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GM Strike Ends After Longest Work-Stoppage Since 1970, Over $2 Billion In Costs

Courtesy of ZeroHedge View original post here.

Ending a nearly six-week long strike, one which Wall Street analysts said was adversely impacting the US economy and would hit the October payrolls reports, late on Friday workers at General Motors’ US plants approved a new labor deal following contentious negotiations over pay and production plans, ending the longest work stoppage at GM since 1970.

In the Friday vote Friday, members of the United Auto Workers union ratified an agreement that will increase hourly wages and keep open a plant that GM planned to idle early next year, but also allow the carmaker to move forward with closing three other factories, according to media sources.

Under the labor pact, permanent hourly workers will receive 3% pay raises and 4% lump-sum bonuses in alternating years of the contract, and an $11,000 ratification bonus, according to a summary from the UAW. Workers’ healthcare costs will remain the same. The deal also includes a path for temporary workers to become permanent and a plan to build a new vehicle at Detroit-Hamtramck, one of the factories tagged to be idled.

The strike started in September when roughly 48,000 hourly workers went on strike in a dispute over pay, healthcare costs, temporary workers and GM’s decision last year to idle four US plants. On October 16, the UAW and GM announced they had come to a tentative agreement, paving the way for an end to the automotive industry’s first walkout in more than a decade.

The end of the strike comes as a relief to GM and its workers, who did not receive their normal wages for the length of the walkout, while costing GM at least $2 billion as the strike halted activity at more than 30 US factories and led to temporary lay-offs at other plants in Canada and Mexico.

“We delivered a contract that recognises our employees for the important contributions they make to the overall success of the company, with a strong wage and benefit package and additional investment and job growth in our US operations,” said Mary Barra, GM chief executive and chairman.

“We are all so incredibly proud of UAW-GM members who captured the hearts and minds of a nation,” said UAW vice president and Director of the UAW-GM Department, Terry Dittes. "Their sacrifice and courageous stand addressed the two-tier wages structure and permanent temporary worker classification that has plagued working class Americans.

The largest American carmaker has pledged to invest $7.7 billion in US plants over the four-year contract, and is expected to spend an additional $1.3 billion on other plans, including a new battery plant near the shuttered Lordstown, Ohio, facility.

As the FT notes, the UAW selected GM as its so-called target company for this year’s labour negotiations. Their deal will be used as a template in upcoming talks with Ford and Fiat Chrysler.

While the strike may be over, it is expected to hit US employment numbers due next week, having already knocked durable goods orders in September. According to Bank of America, "the upcoming jobs report will be quite gloomy, with job creation of only 25k with a risk of a negative number given the drag from the GM strike. Along with the slowdown in job creation has come a stalling of wage growth with a variety of measures showing that wage growth has failed to accelerate further this years." The strike's impact rippled across the manufacturing sector, as companies that supply GM with parts laid off thousands of workers.

GM shares, which had dropped more than 5% since the strike began, jumped in after hours trading.


 

 

 


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