GM workers strike, first time since 2007

[K1052]

Tens of thousands of auto workers across the country went on strike Sunday night after negotiations faltered between their union and General Motors.

The strike began at 11:59 p.m. ET., with as many as 50,000 United Auto Workers at dozens of facilities from Michigan to Texas expected to participate.

The move could cost hundreds of millions of dollars. A two-day strike in 2007 — the last time the UAW called such a work stoppage — cost General Motors more than $600 million.

https://www.nbcnews.com/news/us-news/tens-thousands-general-motors-auto-workers-go-strike-n1054701

The automakers seem in increasingly tight spots with production overcapacity, regulatory uncertainty, a trade war, and growing labor unrest. I presume Trump, as a staunch populist, will eventually blame the union.

 

[Brainonska511]

https://www.nbcnews.com/news/us-news/tens-thousands-general-motors-auto-workers-go-strike-n1054701

The automakers seem in increasingly tight spots with production overcapacity, regulatory uncertainty, a trade war, and growing labor unrest. I presume Trump, as a staunch populist, will eventually blame the union.

The NBC article seems to skip the fact that GM made $8.1 billion in profits last year (globally): https://nyti.ms/34OoUJp

 

[K1052]

The NBC article seems to skip the fact that GM made $8.1 billion in profits last year (globally): https://nyti.ms/34OoUJp

This is a fair point. Even with uncertain futures the automakers are profitable.

 

[glenn1]

This is a fair point. Even with uncertain futures the automakers are profitable.

Currently profitable. Automakers are highly cyclical, almost a textbook example. Hopefully the workers get paid but justifying a big raise on point in time income statement values without considering the long-term implications would be irresponsible. We're long in the tooth for this expansion cycle and unclear when it will come to an end. We might already be in the beginning stages of a recession right now.

 

[K1052]

Currently profitable. Automakers are highly cyclical, almost a textbook example. Hopefully the workers get paid but justifying a big raise on point in time income statement values without considering the long-term implications would be irresponsible. We're long in the tooth for this expansion cycle and unclear when it will come to an end. We might already be in the beginning stages of a recession right now.

So following this logic is a time for raises when the business is profitable or when it is unprofitable? Or neither? This line of reasoning certainly appeals to management but seems an problematic place to negotiate a labor contract from.

Personally I think the auto industry is looking at a downturn in the near future if one hasn't already arrived in some respects. That said many obligations were shed in the bankruptcy so the situation isn't exactly the same as a decade ago.

 

[Fanatical Meat]

Going to be interesting which side the President picks. I honestly have no idea but we all know he’ll chime in.
Without knowing much about the disagreement I’m going to guess Union guys took a pay/benefit cut during the melt down with a wink-wink “we’ll make it up to you when things are better...” and there is a disagreement as to what making it up to them is.

 

[Brainonska511]

So following this logic is a time for raises when the business is profitable or when it is unprofitable? Or neither? This line of reasoning certainly appeals to management but seems an problematic place to negotiate a labor contract from.

Schrodinger's pay raise conditions.

 

[K1052]

Going to be interesting which side the President picks. I honestly have no idea but we all know he’ll chime in.
Without knowing much about the disagreement I’m going to guess Union guys took a pay/benefit cut during the melt down with a wink-wink “we’ll make it up to you when things are better...” and there is a disagreement as to what making it up to them is.

He'll fence sit then eventually blame UAW leadership. Which like ok has problems but siding with GM probably isn't going to endear him to the rank and file.

 

[Fanatical Meat]

He'll fence sit then eventually blame UAW leadership. Which like ok has problems but siding with GM probably isn't going to endear him to the rank and file.

But he needs those votes, should be interesting

 

[K1052]

But he needs those votes, should be interesting

Trump plans to campaign in New Mexico and Oregon for 2020. I'm not sure how much reality is actually penetrating the re-elect workings over there these days.

 

[glenn1]

So following this logic is a time for raises when the business is profitable or when it is unprofitable? Or neither? This line of reasoning certainly appeals to management but seems an problematic place to negotiate a labor contract from.

Personally I think the auto industry is looking at a downturn in the near future if one hasn't already arrived in some respects. That said many obligations were shed in the bankruptcy so the situation isn't exactly the same as a decade ago.

