Monday, September 24, 2007

UAW strike

After two months of negotiations and roughly one week after its existing contract expired, the United Auto Workers (UAW) went on strike today against General Motors (GM), the country's largest automaker. Some 73,000 workers are expected to walk off the job.

The number of work stoppages has been down in the U.S. in recent years. Last year, there were no strikes of comparable size. The last major UAW strike occurred nearly a decade ago and involved several parts plants, and the last strike directly against auto manufacturing operations occurred three decades ago.

The strike comes at a bad time for the U.S. economy, which is already battling a housing slump, a credit crunch, and $80 a barrel oil prices. Employment figures last month indicated that the number of jobs had actually decreased from the month before. A large, long-lasting strike would increase the chances of entering a recession. The only "good" news (if you can call it that) is that GM's manufacturing workforce has shrunk so much that many fewer workers are involved than in the earlier UAW strikes.

The strike also comes at a bad time for GM. The company has seen its market share, work force, and profitability decline. In the late 1970s, GM sold nearly half of the vehicles in the U.S.; today it sells less than a quarter. The company has suffered net losses in the last two years. Although worker productivity is high, the company has huge legacy costs that reduce its competitiveness. Also, the strike comes right at the start of the new auto year.

Although both sides are rushing out press releases expressing disappointment and blaming the other for the work stoppage, there are some encouraging signs. The most hopeful are that the UAW and GM are keeping most details of the negotiations under wraps and that the UAW has asked to continue meeting. There also appears to have been some progess in the negotiations on some major issues, such as shifting some of the risk for retiree health expenses away from GM and towards the union. The remaining sticking points appear to be related to job security measures.

Still, a strike of any length is unwelcome news, especially for the families and communities involved.

8 comments:

Bubba said...

The cost of labor is a particularly tough burden for all of the american auto maufacturers burden.

However, they could have avoided much of their current difficulties had they been paying better attention to product back in the 70s, and kept the market share bleedoff to a minimum.

I will always find it amusing that the Big 3 never paid attention to Dr. Demmings until it was too late.

Meanwhile, the emerging Japanese manufacturing culture made a shambles of the one industry whose fame was a staple of the American mystique in other nations after WWII.

"The Rake" said...

Good objective post.

I can't keep the blinders on anymore.

Dave Ribar said...

Bubba:

Good points, though it's more sad than amusing that so many jobs have been lost in the process.

One bright spot in the rise of the foreign automakers is that they have brought some investment and manufacturing to the states. U.S. autoworkers can get the job done under the right circumstances.

"Rake:"

Thanks.

Bubba said...

I was thinking of the arrogance of execs at the Big 3 over their fall from on high.

I have first hand experience of that from up close and personal. My dad was a GM divisional exec, and I met a few of these guys back in the 60s, and I had business with a newer generation in the 70s and 80s when I worked in motorsports.

Dave Ribar said...

Bubba:

Sounds like an eye-opener.

There were problems at all levels. In his book, Working, Studs Terkel interviewed several autoworkers in the early 1970s who described how they sabotaged cars out of frustration with their jobs.

jimcaserta said...

What do you think of the unions using their pension money to buy out the company? The market cap of GM is only $21Bln, and I've read the pension fund has > $80Bln in assets to manage. Part of the problem with their contracts is balancing payments to former workers with keeping current workers. Neither former or current workers would be in good shape if the company went bankrupt.

Dave Ribar said...

Jim:

That's a neat idea, especially for the current workers. I'm not sure whether the former workers who are covered under those pensions (retirees, bought-out employees, etc.) would go for it.

Bubba said...

"Neither former or current workers would be in good shape if the company went bankrupt."

If they buy GM and don't implement the product/customer mentality better than the previous gang, it won't make a difference.