Did I Speak Too Soon About Labor Peace?

By Chris Haak

06.08.2009

Just over two weeks ago, I wrote an article about how there had finally been some good news about labor peace; the American Axle strike had ended, the CAW had agreed to a new collective bargaining agreement with GM and Chrysler, and a key GM plant’s UAW workers had agreed to a local agreement, ending a strike that idled the full size crossover plant in Lansing Delta Township, Michigan that builds the Acadia, Outlook, and Enclave.

Perhaps I spoke too soon, however. While the three events I wrote about on May 14 were indeed good news and significant positive labor developments, there are so many contentuous relationships between labor and management in all aspects of an auto industry in recession that just as one agreement is signed, another pair seems to go to war. And I’m not just talking about OEM auto manufacturers such as GM and Chrysler; this is happening throughout the supplier base and now even after the vehicles are built.

I specifically mentioned labor problems “after the vehicles are built” because the second-largest auto transport company, Performance Transportation Services, Inc., is expected to see its Teamsters-represented workforce go on strike beginning Monday, June 9 to protest PTS’ bankruptcy court-approved 15% wage reductions for union employees. The company is currently in Chapter 11 bankruptcy protection for the second time since 2006, and is blaming its problems on the lethal combination of sky-high diesel fuel prices and declining production (and therefore shipments) of new vehicles from its customers to dealers. PTS clients include Toyota, GM, and Ford, although spokespeople for all three companies indicated that contingency plans are in place. Still, it can’t be welcome news for companies like GM and Ford, who are struggling against several headwinds in the marketplace (plus GM just resuming production at many of its plants after the two-month American Axle strike).

The second problem is an even thornier issue. The CAW, fresh into its new collective bargaining agreement with GM that its membership ratified about two weeks ago, is absolutely livid about GM’s recent announcement that it would be closing the Oshawa, Ontario pickup plant soon. According to the CAW, GM bargained with them in bad faith, since it pledged to keep the Oshawa truck plant open “dependent on market conditions,” then decided two weeks after bargaining that market conditions had deteriorated to the point that production was no longer viable in one of their highest-cost (but highest-quality) truck plants. The CAW spent several days last week blockading the GM Canada headquarters in Oshawa to protest the action, and CAW president Buzz Hargrove has said that the union would decide sometime next week what steps to take next, including the possibility of a strike to protest GM’s action.

For its part, GM met with CAW leadership in Detroit last week for a 90-minute meeting and outlined more details for the union about what went into their decision to close the plant (specifically, that GM now views high gas prices as a permanent reality, so GM also considers the related consumer shift away from large vehicles. The company had no comment on the possibility of a strike, since the union has not officially called for one.

Depending on where the strike occurs (whether it’s local to Oshawa, or covers the entire population of GM employees in Canada represented by the CAW), a strike obviously couldn’t come at a worse time for the company. The company is shedding market share at an alarming rate, bleeding cash monthly, chipping in billions of dollars to bail out troubled suppliers (Delphi, American Axle, plus the rumored purchase of battery supplier Cobasys). If GM doesn’t make it, the cause isn’t likely to be one single issue, but rather the proverbial “death by a thousand cuts.” GM paying their troubled suppliers for buyouts is like asking a still-bleeding stab wound victim to donate a pint of blood.

I’d love nothing more than to see a thriving, successful GM driven by outstanding products (the company is making great progress on that front) that are relevant to the current market conditions (not so great on this one), and propelled by excellent marketing (the huge divisional structure means too many mouths to feed with marketing dollars, so products get support at launch then are left on the vine to fend for themselves for the next five years of their life cycle). But these issues keep coming up; it’s like the company takes one step forward then two backward. Even if these two labor disagreements are settled in a way favorable to the manufacturers, what dispute is looming around the corner ready to hit them next? And will it be the next dispute – or one two years from now – be the one that finally causes GM to wave the white flag of surrender?

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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7 Comments

  1. There are no easy anwers here because GM making it depends to some degree on the unions losing jobs, members and political power. GM cannot keep making stuff they can’t sell, and if the overall market is going down, it can’t move those displaced union workers over to another plant, because there’s not enough demand to increase production in the plants that make popular models.

  2. I saw Pete Delorenzo’s comment on Autoextremist about Buzz Hargrove and the CAW I decided to quote:
    “The CAW union chief screams bloody murder and taunts of “betrayal” over GM’s upcoming closing of its Oshawa truck plant while threatening a strike or legal action. Maybe if you weren’t such a relentless pain in the ass for so long GM may have closed a different plant, eh, Buzz? You had this one coming, and now your rank & file membership will know exactly who to blame this time. You reap what you sow, as they say. As a matter of fact, Buzz, you’re entitled to it.”

    I hoppe, even if I have some big doubts, then Buzz might see the light.

    In 2006, GM avoided one of Kerkorian’s plans of a “alliance” with Renault-Nissan (currently they “flirt” with Chrysler with a small-car and a pick-up but who knows?). Now, even if I’m against this, I fell a bit resigned then GM could be the target of a takeover by a Indan, Chinese conglomerate or an European carmaker (if Carlos Ghosn decide to strike back to get GM, I won’t be surprised).

    On a more humoristic side, GM could have a fate similar AT&T who reborn from the ashes (well, sort of). To quote a bit Stephen Colbert who did a editorial on the Colbert Report: “AT&T is like the T1000, you dismantle it in pieces. No matter what, it’s still coming back”. I wish the same for GM

  3. It easy to be vindictive about the stubborn union, but those jobs are held by real people supporting real families. Those jobs supply the buying power that drives the local ecomonomies of where the auto plants are, and it’s never a good thing when local economies get into trouble, because if enough local economies get into trouble, then you have a national problem.

  4. The unions are part of the problem, not something to feel bad about. GM would have a lot less problems if they were buiding cars in the non-union South instead of the heavily union Michigan.

  5. Despite having in America now for the past three years, I cannot understand how the richest and most powerful country in the world cannot compete in the world because of their unions. There are very strong unions in the competing auto production countries of Germany and Japan, and they do just fine and so do their union members. It’s the same with the price of petrol as we’ve been paying much higher prices for decades but somehow petrol goes to $4.00 a gallon here and the sky is falling. Those other countries have free universal healthcare as well, and they’re doing just fine from an economy perspective. I just cannot work out why things like this are so hard in the U.S., when the country is so wealthy. It’s just very baffling.

  6. Francis Kilner, ‘Free’ universal healthcare does not exist anywhere in the world. People pay for it, in different ways, depending on the country in which they live (for example, out of income taxes in the UK, I believe). The rest of your comment I agree with. American car companies have had, to pardon the pun, a ‘free’ ride with their pickups, SUVs and cheap gas. Now they have to wake up and do something the rest of the world, for the most part, has had to do for quite a while. Can they do it?

  7. Can’t understand why people always blame the unions for Detroit’s problems. The union members putting together Volkswagens and BMWs get paid pretty well. The difference there is that those companies don’t have to pay healthcare costs for their employees and they make cars people actually want to buy. Neither of those things are something the union has control over, just like in the US.

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