I see you basically ignored my statement "Hopefully the workers get paid" in my post you quoted. As for "when is a time for raises" that probably should reflect when the current labor contract is set to expire. A smart management team would attempt to take secular economic conditions into account when deciding the duration of a new contract, or to open off-cycle negotiations to "reset" a contract term if appropriate. I'm unsure if GM has such a smart management team, but that's another topic altogether. A smart union negotiator would likewise take into account the overall economic picture when making strategy/decisions about contracts as well knowing the company has to survive a downturn to be able to pay out the contracts it signed, and I'm likewise unsure if the UAW has that level of smarts. Either way I have very little exposure to either side (except through some incidental holdings of the automakers as part of an index fund) so my interest is primarily as a bystander which is hoping for a mutually beneficially outcome for both sides.

 

[Greenman]

UAW will get what they want. For GM it's a simple equation, go broke now or maybe go broke later. They'll choose later.

 

[K1052]

I see you basically ignored my statement "Hopefully the workers get paid" in my post you quoted. As for "when is a time for raises" that probably should reflect when the current labor contract is set to expire. A smart management team would attempt to take secular economic conditions into account when deciding the duration of a new contract, or to open off-cycle negotiations to "reset" a contract term if appropriate. I'm unsure if GM has such a smart management team, but that's another topic altogether. A smart union negotiator would likewise take into account the overall economic picture when making strategy/decisions about contracts as well knowing the company has to survive a downturn to be able to pay out the contracts it signed, and I'm likewise unsure if the UAW has that level of smarts. Either way I have very little exposure to either side (except through some incidental holdings of the automakers as part of an index fund) so my interest is primarily as a bystander which is hoping for a mutually beneficially outcome for both sides.

GM is doing their thing for shareholders and the union it's for their people. Obviously maintaining the buyback regime and quarterly dividend is paramount for management and spending more for labor isn't. The only problem is that it's difficult to cry poor on possible future market conditions while posting a significant profit and buying back $15B in stock, the other side of the table won't take you seriously.

 

[1prophet]

When you open up the hood of a new GM, Ford, or Chrysler car/truck and you see more and more foreign made parts (China, Mexico, etc.) than a Toyota pickup, and their senior management pad their pockets while living large off union dues,

UAW Corruption Scandal Widens With Raids On Homes And Latest Arrest

The FBI searched the homes of the current and former union presidents, and a region director has been charged with embezzlement. What role will this play on upcoming contentious contract talks?

www.npr.org

UAW Corruption Scandal Widens With Raids On Homes And Latest Arrest

, and they are competing against this thanks to NAFTA, how long before they are irrelevant?

 

[Puffnstuff]

The UAW has been engaged in questionable practices for many years yet the workers still trust them. How many scandals does it take before the workers look elsewhere for representation?

 

[glenn1]

GM is doing their thing for shareholders and the union it's for their people. Obviously maintaining the buyback regime and quarterly dividend is paramount for management and spending more for labor isn't. The only problem is that it's difficult to cry poor on possible future market conditions while posting a significant profit and buying back $15B in stock, the other side of the table won't take you seriously.

It's an adversarial contract negotiation, OF COURSE the management doesn't want to spend more for labor just like the workers want as high a salary and concessions as they can possibly get from management. Unless you have the naïveté of an elementary school kid you recognize this.

It works both ways too. The workers have the same problem with the other side of the table taking them seriously - the workers' bargaining power is directly related to (a) how credible the threat they can find jobs paying equal or more elsewhere, (b) how well they can prevent "scab" workers from filling their positions while they strike, and (c) if the company moves to fire them, can an NLRB without a quorum stop them from doing so.

 

[K1052]

It's an adversarial contract negotiation, OF COURSE the management doesn't want to spend more for labor just like the workers want as high a salary and concessions as they can possibly get from management. Unless you have the naïveté of an elementary school kid you recognize this.

It works both ways too. The workers have the same problem with the other side of the table taking them seriously - the workers' bargaining power is directly related to (a) how credible the threat they can find jobs paying equal or more elsewhere, (b) how well they can prevent "scab" workers from filling their positions while they strike, and (c) if the company moves to fire them, can an NLRB without a quorum stop them from doing so.

The probability that GM will fire its union workforce the year before an election seems..rather remote. They'd get taken apart politically.

 

[Ajay]

Without knowing much about the disagreement I’m going to guess Union guys took a pay/benefit cut during the melt down with a wink-wink “we’ll make it up to you when things are better...” and there is a disagreement as to what making it up to them is.

They did take a compensation cutback. I don’t know if there was any 'wink wink', but clearly GM has recovered well and ought to share some of that wealth with their workers. The giant stock buybacks drive me nuts (across many industries). Totally bogus redistribution of wealth. Invest in your technology, brand, products, talent, workers, community, etc. The tie in of executive pay (stock bonuses) has completely skewed corporate behavior towards a virtual market that hurts their long term competitiveness (IMHO).

