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How GM's profit-sharing offer to UAW workers missed the mark

Jamie L. LaReau, Detroit Free Press
Regina Knuckles, 46, of Flint stays warm next to a fire pit on the fourth day of the nationwide strike of UAW strike against General Motors after stalled contract talks in Flint, Mich. on Thursday, Sept. 19, 2019.

DETROIT - General Motors and UAW negotiators were to continue talks toward a new contract Sunday, day seven of a nationwide strike against the automaker

Democratic presidential candidate Elizabeth Warren, for the first time with frontrunner status in a new Iowa Poll, was to join strikers at Detroit-Hamtramck Assembly Plant on the picket lines Sunday. UAW President Gary Jones dubbed it "Solidarity Sunday" and invited the public to join strikers across the country. Former Vice President Joe Biden, the leader in most Democratic polls, was expected at a labor rally in Kansas City, Kansas.

Top UAW leaders will be in negotiations rather than at the Detroit rally. Terry Dittes, the union's GM Department vice president will be participating in talks at the Renaissance Center and union President Gary Jones is expected to join the group, the Free Press was told by a person familiar with the negotiations. 

The autoworkers are one of two UAW-represented groups striking GM facilities. About 850 janitors employed by Aramark walked off the job early Sunday at five GM locations in Michigan and Ohio. At the same time, the union's separate 2015 contract with GM expired. Some 24 hours later, 46,000 GM workers went on strike across the United States.

A source familiar with the talks said negotiators resumed bargaining around 9 am Sunday after going into the evening Saturday.

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Profit sharing 

Meanwhile, the Detroit Free Press has learned details of another key sticking point between the union and the automaker: profit sharing, with a person familiar with GM's proposal said it falls short of union demands.

GM has said it offered an improved formula that would boost profit sharing. The biggest issue seems to be that GM's offer did not include temporary workers. 

GM spokesman said David Barnas said, "I can’t comment on current bargaining/negotiations." He added that currently all classifications of hourly workers at GM are eligible for profit sharing, except for temporary employees.

In a media statement Sept. 15, GM said it had offered the UAW an "improved profit sharing formula" among other gains in its initial contract offer. The UAW rejected GM's offer, which contained numerous other components, and ordered its 46,000 workers to strike early Monday morning all 55 GM facilities in the United States.

A source with knowledge of the offer GM made to the UAW, said the union considered the profit sharing proposal "concessionary. It rolls back profit sharing."

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"The temporary workers don’t get the profit sharing," said Harley Shaiken, a professor who specializes in labor at the University of California, Berkeley. "If 10% of your workforce doesn’t get it, that’s a whoa! That’s a big a check, and if you don’t get it and you’re doing the same job as someone next you who does get it, you’re not going out to celebrate with them that night.”

But GM has the auto industry’s most generous profit-sharing plan for hourly employees, said a company spokesman, citing a study conducted by the National Opinion Research Center at the University of Chicago. 

GM’s yearly profit sharing for the last four years has exceeded $10,000 annually, the company said.

The government-funded U.S. General Social Survey reported that 32% of American workers received a share of their company’s profits last year. The average payout was $2,000. 

How to get top dollar

A GM worker typically gets $1,000 for every billion in GM's North American pretax profits, Shaiken said.

So this year, most hourly workers got checks for $10,750, based on GM's North American pretax profit of $10.8 billion in 2018.

Justin McCauley, 36, of Saginaw is a temporary worker with three years experience working atthe General Motors Flint assembly plant, where he know strikes on the fourth day of the nationwide strike of UAW strike against General Motors after stalled contract talks in Flint, Mich. on Thursday, Sept. 19, 2019.

To be eligible to receive profit-sharing, a worker must be a permanent, full-time GM UAW employee at the end of the year, a person familiar with the program said. Some workers can attain eligibility through other provisions, but the source said the primary criteria is being a full-time, permanent employee by year-end.

For a worker to get the full $10,750, he or she must have earned 1,850 compensated hours during the year. Those compensated hours include overtime. A "large majority" reach that threshold and receive the full payout, the person said. 

Those who do not hit the 1,850 compensated hours get a prorated amount based on their number of compensated hours.

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For example, if a person had 1,500 compensated hours in 2018, that would be divided by 1,850 and multiplied by $10,750. They would receive about $8,716. If a newer hire only had 100 compensated hours by year-end, divided by 1,850 and multiplied by $10,750, they would receive about $581.

“Individual payouts are a matter of how many compensated hours you have, not your pay rate," said the source.

