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There's a price to pay for the GM-UAW strike. Here's what it cost the workers and the automaker

Jamie L. LaReau, Detroit Free Press
UAW strikers with Local 22 take to the streets outside of GM Detroit-Hamtramck Assembly Monday, Sept. 16, 2019.

No one wins in a strike.

That's the conclusion of the Center for Automotive Research (CAR) in Ann Arbor, Michigan, after it analyzed the UAW's nationwide strike against GM last fall and the four-year contract that resulted. 

Union members got higher wages and kept their health care coverage and cost structure along with other wins. But they did not get much in the way of added job security, said Kristin Dziczek, vice president of Industry, Labor & Economics at CAR.

The comments were made during a  recent 90-minute webinar hosted by CAR called, "Implications of the 2019 UAW-Detroit Three Contract Negotiations."

"The UAW went into this looking for guarantees and certainly they didn’t lose anything," said Dziczek. But after six weeks on the picket line, they came out of it with what they had," in terms of job security. 

Meanwhile, the Detroit Three carmakers will each see their average hourly labor costs grow at a rate higher than their nonunion foreign competitors who run U.S. plants, said Dziczek.

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Murky job security

For the Detroit Three, average labor costs will climb by 2023.

The UAW chose to negotiate first with GM and used that contract as a template for the agreements it hammered out with Ford Motor Co. and Fiat Chrysler Automobiles. 

The UAW's 48,000 workers at GM's 55 facilities in 10 states went on strike for 40 days before ratifying a new four-year contract on Oct. 26. The UAW had similar deals with Ford and FCA shortly thereafter. 

The new contracts gave GM's workers generous ratification bonuses, wage increases, improved profit sharing and lump-sum payments. But at GM there was no reversal to product allocation such as bringing a vehicle built in Mexico to a plant in the United States. 

GM did reverse its November 2018 decision to close the Detroit Hamtramck Assembly plant to instead retool it to build electric trucks, but the UAW was unable to save Warren Transmission, Baltimore Transmission and Lordstown Assembly plants from shutdown. 

"The economics has always been important, but the job security has become very important," said Art Schwartz, the retired general director of GM's labor relations.  "The UAW got some decent (investments from the Detroit Three) so we’ll see how it plays out.”

Former General Motors labor negotiator Art Schwartz.

Historically, the Detroit Three have exceeded their promised product investments, said Dziczek. In 2015, the three companies agreed to invest $21 billion in U.S. manufacturing. CAR's research showed the automakers surpassed that amount over the four years. In 2019's agreement, the Detroit automakers have said they will invest $23 billion in U.S. manufacturing over four years, Dziczek said.

Big labor costs

Going into negotiations GM wanted to trim a $13 cost gap in its average hourly labor costs compared with its nonunion foreign competitors.

Instead, Dziczek said, GM, Ford and FCA will see their average hourly labor costs rise by 2023 at a greater level than their nonunion foreign competitors.

  • GM's average hourly labor cost now: $63, rises to $71 an hour by 2023.
  • Ford's average hourly labor cost now: $61, rises to $69 by 2023.
  • FCA's average hourly labor cost now: $55, rises to $66 by 2023.
  • Nonunion foreign automakers in the United States average hourly labor now: $50, rises to $52 by 2023.

“So this is increasing cost steadily compared to the 2015," said Dziczek. In 2015, GM paid $55 an hour in average hourly labor costs.

The average hourly labor cost is the sum of all labor costs, including wages, benefits and payroll taxes, divided by the total number of hours worked in a year.  

Honda, Nissan and Toyota, international automakers in the United States, usually employ more temp workers than the Detroit Three, helping to lower that figure. They also have some newer plants with entirely new workforces that are lower on their wage progression and few retiree costs, said Dziczek.

But the widening average labor cost gap doesn't mean the Detroit Three must offset it with price increases on new cars, said Schwartz. He said if GM can trim other costs and boost productivity, that could keep it cost-competitive.

"Companies have always tried to balance pay increases with increases in productivity," said Schwartz. "GM could offset the increased labor costs with cutting costs elsewhere, too, such as material costs."

Plus, GM has made multiple billions in profits over the last four years, so it stands to reason that the UAW would demand workers get a slice of that pie.

"It’s logical to expect that labor costs will go up during negotiations,” said Schwartz. "Anyone who went into this thinking the labor costs would stay the same or go down was probably dreaming.”

The human cost

Ultimately, the strike was not worth it for the UAW workers, these experts said.

“For the manufacturers, a strike is extraordinarily expensive; it cost GM $3 billion, and it destroys your brand," said Marty Malloy, a retired Ford labor affairs vice president for 34 years. "As long as this strike lasted, I would have thought there’d be something radically different in this agreement and it came out pretty much as expected. There was really no language that was new or a breakthrough.”

Dziczek agreed, noting the human toll the strike took on GM and UAW workers. In one case, GM fired three UAW workers at Flint Assembly Plant for what it said were threats of violence and actual violence during the strike.

There were other costs: 55-year-old Roy McCombs, a UAW picketer at GM's Spring Hill Assembly in Tennessee. died after being struck by a passing SUV..

Many strikers struggled after a couple of weeks to make rent, mortgages and pay other bills on just $250 a week in strike pay.

“There’s an enormous human cost being out on strike," said Dziczek. "I was surprised it went on as long as it did. There are tremendous costs on all sides.” 

Contact Jamie L. LaReau: 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.

This article originally appeared on Detroit Free Press: Jobs: GM-UAW strike wasn't worth it for workers