Autoblog

The UAW strike at American Axle has ground on for three months, but an agreement with the union was reached on Friday. General Motors had pledged $200 million dollars to help get things rolling again after being forced to idle plants. The action has reportedly cost GM $800 million, so what's a few more on top of that to get plants back online? With that logic, the automaker's managed to shake loose another $18 million to pay for supplemental unemployment benefits, bringing its total commitment to $218 million in hopes of wrapping up the spat with its axle supplier.

[Source: Automotive News - Sub. Req.]

General Motors has been hit so hard by the ongoing American Axle strikes that it's stopped production of the GMC Yukon, Denali, Sierra heavy-duty regular and extended cab, its commercial-duty pickup and variants of Chevrolet trucks and Tahoes. All the while, the General is still negotiating with the UAW over local contracts at some of its most important plants. To ease some of its supply problems, General Motors has reportedly offered as much as $200 million to American Axle for the funding of employee buyouts, early retirements and for the support of wage buy downs. The offer, however, is conditional on a quick resolution between American Axle and the UAW.

Spokesman Dan Flores says that GM hopes "the offer will help bridge the gap between American Axle and the UAW and that they will be able to reach a mutually satisfactory agreement in the near future." Both the UAW and American Axle sound supportive of the investment; Bill Alford Jr., vice president and incoming president at UAW Local 235 says, "We're happy that General Motors is finally coming to the table and realizing that they have a stake in American Axle's future." For GM's sake and that of the striking workers, we hope the feuding companies find an amicable solution soon, though it seems unfortunate that GM, which is not exactly posting record profits itself, should need to cough up funding to make it happen.

[Source: The Detroit Free Press]

Local UAW contract negotiations aren't going well for General Motors, and today they took a turn for the worst as union members at the automaker's Fairfax assembly plant in Kansas walked off the job at 10AM EST. The bulk of GM's hot-selling Chevy Malibu are produced at the Fairfax plant, with a lesser number of the four-door sedan being built at the automaker's Orion plant in suburban Detroit. Last month GM sold 17,050 Malibus, a 39.5% increase in volume over April 2007. The local union in Fairfax had given GM a number of ultimatums, extending them since the first was established for April 22nd. We're not exactly sure what issue is at the heart of these contract negotiations, but The Detroit News reports that at least one bone of contention is the plant requesting seniority to snag transfer jobs, while the other issues remain undisclosed.

General Motors has been able to weather a 10-week strike by union members against American Axle, one of its main suppliers, as only production of large trucks and SUVs have been affected. Another strike at its Lansing Delta Township plant where the large Lambda CUVs are built has also only served to reduce inventories of vehicles that are seeing a slow down in sales. While the General can withstand a reduction of inventory for vehicles that currently aren't selling as well as they were before because of high gas prices and a slump in the housing market, the Malibu is gaining popularity with consumers month over month. The Fairfax and Orion plants were already producing at capacity to keep up with demand, so today's strike will assuredly hurt the automaker where it matters most: the bottom line. We'd expect GM to act quickly to end the strike, as money is being lost by the hour while Malibus aren't being built.

[Source: The Detroit News]

Workers at the General Motors assembly plant in Oshawa, Ontario have given the automaker until this fall to confirm that additional models will be built there, or else... STRIKE! The Oshawa plant currently builds the Chevy Impala and Buick LaCrosse, and is scheduled to build the Chevy Camaro when it enters production in February of 2009, but that's it. Other rear-wheel-drive products were also promised, but because of the weak dollar and new CAFE regulations, GM is apparently rethinking whether those vehicles will be built at all.

Apparently back in 2006, the Canadian Auto Workers union agreed to concessions to reduce costs, convert to a more flexible manufacturing process and guarantee that future vehicles would be built at the plant. They're now claiming that GM wants additional concessions to secure those future vehicles, and all GM has to say is that "future products for Oshawa are in flux." According to CAW, it has until this fall to make those future product not in flux, or else the General will have another strike on its hands to deal with.

[Source: Automotive News, sub. req'd]

UPDATE: According to Automotive News, the deal also stipulates GM agrees to new-vehicle programs at 16 U.S. plants.

This morning local UAW leaders that represent plants from around the country unanimously voted to approve the contract offered by General Motors that came at the end of a 40-hour strike by union workers this week. Official details of the contract have been revealed, and we now know that GM's contribution to the Voluntary Employee Beneficiary Association (VEBA) will be $29.9 billion, plus another $5.4 billion in what The Detroit News calls "pre-VEBA costs". That's significantly less than the upwards of $50 billion we heard was being offered, but UAW president Ron Gettelfinger insists it should last the union some 80 years.

While the contract was unanimously approved this morning by UAW local leaders, it's the 73,000 union rank and file that still need to vote on the contract. That vote is expected to come by October 10th, and despite a $3,000 signing bonus for those who vote to approve the contract, there are some union members who argue that their leadership has betrayed them. A small but vocal group specifically disagrees with the VEBA and the fact that GM is now off the hook for health care costs. There are many who also dislike the new two-tier wage system that starts off thousands of new hires at a much lower $18/hour rate of between $14 and $16.23/hour. Despite protestations, however, we expect the majority of the UAW's GM workers to fall in line and vote this thing through.

Check out official details of the UAW-GM contract after the jump.

