General Motors' workers strike work
By Our Corporate Bureau | 25 Sep 2007
At 11 a.m. on Monday, 24 September, about 73,000 members of the United Auto Workers Union struck work against General Motors Corp after the 10 week-old renegotiations over wage contracts stalled. Although the negotiations were restarted in the afternoon, work at more than 80 GM facilities in the US was not.
This is the first national strike by US auto workers since 1970. The last time the UAW called a strike against GM was in 1998.
General Motors, whose sales have now dropped behind Japan's Toyota Motor Corp., has been trying hard to persuade the union to accept labour cost parity with its Japanese rivals. According to American carmakers, labour costs, including benefits, are some $25 - 30 per hour more than at Toyota, Honda Motor Co. and Nissan Motor Co.
GM is paying for past profligacy, because of which it is shelling out large sums on the healthcare costs of retired employees. It is asking UAW to form a trust to take on these costs; but the union wants a quid pro quo — job security guarantees that the carmaker will make future cars and trucks in American plants.
The strike is set against a backdrop of a continuing decline of the US auto industry. American car makers are running up huge losses while Japanese companies notch up substantial profits. One reason is their inflexible labour-related costs. The decline has weakened both General Motors and the UAW. That makes a protracted strike unlikely.
But, with industrial relations discord, you never know what might exacerbate things. If, for any reason, the strike gets prolonged, it would be a serious blow to GM; and it could be worse for the UAW. If the union refuses to provide the substantial concessions GM wants, the company may well have to shut down some of its still-running US plants. The company's restructuring has already resulted in a reduction in the workforce in the past year. A strike means loss of wages.
The company is said to have adequate inventory of most of its products, and could ride out a short strike; but its popular new crossover vehicles Buick Enclave, GMC Acadia and Saturn Outlook could take a hit.
