The relationship between General Motors and the United Auto Workers (UAW) trade union reached a breaking point in September 2019 as the two sides failed to hammer out the terms of their next four-year contract. Nearly 50,000 workers in nine states went on strike at midnight on September 16, and the movement remains on-going as of October 8. It’s allegedly affecting the production of the next-generation Chevrolet Corvette.
Here’s what you need to know about the strike, and how it could potentially affect both you and your next car.
How did we get here?
General Motors is significantly reducing its global footprint to keep up with a rapidly changing industry. America’s new car market remains one of the largest in the world, and it’s healthy, but motorists are buying fewer sedans as they flock towards high-riding SUVs and crossovers. On a secondary but more lasting level, carmakers need to spend a tremendous amount of money developing more efficient models and autonomous technology to remain competitive on the global stage. General Motors has notably invested billions into its tech-oriented Cruise division. The company’s far-reaching restructuring reflects the fact that the good ol’ days of churning out V8-powered trucks for mammoth profits are over.
GM’s far-reaching restructuring reflects the fact that the good ol’ days of churning out V8-powered trucks for mammoth profits are over.
Announced in late 2018, the restructuring plan calls for a 15% reduction in the company’s workforce. It’s not just blue-collar workers; about a quarter of the executive team will be sent home. The shift will cost 8,000 salaried workers their job, and 6,000 hourly workers will need to accept a transfer elsewhere in the company or leave. Four American factories and one Canadian plant will close, too. General Motors hopes to save $6 billion annually by the end of 2020, according to CNN.
The Lordstown, Ohio, factory closed in March 2019 after making the last Chevrolet Cruze. Two transmission factories respectively located in Maryland and Michigan have closed, too. The Hamtramck plant on the outskirts of Detroit will close in early 2020. Approximately 3,300 hourly jobs will be lost when the four plants are closed. Over 1,000 employees have accepted transfers to other factories, which normally means packing up and moving to a new city, sometimes in a different part of the country. It’s in this grim context that the UAW began negotiating a four-year contract with General Motors.
What’s at stake?
Money, of course. The UAW wants General Motors to save as many jobs as possible. That’s not as simple as keeping factories open; bargainers asked the firm to reduce its reliance on temporary workers, which are paid less than full-time workers and receive fewer benefits. Automotive News added workers on strike are also demanding better wages, improved benefits and job security. Many also criticized General Motors for shifting production overseas, notably to Mexico.
General Motors offered to invest $7 billion into its American factories. Though it hasn’t fully been made public, the plan calls for launching a family of electric vehicles that includes a pickup and creating the infrastructure needed to make these models a reality. Sources familiar with the negotiations told Automotive News that the truck could be manufactured at the Hamtramck factory, a move that would keep the facility open in the foreseeable future. Lordstown is closed for good, though a startup is trying to buy it, but General Motors could build a battery plant near it to keep jobs in northern Ohio.
The talks between the UAW and General Motors were seemingly moving forward during the last week of September 2019, but Terry Dittes, the union’s vice president, told members that they took a turn for the worse after the carmaker submitted an inadequate counter-offer.
“The company’s response did nothing to advance a whole host of issues that are important to you and your families! It did nothing to provide job security during the term of the agreement,” he wrote in a letter obtained by CNBC.
What does this mean for consumers?
The movement won’t have a significant effect on car buyers if it ends in the coming days. Production is being disrupted, make no mistake, but dealers have sufficient inventory to keep up with demand. If the strike ends soon, the only parties affected will be General Motors, which analysts say is losing about $50 million per day during the movement, and the workers on the picket line, who aren’t getting paid while they’re out protesting.
The Detroit Free Press learned from an insider that the strike will delay production of the eighth-generation Chevrolet Corvette in Bowling Green, Kentucky. The company needs to finish building the outgoing, seventh-generation model before it retools the factory and prepares it to build the new car. Chevrolet denied the delay, however.
Buyers shouldn’t let dealers talk them into paying significantly more on account of the strike.
It’s difficult to predict how long the strike will last; it’s already one of the longer movements in recent memory. The UAW last went on strike against General Motors for two days in 2007, but a similar movement paralyzed American Motors Corporation (AMC) for three weeks in 1974. If it continues, it’s reasonable to assume that some General Motors cars, trucks, and SUVs made in the United States will be in short supply. Some of the company’s more desirable models could temporarily become more expensive, though we don’t expect a major leap. Significantly, buyers shouldn’t let dealers talk them into paying more on account of the strike.
Digital Trends reached out to General Motors and the UAW for more information. We’ll update this story if we hear back.
Updated on October 8, 2019: Added the latest information about the strike.
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