The UAW and General Motors have made “good progress” on two key issues, the UAW’s lead negotiator said in a letter to members late Friday afternoon.
GM and the UAW negotiators adjourned early Friday evening after a full day of talks at Detroit’s Renaissance Center. It was day 19 of the union’s nationwide strike against the automaker. Talks were to resume Saturday morning.
In the letter, Terry Dittes, vice president of union’s GM Department, wrote: “Since the last update, we have made good progress regarding the issues of health care and a path for temporary employees becoming seniority members. “
The issue of temporary workers making significantly less than permanent workers, has been a huge obstacle in talks. The temps, who are paid $ 15 – $ 19 an hour, can work for several years without an assurance of a permanent role. The UAW agreed to expanded use of temps at all three Detroit automakers as the industry headed into the recession a decade ago.
Temps are union members, but not eligible for profit sharing and pay more for health care than their peers. A survey of autoworkers last year found thatproviding equity for them was the union member’s No. 1 issue.
GM said, “We continue to negotiate, exchange proposals and make progress toward reaching a tentative agreement.”
Remaining issues
Dittes also told members the UAW and GM still have “several of your proposals outstanding and unsettled like wages, job security, skilled trades and pension.”
One labor expert said the letter hints of a real possibility of a tentative agreement coming over the weekend. But he warned that the process of collective bargaining means that issues aren’t solved one by one. All the issues must come together in one package.
“Until that is complete, there’s not a settlement,” said Harley Shaiken, University of California Berkeley professor who specializes in labor.
Shaiken said it’s positive that Dittes highlighted the key issues of health care and temporary workers and that talks will continue through the weekend.
“But there are very key issues yet to be resolved,” said Shaiken. “We’ll see how things look on Sunday, if not before. It could be that they get close, but yet a key issue continues to divide them. ”
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On temp workers, who make up 7% – 10% of GM’s hourly workforce, people close to the talks say GM’s preferred approach is to hire more temporary workers to reduce costs. Analysts said GM would want to hire enough temps and reduce its health care costs enough to chip out at least $ 5 an hour in total labor costs – the sum of all labor costs divided by all hours worked.
The Center for Automotive Research in Ann Arbor said that nonunion foreign-based automakers that build cars in the United States have an average total labor cost of $ 50 an hour. They are known to employ a higher number of temps than the Detroit Three. GM’s average hourly labor cost in the United States is $ 63 an hour. Temps make up about 7% – 10% of GM’s hourly workforce, or about 4, 100 people.
Health care is a big piece of those costs, with UAW members picking up just 3% of their expenses, well below the average US worker’s 28%. GM early in the talks proposed that workers pay 15%, which was a nonstarter. Reports have varied on GM’s position since, indicating the company had given in and would stick with 3%, and then that the question was back on the table.
GM’s costs rolling up
Bargainers for both sides have been meeting daily since the contract between GM and the UAW expired at midnight Sept . 14. The union rejected an initial proposal GM made and 46, 000 hourly workers went on strike at 12: 01 am September 16.
UAW negotiators are also bargaining with Ford and Fiat Chrysler Automobiles, which have extended their contracts, while striking and negotiating with GM. The union chose GM as its “target” company with which to negotiate a template that it will take to Ford and FCA on major economic and job security issues.
One strong motivator for GM to want a deal is the cost.
This strike has cost GM just over $ 1 billion thus far, said JP Morgan analyst Ryan Brinkman on Tuesday. He estimated GM is losing $ 82 million per day, though East Lansing-based Anderson Economic Group estimates GM is losing about $ 25 million a day in profit.
Still, many analysts have said that GM has a lot of money, $ 17 .5 billion in cash on hand at the end of the second quarter, and it can weather this strike.
“That’s true, but Moody’s came out Thursday saying that they are considering downloading GM bonds to junk status,” said Shaiken. “That means GM would have to pay higher interest on borrowing and that is a real cost to continuing this strike.”
Another cost is losing production of big-selling vehicles such as the Chevrolet Silverado and GMC Sierra pickups. On Tuesday, GM halted production at its Silao Assembly, in Silao, Mexico.
That factory builds GM’s highly profitable Chevrolet Silverado and GMC Sierra pickups. About 6, 000 workers were affected.
As of Friday afternoon, GM said production at its other Mexican plants , Ramos Arizpe, San Luis Potosí and Toluca, continues on normal schedules. GM builds the new Chevrolet Blazer and Chevrolet Equinox SUVs at Ramos Arizpe. At San Luis Potosi, GM builds the Equinox, Chevrolet Trax and GMC Terrain SUVs. Toluca is a propulsion system and foundry operation.
More:GM shuts down Mexico pickup plant due to UAW strike
“So GM has to factor that down production into their costs,” said Shaiken. “Some of those key vehicles may be lower in inventory that GM would like. The Chevrolet Silverado is a license to print money when it’s selling well. ”
On the other hand, union members are living with the reality of $ 250 a week in strike pay. While the union’s strike fund is healthy, holding more than $ 800 million, many workers are worried about regular payments such as car loans and housing.
Contact Jamie L. LaReau: 313 – 222 – 2149 or[email protected]. Follow her on Twitter@Jlareauan. Read more onGeneral Motorsand sign up for ourAutos Newsletter.
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