Another busy week for General Motors! Last week I predicted that contract negotiations between the UAW and GM would “be a story to watch in the coming days and weeks.” By Monday of this week, stories came out that UAW workers at General Motors plants, “went on a nationwide strike early Monday morning in the United Auto Workers’ largest work stoppage in more than a decade,” as reported by Nora Naughton and Mike Colias of the Wall Street Journal. Around 46,000 workers at 31 GM plants were instructed to strike, one of the, “biggest walkouts at a private sector employer in years.” (WSJ)
The contract negotiations are made more difficult by the federal investigation into the UAW for corruption, previously blogged about here. The investigation undermines confidence in the union from its members, so the union must appear tough and win big at the negotiating table to gain this confidence back. The union is also, “weakened by decades of dwindling membership” (Naughton, Colias). On the other side of the table, GM looks to, “show Wall Street that today’s GM is leaner and more assertive than the one that collapsed into bankruptcy a decade ago,” (WSJ). Both sides are attempting to save face, which could cause a long, protracted period of negotiation. However, time may not be on General Motors’ side. As Naughton and Colias report, “Analysts estimate [the strike] is costing GM $50 million to $100 million a day in lost profits.”
Adding fuel to the fire is the closure of several GM factories despite the auto industry experiencing a historic run. The move was lauded by analysts, “saying GM was taking steps to guard against a downturn,” but UAW workers, on the other hand felt, “betrayed … to be pummeled by closures … when the company is posting some of its strongest profits in history” (WSJ). At this point, the UAW and GM have diverging interests. GM looks to continue its profitable run, without regressing, while the UAW looks for job security, higher wages, and benefits for its members. It is often cheaper for manufacturers in the United States to outsource manufacturing jobs to foreign countries, where it easy to pay workers lower wages, which means these two goals may be impossible to reconcile.
One outside factor that could play a major role in this conflict is President Trump. It is no secret that the President wants to keep manufacturing jobs in the United States, in order to Make America Great Again. When the strikes were announced, he tweeted, “Here we go again with General Motors and the United Auto Workers. Get together and make a deal!” When GM announced plans in November 2018 to close factories down, the President blasted GM in an interview with the Wall Street Journal, saying, “They better damn well open a new plant there very quickly.” It would not be unprecedented for the President to step in if the strike gets out of hand and begins to negatively affect the economy, see Theodore Roosevelt and Harry Truman. Although previous federal interventions were to prevent disruptions in essential services, especially during war times, blue-collar workers, especially in swing states such as Michigan, are an important group for Mr. Trump in the upcoming election, so his involvement in the strike will be something to monitor in the coming days.