in the press
Strike Impact: UAW - General Motors
September 25, 2007
Northville, Michigan
The Issues
- GM is losing over 11,000 vehicles per day, 10,000
engines and an equal number of transmissions. The
volume impact escalates as non-UAW facilities in Moraine,
OH, Canada and Mexico are affected
- The union feels that the job security language is a
stumbling block – not the possible VEBA
- Suppliers will be affected in order of final assembly
proximity or their supply chain position (Tier 2/3)
Fundamentals
Today’s national labor work stoppage by the UAW at General
Motors is the first since 1970. It would be surprising if
this stoppage were to last more than a week. A stoppage
longer than this would not be healthy for either side.
Core Issues
- Pensions and Healthcare: The continued restructuring
of legacy costs is the most significant issue. Current
employee healthcare is at the top of the agenda, though
ongoing pension costs are a considerable liability as
well. GM has almost 400,000 retirees at this time;
83% are UAW covered. The Union and the company
are exploring the use of a VEBA (Voluntary Employee
Benefit Association) though this is not a certainty given
a difference of opinion of its funding.
- Jobs Bank: The buyouts from last year drew thousands
off the jobs bank roll. As further capacity reductions are
made, the OEMs will seek to rewrite language to preclude
idled workers from the costly jobs bank unless the layoff
is temporary. At issue is the ability for manufactures to
win the flexibility to relocate employees to facilities over
an extended distance.
- Facility Investment: A more substantial issue is
company guarantees to keep facilities open and promise
new projects for existing facilities. In this environment
of global platforms and a competitive marketplace – the
company will be careful of what is promised to ensure
that ‘fixed’ costs are not baked into the agreement.
- Simplifying Work Rules: Greater use of MOAs/COAs are
required in the future combined with higher production
flexibility. Two-tier wage agreements are expected to
alleviate some of the ‘manufacturing’ disadvantage at
the Detroit 3. This has been ongoing but needs to be
‘legitimized’ through language in the national contract
as the target is to approach wage parity with the New
Domestic OEMs.
Strike Impact
The tables to the right outline our expectation for lost
volume per day by country for vehicles and engines/transmissions. The bulk of GM’s requirements for North
America are self contained though a protracted stoppage
(more than one week), could affect operations abroad.
Expected Outcomes
- Our expectation is for a short work stoppage - less
than one week in length
- Facilities in Canada, Mexico and Moraine, OH (not UAW
represented) will be impacted over the next 1-3 days
depending upon inventory
- If this is a short work stoppage, GM will offset lost
production with overtime where appropriate
- There should not be a sizeable impact at the dealer
level unless this stoppage becomes protracted
From a negotiating perspective, this stoppage adds a
new dynamic to the Chrysler and Ford discussions
We will continue to monitor this situation and send updates
when required.
For questions contact
Michael Robinet, Vice President, Global Vehicle Forecasts
at michaelrobinet@csmauto.com or +1 248 465 2804
