Outside the Beltway

UAW Goes on Strike against GM

James Joyner
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The UAW has gone on strike against General Motors.

Thousands of United Auto Workers walked off the job at GM plants around the country Monday, in the first nationwide strike during auto contract negotiations since 1976.

[…]

The UAW has 73,000 members who work for GM at 82 U.S. facilities, including assembly and parts plants and warehouses.

[…]

[GM spokesman Dan] Flores said the automaker is disappointed in the UAW’s decision to call a national strike. “The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company. We remain fully committed to working with the UAW to develop solutions together to address the competitive challenges facing GM,” Flores said.

GM had been pushing hard for the health care trust — known as a Voluntary Employees Beneficiary Association, or VEBA — so it could move $51 billion in unfunded retiree health costs off its books. GM has nearly 339,000 retirees and surviving spouses.

[…]

While GM has enough cars and trucks to withstand a short strike — the automaker had about a 65-day supply of cars and trucks as September began, according to Paul Taylor, chief economist for the National Automobile Dealers Association — it still would be costly for the company.

After years of one-sided negotiations, with the auto companies having all the leverage, one understands the workers’ frustrations with constantly being asked to do more while getting less in return. Unfortunately, however, that’s what will inevitably happen here. GM, like all the other companies which came out of the post-World War II boom with incredibly generous compensation and benefits packages, simply can’t compete under the old model anymore. They’re in a global economy competing against robust companies like Honda and Toyota that can put out great products without the burden of paying retirement and, especially, health benefits.

It’s not at all inconceivable that Americans will no longer be in the car manufacturing business twenty years from now. The UAW may well be hastening that product.

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12 responses to “UAW Goes on Strike against GM”

  1. Triumph Avatar
    Triumph

    . They’re in a global economy competing against robust companies like Honda and Toyota that can put out great products without the burden of paying retirement and, especially, health benefits.

    I know for a fact that Toyota employees at plants in the US get retirement and health benefits.

  2. James Joyner Avatar
    James Joyner

    I know for a fact that Toyota employees at plants in the US get retirement and health benefits.

    I’m sure they do. But, since their manufacturing here is a relatively new thing, they presumably negotiated much better terms. More importantly, they don’t have a decades-long backlog of retirees.

  3. legion Avatar
    legion

    It’s not at all inconceivable that Americans will no longer be in the car manufacturing business twenty years from now. The UAW may well be hastening that product.

    I’m sure at least part of the blame will fall on US manufacturers’ systemic inability to make a car that people actually want to buy, and that lasts more than 3 years, and whose sticker price & gas thirst can be afforded by anyone making less than $250k…

  4. Rick DeMent Avatar
    Rick DeMent

    …not to mention the absurd amount of management type employees who get paid 100k plus to move stacks of paper from one pile to another. Chrysler just axed 13,000 of these types and now 400k McMansions are now 250k McMansions. GM should do the same and quit quibbling with the Union.

    Also GM and the other car companies are going to have those legacy costs no matter what, they decided that it was better to distribute that money to the shareholders when things were good and now they belly ache about not having enough money to fund legacy costs.

  5. James Joyner Avatar
    James Joyner

    I’m sure at least part of the blame will fall on US manufacturers’ systemic inability to make a car that people actually want to buy, and that lasts more than 3 years, and whose sticker price & gas thirst can be afforded by anyone making less than $250k…

    I dunno. You can certainly buy reliable, fuel efficient American cars for under $20,000. My Ford Contour was virtually problem free for six years before I traded it in.

    I agree, though, that there are market niches not being well served. I traded the Contour (and some additional cash, naturally) for a Nissan 350Z. There really isn’t a comparable American car these days in anything like that price range. The Mustang is aimed at kids and geriactrics, the Corvette has gone from a n affordable sports car to a near-exotic, and the Camaro is out of production.

  6. Triumph Avatar
    Triumph

    I’m sure they do.

    You claim in the post that Honda and Toyota DO NOT pay for retirement and health benefits:

    “They’re in a global economy competing against robust companies like Honda and Toyota that can put out great products without the burden of paying retirement and, especially, health benefits.”

    Like GM, Toyota and Honda DO have the burden of paying retirement and health benefits. You are correct to suggest that Toyota and Honda’s terms are better than GM, but they contribute to such benefits nonetheless.

  7. Triumph Avatar
    Triumph

    It’s not at all inconceivable that Americans will no longer be in the car manufacturing business twenty years from now.

    Also it is important to problematize what you mean by “American” manufacturers.

    GM and Ford have farmed much of their production out to Mexico and Canada, while Honda and Toyota have expanded production in the US.
    In fact, if you look at the raw stats, production of vehicles in the US has been stagnant for the past 20 years.

    As the dollar gets weaker, it would probably not be unlikely that manufacturing in the auto sector could even grow. Companies like GM may be toast, but US production of Japanese brands will continue to expand.

  8. Dave Schuler Avatar
    Dave Schuler

    This is where healthcare costs and industrial policy intersect. Every car GM builds in the United States carries nearly a $2,000 burden in healthcare costs over the very same vehicle built in Canada, Japan, or S. Korea. With that sort of advantage there’s no way U. S. companies with U. S. built cars will be competitive in the sub-$20,000 market.

    There isn’t that much of a labor difference, overhead difference, etc. between building a $20,000 car and building a $40,000 car.

    Add to that the reality that China is breathing down the necks, not just of American car companies, but of Japanese and Korean car companies as well. The Chinese are not investing in all that heavy industrial equipment to make apparel. They want to get into higher markup industries and automotive is one of them. The Chinese car models should be showing up within the next five to ten years and the idea that a U. S. company could compete at the low end with a Chinese car on price under current work rules is absurd.

  9. DC Loser Avatar
    DC Loser

    Dave Schuler’s above comments reflect the growing confluence of big business and universal healthcare advocates in their demand for state subsidized single payer healthcare, which I believe will be a reality in the not distant future. Business, and their political lackeys, will frame the argument as a competitive issue, which it certainly is given the above data.

  10. Wayward Degenerate Avatar
    Wayward Degenerate

    Wouldn’t it be nice if other working class Americans could preserve their health benefits or job stability? The Union, the UAW is a rare species these days much more so then 40 years ago.
    The truth is that many workers in this country don’t have job security, or health benefits, or any idea of a pension or retirement. The very idea of a union is covered with a toxic coat of propaganda anyway, maybe GM will re-emerge without the legacy of “grandiose” worker entitlement, move everything to Mexico.

  11. floyd Avatar
    floyd

    Just another example of the fact that wages is viewed simply as “theft of profit” and that workers ought to resign themselves to lowest common denominator status while managers of U.S. companies continue to “earn” multples of their counterparts from elsewhere.
    To use the “Titanic” analogy; It pays better to rearrange the deck chairs than to waste your time working on the bilge pumps.Plus,you get to hog all the lifeboats!

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