GM's offer

For it's part, GM has said it presented a strong offer that, "improves wages, benefits and grows U.S. jobs in substantive ways and it is disappointing that the UAW leadership has chosen to strike at midnight tonight. We have negotiated in good faith and with a sense of urgency. Our goal remains to build a strong future for our employees and our business.” 

GM has said in its offer it also offered solutions for "unallocated" assembly plants in Michigan and Ohio. That's in reference to GM's announcement last fall that it would idle two transmission plants, one in Warren and one in Baltimore; along with Lordstown Assembly in Ohio and Detroit-Hamtramck Assembly. 

GM's proposed solutions would include building an electric pickup and batteries at Detroit-Hamtramck and a battery cell manufacturing facility in part of Lordstown. GM continues discussions to sell Lordstown to an investment group that includes electric truck maker Workhorse.

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GM's public overview of its proposal also included $7 billion in investments and 5,400 jobs. It listed investments in eight facilities in four states, additional new vehicle and propulsion programs, an improved profit-sharing formula, ratification payment of $8,000, and retention of health care benefits including new coverage for autism therapy care, chiropractic care and allergy testing.

It was silent on two key UAW issues: Evening out pay for "in-progression" workers hired since 2007 who are paid less than legacy workers; and creating a path to permanent employment for temporary workers. GM is known to want more flexibility in using temps.

Remaining issues

Here are what's known of key points in the discussions:

Health care: GM initially proposed that workers pay 15% of their costs, up from their current 3%, but reportedly has backed off. Workers are adamant they need to maintain their coverage, which is far less expensive to them than to almost all other American workers. GM, which spends $1 billion a year on health care, did kick responsibility for those costs during the strike to the UAW strike fund, sparking sharp bickering between the two sides. 

Wages: Workers, whose pay has regressed 16% against inflation since 2010, say it's their turn to be rewarded after years of profits for GM and the other automakers. They also want to equalize pay for workers hired after 2007, who start at $17 per hour and can rise to about $28 per hour after seven years. GM initially offered 2% raises and 2% lump sums in alternating years of the next four-year deal. This comes in below the wage increases GM provided in the 2015 contract of 3% raises in years one and three, and 4% lump sums in alternating years.

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Temporary workers: About 7% to 10% of GM's workforce over the course of a year is temporary workers, who are paid $15 an hour and lack the opportunity to transfer if their plant closes. The union wants a path for them to become permanent; GM wants the right to hire more temps for flexibility. 

Job security: GM has offered $7 billion in investment and said it would keep or retain 5,400 jobs over the life of the contract. But only half of those jobs will be new, the other half will be retained positions. And, while the $7 billion would be invested in facilities with UAW representation, some would be joint ventures with contracts separate from the union's contract with GM. Also, not all of the money would come from GM. 

The union chose to negotiate first with GM in an effort to reach a template agreement that it can then take to Ford and Fiat Chrysler Automobiles, which are operating under contract extensions.

Developments to date

  • The effects of the UAW strike against GM are being felt by thousands of suppliers that have temporarily laid off workers because GM assembly plants are not accepting deliveries.
  • On Monday, if the strike continues, GM will idle part of its DMAX engine plant in Moraine, Ohio, said GM spokesman Dan Flores. It builds the 6.6-liter turbo diesel engine in GM’s heavy-duty pickups, a product of Flint Assembly Plant. About 550 workers at DMAX, which are represented by the International Brotherhood of Electrical Workers, will be temporarily laid off. DMAX will continue to build engine blocks, but not full engines.
  • Unifor, Canada's autoworker union, said Friday that 4,500 of its members have been temporarily laid off, CNBC reported. That includes 1,200 workers at GM's truck assembly plant in Oshawa, Ontario, which was shut down late Tuesday because of a shortage of parts made at UAW-represented U.S. plants. On Friday morning, Oshawa’s car line stopped due to a parts shortage caused the U.S. strike, GM said. About 2,000 hourly employees are now on temporary layoff at the car plant, which is scheduled to close at the end of the year.
  • Oshawa’s stamping operation continues to run. It stamps sheet metal for Ontario's CAMI plant, which builds the Chevrolet Equinox SUV. Unifor told CNBC that GM plans to temporarily lay off 700 additional workers at the company’s St. Catharines plant Monday and will “re-evaluate” production at its CAMI plant next week if the strike continues. A GM spokesman declined to comment on speculation.
  • GM has said its plants in Mexico remain operational but it is monitoring the situation daily. 

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Contributing: Phoebe Wall Howard, Detroit Free Press

Follow Jamie L. LaReau on Twitter @jlareauan. 

This article originally appeared on Detroit Free Press: How GM's profit sharing offer to UAW workers missed the mark