to capitulate on health care costs, allowing the union to keep current benefits, which allow members to pay 3 percent of costs, without any changes. Ford Motor Co. has warned that health care costs will top $1 billion next year, and all three companies identified health care as a prime opportunity to find some financial relief.
Beyond health care, the bonuses and wage rates GM negotiated will sting a little more at Ford, which has more overall workers, and at Fiat Chrysler Automobiles, which has a higher amount of in-progression workers.
Both companies will likely tweak their respective contracts in a number of areas, but the lead company usually comes out with the most favorable deal.
The union secured a win for all current workers, who will be making top wages of $32.32 by the end of the current deal. But the fate of new hires is a little less clear.
All current full-time temporary employees with at least three years of continuous service (layoffs up to 30 days don't count) will become permanent employees in 2020.
New temporary workers hired after the date of the contract, however, start at $16.67 per hour. There is no language about pay raises or promises to move directly into full-time employment. In fact, a section from prior deals saying they'd be considered for regular job opportunities has been crossed out. Instead, part-time temps will only be considered for full-time temp jobs, with the opportunity for permanent employment after serving two years as a full-time temp.
The union will say this is a win, noting that the process before didn't have set rules or time frames and there's now a defined pathway. But the more complicated process might be a tough sell to members, if only for the section that eliminates the direct jump out of temporary employment.
It's also unclear whether new full-time hourly employees would be placed on the new, condensed four-year grow-in to top wages that current full-time employees won.
The decision to shutter the Lordstown plant in Ohio is a setback for President Donald Trump, who in 2017 told a crowd assembled for a rally in nearby Youngstown, Ohio, to not sell their homes. The tweeter-in-chief has cast himself as a savior of middle-class manufacturing jobs.
To be sure, GM has committed to create (or keep) 9,000 jobs in the U.S. over the next four years, and Lordstown could still be sold to an EV maker that would create 400 jobs, but GM's ability to close two other plants and the union's inability to secure product back from Mexico flies in the face of Trump's promises. That could be costly during the 2020 election for a president who relied heavily on blue-collar workers to deliver him to the White House in 2016.