As expected, the United Auto Workers union chose General Motors as its strike target in the current negotiations for a national contract to replace the one that expires September 14.
As a result, the UAW will focus its negotiations with GM. Once those negotiations are completed, the union will turn its attention to Ford and Fiat Chrysler, using the GM contract as a pattern. The UAW represents 150,000-plus workers at the three Detroit auto companies. Workers at all three companies voted to authorize a strike by a landslide – more than 95%.
GM was the obvious choice because it has excess plant capacity and too many traditional cars in its line-up – a segment that is in decline as consumers opt instead for pickup trucks and sport-utility vehicles. Last November, GM announced it would close the Lordstown, Ohio, plant, and it did this spring because it was discontinuing production of the Chevrolet Cruze. It announced other plants might be closed as well because no products were allocated to them.
As we stated in a July 15 post, all negotiations are challenging, but this round will be particularly difficult. The U.S. auto industry has reached its peak in sales in this current business cycle. Business is still healthy but has begun a downward trend. More importantly, the auto industry is on the verge of massive transformation to electric vehicles, self-driving cars, mobility services and new ways for consumers to acquire personal transportation, although no one knows when the tipping point will be for the transformation.
In addition, UAW leadership is under the shadow of an ever-increasing federal investigation into alleged corruption.
The union is determined to protect worker health care, expected to be one of the most heated issues as it is a costly item for automakers, as well as improve wages. Automakers want workers to contribute more toward their health care cost. The union wants job security through plant investments and product commitments. It wants to limit the use, or limit the expansion of the use, of temporary workers and create a faster track for lower-level workers to achieve full-UAW pay status. The automakers want more flexibility in the use of temporary workers so they can adjust the workforce to the market.
While UAW members always select a strike target, the likelihood of an actual strike is higher in this round because negotiations are occurring against the backdrop of the complicated issues surrounding them.