A move by the powerful United Auto Workers (UAW) union to put five General Motors plants on walkout notice could be for genuine grievances or a tactic to bring the automaker into supplier American Axle’s strike talks, a US based auto analyst has suggested.
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Global Insight’s Aaron Bragman said in a research note the union has put three GM assembly plants and two component plants on five-day strike warning, claiming that negotiations to finalise local operating agreements under the national contract have languished. One plant is scheduled to be idled by GM for a month anyway, but one makes GM’s hot-selling mid-crossovers.
“The loss of production for GM’s CUVs would be a blow to the company, which has scored its first big hits with the new Buick Enclave, GMC Acadia, and Saturn Outlook,” Bragman wrote.
“The question arises: is the UAW really airing grievances with the threat of a strike, or is it a tactic to draw GM into the stalled six-week-long strike negotiations between the union and American Axle Manufacturing?”
He added that GM has exercised some manufacturing flexibility and will shut down its full-size SUV plant for a month, to allow two full-size pick-up plants to reopen but, with production of GM’s CUVs (and possibly the Chevrolet Malibu) potentially threatened, GM may have no choice but to start becoming more involved in the American Axle situation.
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By GlobalDataAt issue at the three assembly plants and two component plants on five-day strike warning are local operating agreements to be negotiated separately from the national agreement reached between the union and GM late last year.
That new four-year contract established general overall agreements, such as a two-tier wage system, the transfer of healthcare coverage to the union, and guaranteed work for myriad GM plants.
The local operating agreements must now be signed plant by plant, and the union has officially given GM the required five-day strike notice, claiming that no progress has been made in coming to an agreement at those facilities.
“Unlike the national level contracts, which often deal with wages, benefits, and overall work guarantees, local agreements cover issues of health and safety, grievance resolution, seniority and vacation, and other more plant-specific issues,” Bragman said.
The facilities in question are GM’s Delta Township (Michigan) crossover plant, the Arlington (Texas) sports-utility vehicle (SUV) assembly plant, the Flint (Michigan) full-size pick-up and medium-duty commercial truck plant, as well as a Parma (Ohio) stamping plant and a Warren (Michigan) transmission plant.
The Flint and Warren plants have been partially idled by the ongoing strike against supplier American Axle and the subsequent lack of parts for GM’s full-size pick-ups, but Flint continues to operate building medium-duty commercial trucks.
The company’s Arlington plant is also still churning out full-size SUVs, being supplied by American Axle’s Mexican facility, but GM has announced that it plans to idle the plant for four weeks beginning 14 April, as the market for the company’s full-size SUV offerings continues to shrink with the recessionary economy.
GM announced over the weekend that it would then use the parts previously slated for the Arlington plant to reopen two full-size pick-up truck plants in Oshawa (Ontario) and Fort Wayne (Indiana), to build about a month’s supply of Chevrolet Silverado and GMC Sierra pick-ups, sometime in the next several weeks.
In a related news item cited by Bragman, the union is now saying that GM has found enough parts to keep Malibu production running at its two assembly facilities for a week longer than anticipated. Previously, the UAW had stated that due to the American Axle strike, Malibu production would be likely to halt on 11 April; that date has now been pushed back to 18 April.
Bragmans said news of the possible strike at the five GM facilities came just as GM announced that it had finally reached an agreement with the UAW on the classification of jobs in the new tiered wage system.
After the ratification of the new contract late last year, GM began examining its plants closely in conjunction with the union to determine which jobs and roles within the plants would be classified as ‘non-core’ and thus be subject to hire at the much lower wage rates for new incoming employees.
“GM and the UAW have reached an agreement to clarify items related to the 2007 national labour agreement including the specific number of non-core job assignments at each facility,” GM spokesperson Dan Flores was quoted as saying by the Detroit News. Negotiations to determine which roles would be classified at the lower tier had been dragging on for months.
“Calling a possible strike against GM for ‘insufficient progress’ towards resolving local operating agreements is a serious step, and begs the question as to whether or not this is a UAW tactic to try and get GM more involved in the ongoing American Axle strike, or a legitimate result of grievances at the five facilities in question,” Bragman wrote.
“Combined with the continuing UAW coverage of when exactly Malibu production is scheduled to halt (GM has not confirmed any of the UAW’s dates for a possible halt of Malibu production), the threat of bringing down two plants that have not been affected by the American Axle strike is serious.
“The worst possible scenario would be to have the Lansing (Michigan) Delta Township plant see a work stoppage; that plant makes [the hot-selling Enclave, Outlook and Acadia]. A worker walkout at the Arlington (Texas) plant would ultimately have no teeth; even if GM had not called for a four-week idling of that plant, the parts that would have been scheduled to go to that plant for use in the full-size GMT900 SUVs would go to one of the idled GM plants that builds the GMT900 pick-up.
“The company essentially stole the union’s thunder by announcing the four-week shutdown, so that it can use the supply chain to reopen two pick-up plants.
Bragman said GM has so far successfully stayed out of the battle between the UAW and American Axle, and for good reason.
“By capitulating to the union’s demands to become involved to help settle the strike (likely by opening its wallet to help offset some of the guarantees and demands made by the striking membership), GM would open itself to risk from all of its major suppliers that are union represented. It has set something of a precedent at Delphi, where it has taken upon itself a significant amount of worker compensation and even rehired some employees into the GM fold; but GM is still heavily invested in Delphi.
“American Axle has been independent of GM almost entirely for several years, and the automaker is trying to keep it at arm’s length.
Bragman noted that the heads of American Axle and the UAW were scheduled to meet today (7 April) “to discuss the ongoing strike and presumably try and come to some new negotiation, but as the strike creaks along, GM has proven thus far that it can weather the downturn in the market for full-size pick-ups and SUVs just fine, much to the union’s consternation.
“Ratcheting up the rhetoric by threatening production at two plants that make GM’s current hits would most certainly elevate the discussion to a new level, however.”
