UAW Members Approve Contract and End Strike Against GM
DETROIT—The longest nationwide strike against General Motors in half a century ended on Friday after a solid majority of the company’s union members delivered their support for the four-year contract hammered out by their leaders.
The United Auto Workers (UAW) union emerged with substantial wage increases and succeeded in ending a two-tier wage structure that had been a particular irritant in its ranks. It also won commitments to new GM investments in United States factories, while accepting the permanent shutdown of three plants already idled.
The UAW. said 57 percent of the nearly 41,000 members voting had backed the contract proposal. Now it will turn its attention to the other big Detroit automakers, Ford Motor and Fiat Chrysler. The union usually seeks to reach similar terms in a process known as pattern bargaining.
Patrick Anderson, the chief executive of Anderson Economic Group, a research and consulting firm, says that GM lost an estimated $1.75 billion as a result of the strike. But the walkout inflicted a wider economic toll, particularly in the Upper Midwest and other areas dependent on the auto industry, causing layoffs at GM suppliers like Lear Corp.
In total, striking GM employees and workers at the suppliers lost an estimated $988 million in wages, according to Anderson. For GM workers, the contract will yield wage increases of 3 percent in the second and fourth years and 4 percent lump sum payments in the first and third years, similar to what the union obtained in 2015.
Even larger gains are in store for those in a category called “in progression,” the lower scale of a two-tier wage system negotiated in 2007 when the Detroit automakers were financially reeling. Workers hired after that date, about a third of the overall work force, started at about half the pay of veteran employees and had no prospect of reaching the top wage, currently $31 an hour. Over the course of the new contract, the disparity will be phased out, and those with four years’ experience will rise along with more senior workers to the new top level of $32 an hour.
In addition to pay increases, GM workers will get bonuses of $11,000 for ratifying the contract. They will continue to pay 3 percent of their cost of health care, well below the percentage that GM’s salaried workers contribute.
There were also rewards for temporary workers, about 7 percent of GM’s union work force, who will have a path to permanent employment after three years. About 900 of them will become full employees in January, the union said, and 2,000 more by 2021. The U.A.W. now has just under 400,000 members, down from 1.5 million in 1979, and 540,000 in 2006.
As part of the new contract, GM pledged to invest $7.7 billion in its United States plants, and another $1.3 billion in ventures with partners, providing a measure of job security. GM will put $3 billion toward overhauling the Detroit-Hamtramck plant, which had been scheduled to close in January. Three-quarters of the 700 workers there voted in favor of the contract.
At the same time, the agreement allows G.M. to close three idled factories permanently, including one in Lordstown, OH, eliminating excess manufacturing capacity at a time when auto sales are slowing. It also puts the company in a more stable position if the economy goes into a recession.
But the agreement, estimated to increase labor costs by $100 million per year, will deepen GM’s disadvantage compared with some competitors. Before the strike, labor — including wages, benefits and other expenses—cost GM about $63 an hour, according to the Center for Automotive Research. The cost for foreign automakers that operate nonunion plants in the South is about $50 an hour. Many of their plants pay less than $20 an hour.