 

[glenn1]

They did take a compensation cutback. I don’t know if there was any 'wink wink', but clearly GM has recovered well and ought to share some of that wealth with their workers. The giant stock buybacks drive me nuts (across many industries). Totally bogus redistribution of wealth. Invest in your technology, brand, products, talent, workers, community, etc. The tie in of executive pay (stock bonuses) has completely skewed corporate behavior towards a virtual market that hurts their long term competitiveness (IMHO).

I'm guessing the primary constraint in spending more on technology is the pace of advances in battery and materials science. You can put more into R&D for those subjects but they still take time to ripen and be ready for market. I'm also guessing once the technical and legal concerns about self-driving cars get more worked out, you'll also see a bit of a boom on spending by GM and all the automakers.

As for the stock buybacks I agree they were probably ill-advised but their size (around $15b or so IIRC) is peanuts compared to the debt load the company has taken on. That's the far bigger concern. The company can always do a follow-up stock offering if they feel they bought too much back, but even at low interest rates that debt service is going to be a drag. I'm unsure if they strategically got much out of the debt either considering it's not like they used it to launch a brand new all-electric car division or something.

 

[senseamp]

Some good coverage here:

 

[Fenixgoon]

It's an adversarial contract negotiation, OF COURSE the management doesn't want to spend more for labor just like the workers want as high a salary and concessions as they can possibly get from management. Unless you have the naïveté of an elementary school kid you recognize this.

It works both ways too. The workers have the same problem with the other side of the table taking them seriously - the workers' bargaining power is directly related to (a) how credible the threat they can find jobs paying equal or more elsewhere, (b) how well they can prevent "scab" workers from filling their positions while they strike, and (c) if the company moves to fire them, can an NLRB without a quorum stop them from doing so.

of course if it weren't so adversarial then strikes probably would be far less likely to happen. The profit-above-all thinking promoted by Fridman economics isn't a legal requirement.

Cooperation is best in the long-term. Workers stay happy, and the company profits reasonably and consistently (all else being equal)

 

[glenn1]

of course if it weren't so adversarial then strikes probably would be far less likely to happen. The profit-above-all thinking promoted by Fridman economics isn't a legal requirement.

Cooperation is best in the long-term. Workers stay happy, and the company profits reasonably and consistently (all else being equal)

In an ideal world the autoworkers wouldn't even receive salaries. Compensation would be a mix of piece-rate that was adjusted for the quality output of each worker and the remainder being a profit share based on the company's results.

 

[UNCjigga]

He'll fence sit then eventually blame UAW leadership. Which like ok has problems but siding with GM probably isn't going to endear him to the rank and file.

He'll do a far less articulate version of this:

"I know many of you are great workers, I've met you at my rallies over the past few years. And you people are saying that you want to work, you want fair wages, you don't want to lose your jobs to manufacturing in China. But the union bosses just don't get it. You see, they're all Democrats, and they're in cahoots with Democrats, and they'd rather see Americans suffer through a strike than cut dues and risk their own pay. They don't know how to bring American manufacturing back. They've forgotten how to win. If my people were running the unions, you'd all see your pay go up 50-100%!! We know how to win! Get rid of your bosses and get conservatives and Republicans in charge, and we'll save the unions!!"

Sad thing is, it might just work.

 

[Jhhnn]

They did take a compensation cutback. I don’t know if there was any 'wink wink', but clearly GM has recovered well and ought to share some of that wealth with their workers. The giant stock buybacks drive me nuts (across many industries). Totally bogus redistribution of wealth. Invest in your technology, brand, products, talent, workers, community, etc. The tie in of executive pay (stock bonuses) has completely skewed corporate behavior towards a virtual market that hurts their long term competitiveness (IMHO).

It's a form of looting by company executives. Maximizing compensation is all they really care about. A few years in the C-suite will set you up for life & then you really don't have to give a fuck.

 

[dainthomas]

Currently profitable. Automakers are highly cyclical, almost a textbook example. Hopefully the workers get paid but justifying a big raise on point in time income statement values without considering the long-term implications would be irresponsible. We're long in the tooth for this expansion cycle and unclear when it will come to an end. We might already be in the beginning stages of a recession right now.

Guaranteed management are getting pay raises and fat bonuses for the high profits. Workers? Lol, right.

We should have a German-type system where labor is represented on boards of directors.