General Motors shares continued to trade higher on Monday even as around 73,000 members of the United Auto Workers went on strike at the automaker’s US factories after contract negotiation talks broke down after 10 days of bargaining.
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The shares rose $US1.48, or 4.2%, to $36.42 in early trading, from their Friday close at $34.94, the Associated Press (AP) reported on Monday. At 17:25BST [12:25BST] the stock ticker on CNBC’s satellite television feed from the New York Stock Exchange was showing the shares trading at about $35.50, up about $0.55 on the day.
The United Auto Workers (UAW) on Sunday night set a strike deadline of 11am EST (16:00 BST) Monday (24 September) “due to the failure of General Motors to address job security and other mandatory issues of bargaining”, and confirmed the nationwide strike on a nationally televised press conference just over an hour later.
CNBC television showed pickets outside a GM facility in Michigan soon after the strike deadline passed.
GM spokesman Tom Wickham late on Monday confirmed to just-auto that all 80 GM facilities with UAW representations were now on strike but said the automaker expected to resume negotations with the union later in the afternoon, Detroit time, although he could not give specific timings.
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By GlobalDataHe would not detail the specific issues resolved or still to be resolved, saying that the company had decided throughout the contract negotiations to “keep the issues at the bargaining table” and not speculate on any outcome.
“We are disappointed in the UAW’s decision to call a national strike,” Wickham said. “The bargaining involves complex, difficult issues that affect the job security of our US work force and the long-term viability of the company. We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors.
“We will continue focusing our efforts on reaching an agreement as soon as possible.”
A just-auto correspondent in Ontario reported that the US strike would spill over the border into Canada almost immediately because of the integrated nature of the industry.
GM’s Canadian assembly plants in Oshawa, Ontario, receive engines from a plant in Tonawanda, New York. Two car plants in Oshawa are expected to run out of engines tonight or by mid-day tomorrow, local union officials told just-auto.
The automaker’s engine and transmission plant in Ontario ships its products to US assembly plants in Michigan, Ohio and elsewhere, so they will be shut down soon also if the strike continues for more than a few hours.
CNBC said the immediate production loss for GM would be 12,100 vehicles in the first 24 hours of the strike but this would rise to 16,200 in the following 24 hours and 18,100 another 24 hours after that.
The Associated Press noted that the UAW hasn’t called a nationwide strike during contract negotiations since 1976, when Ford plants were shut down. There were strikes at two GM plants during contract negotiations in 1996. The most recent GM strike was at Flint in 1998.
The strike came two days after UAW president Ron Gettelfinger sent a letter to members saying the union hoped to avoid a walkout.
In a statement released in the early hours of Monday morning, Gettelfinger said: “We’re shocked and disappointed that General Motors has failed to recognise and appreciate what our membership has contributed during the past four years.
“Since 2003, our members have made extraordinary efforts every time the company came to us with a problem: the corporate restructuring, the attrition plan, the Delphi bankruptcy, the 2005 health care agreement. In every case, our members went the extra mile to find reasonable solutions.”
“In this current round of bargaining, we did everything possible to negotiate a new contract, including an unprecedented agreement to stay at the bargaining table nine days past the expiration of the previous agreement.”
“This is our reward,” added UAW vice president Cal Rapson, director of the union’s GM department.
“A complete failure by GM to address the reasonable needs and concerns of our members. Instead, in 2007 company executives continued to award themselves bonuses while demanding that our members accept a reduced standard of living.”
“The company’s disregard for our members has forced our bargaining committee to take this course of action,” said Rapson. “Unless UAW members hear otherwise between now and the deadline, we will be on a national strike…”
During Monday’s press conference an exhausted-looking UAW president Gettelfinger said that top union officials, who had been in talks all night, expected to return to the bargaining table later today.
Summarising the negotiations leading up to the strike, he said that the automaker’s attitude throughout had been “General Motors’ way at the expense of the workers”.
“We honestly believed that when we got to the contract expiration date, and [after] we extended the contract date, that GM would come to the bargaining table and work hard with us to get an agreement. They gave us every reason to believe that that would happen.”
Gettefinger said the UAW made clear to GM on Thursday night that “we expected to see movement on the sub-committees [that discuss various issues making up the eventual contract agreement]. He said that there had been a lot of discussion leading up to that point but, in the 24 hours from Thursday to Friday night, the company “moved on only one issue” – where GM had put a cap on profit-sharing.
“We knew then that we were headed to a difficult conclusion to these negotiations.”
He said negotiations continued over the weekend and all night Sunday up to the 11am Monday morning deadline as the union insisted to GM it would not “deviate from the deadline”.
“The company walked right up to the deadline like they really didn’t care,” Gettelfinger added. “As a result of that, we called a strike at 11am.”
Answering just one question from reporters, he said the union would resume talks with GM. “We’re going to go back and see if the company has indicated they want to meet… and we will be going back to the bargaining table today.
“However, the frame of mind we’re in right now, we would expect the company would move rather expeditiously on the open issues there in front of us.”
Earlier on Monday, GM spokesman Dan Flores declined to comment to Automotive News about any strike preparations GM had made in case of a potential walk-out.
The Detroit News said that, over the weekend, GM pressed the UAW for significant concessions, including controversial two-tier wages, in addition to a deal that would shift responsibility for retiree health care costs to the UAW.
The two sides closed in on a new labour agreement over the weekend but continued to wrestle with some major issues after nearly three weeks of continuous negotiations, the paper added.
GM wanted the union to give ground on factory competitiveness and job security and, as late as Sunday, bargainers were still discussing pensions, GM’s US investments and outsourcing, plus retiree health care, “sources familiar with the negotiations” told the Detroit News.
Also according to the Detroit News, a company-financed, union-run trust to pay for retiree medical expenses was expected to be the core of a new contract, with GM and the UAW agreeing last week on a framework for the trust, known as a voluntary employees’ beneficiary association. Over the weekend, the two sides were still negotiating financial agreements related to the VEBA, the report said.
The Detroit News added that retiree health costs represent only about half of GM’s estimated $US25-to-$30-per hour labour cost gap with Japanese rivals so GM is eyeing other ways to save money as well.
GM wants structural changes in the way plants are run, how workers are paid, and what they are entitled to when they’re laid off, the paper said, citing “sources close to the talks”.
GM also wants changes to the jobs bank – a long-standing programme that allows laid-off workers to continue collecting pay and benefits – that would make it easier for the company to place those workers into new jobs, the Detroit News added.
Graeme Roberts