[Source: The Detroit News, Automotive News - sub. req'd]

The GM strike lasted less than 40 hours, not even two full days. For UAW president Ron Gettelfinger, however, it was just enough time to secure for his members the concessions he wanted. So which side blinked after 40 hours of staring the other down? It's tough to tell, but the UAW's main sticking point was job security, and it was looking for a guarantee that production for new models wouldn't be moved outside the United States. This is the issue that initiated the strike, and it appears that GM did change its mind and offer the UAW some type of broad job guarantee for the duration of this 4-year contract. Here's how the whole deal breaks down as we see it.

UAW got:

• An independent retiree health care trust that will be funded with enough money from GM to remain solvent for 80 years
• Undisclosed job guarantees that we expect includes a promise of investment in particular U.S. plants in preparation for production of new models
• GM will hire up to 5,000 temporary workers as full-time employees
• Signing bonuses of an undisclosed amount for all UAW members who sign the contract
• Wage increases of 3% in first year, 4% in second and 3% in third

GM got:

• $50 billion in health care liability off its back after a large one-time payout into independent retiree health care trust
• Two-tier wage structure, as those 5,000 new hires who were previously temp will be brought in at their current wage of $18/hour, rather than the $28/hour current full-timers earn
• Undisclosed revisions in the Jobs Bank program that continues to pay laid-off employees
• Reduction in labor cost to produce vehicles, though might not be realized right away

Next up for the UAW is either Ford Motor Company or Chrysler LLC. It has yet to decide which of the remaining domestics it will negotiate with next, but we're anxious to see if one contract already in place will make the next two go smoother.

[Source: Automotive News, sub. req'd]

Investors and industry pundits don't believe the UAW strike will last long, proving their belief with a slight drop of $0.20 in GM's stock price. Widespread belief is that GM could handle a two-week halt in production without devastation to its balance sheet and recovery plan. GM's got three months of inventory on hand, and GM had planned to cut production by 10-percent in Q4 anyway. The only hitch could be with popular vehicles like the Enclave and Acadia, which typically spend just two weeks on dealer lots.

It's estimated that Toyota, Honda, and Nissan have a $1,000 advantage per vehicle, and one commenter said that analysts are happy to see GM take a hard stance in light of the necessity of gaining on the Japanese three. Other analysts were, of course, varied in their take on the impact: while two weeks is seen as acceptable, according to one analyst, a four-week stoppage would cost GM $4 billion and send GM into bankruptcy. S&P, though, thinks GM has $32 billion in cash, and Moody's thinks the company has enough to last four weeks.

The UAW doesn't want to look like it's shooting itself in the foot and GM in the head, but it does have its active members and retirees to worry about. GM, though, with a more global operation, has a much better position in terms of time, patience, and clout to wait for the deal it wants. As David Cole with the Center for Automotive Research said, "It's unimaginable that it would be a long strike -- absolutely unimaginable. The stakes are so high."

[Source: Detroit News]

click above pic to view more images from the UAW strike

Despite reports that the UAW and General Motors are back at the bargaining table this afternoon, and will be indefinitely, the union appears to be preparing for what could be a lengthy strike. It's now being reported that their brothers and sisters from the International Brotherhood of Teamsters will be standing by them, though not joining the UAW strike themselves. The International Brotherhood of Teamsters represents hourly employees in the transportation and freight-related industries, meaning they're the ones who transport component parts and cars from plant to plant and wherever else they need to go. They have decided to align themselves with the UAW and announced they will honor the picket lines that have popped up at nearly every one of GM's 59 plants. This means that as long as the strike is ongoing, Teamsters don't have to cross UAW picket to deliver their cargo. Their contracts with GM include what's called "sympathy language" that prevents them from being fired for crossing the picket line of another striking union, according to The Detroit News.

It's becoming more and more clear that the UAW is digging in for the long haul on this one, and with little to no response from General Motors in terms of how long it intends to stand firm, the most significant staring contest in the history of the automotive industry has just begun.

[Source: The Detroit News]

click above image to view high-res gallery of the Buick Enclave

Amidst all the fury surrounding the UAW strike today, General Motors released a statement announcing an $800 million deal with its Chinese joint-venture company to supply the Chinese market with U.S.-built vehicles and components. It's the second such agreement GM has signed, the first being an agreement worth $700 million to supply Cadillacs and components to China signed back in May. The new agreement focuses mainly on the Buick Enclave CUV, which is built at GM's Lansing Delta Township assembly plant. One can't help but question the timing of this announcement as GM and UAW negotiators are back at the table this afternoon to discuss job security for the union's 73,000 members. There's little doubt now that UAW employees at the Lansing plant will be busy in the months ahead not only trying to meet demand for the Enclave in the U.S., but also producing the vehicle for export to China. We'll see as the day goes on if this agreement has any effect on negotiations, but there are a total of 59 plants operated by GM that use UAW workers. Securing work for just one of them probably isn't going to be enough.

[Source: GM]

At 1:30PM today, Canadian Auto Workers (the Canadian counterpart to the UAW) president Buzz Hargrove gave a press conference responding to the UAW strike today against General Motors. In Hargrove's mind, a worst case scenario could see anywhere between 80,000 and 100,000 Canadian workers unemployed as a result of the strike. Hargrove seemed to blame General Motors for shifting the hardships caused by what he called "unfair imports" onto its workers, and he surmised the automaker will use the same strategy when it begins talks with the CAW to renegotiate its contracts next year.
As for the near term effect of the strike, Hargrove said the impact on Canadian plants will be immediate. GM Canada's No. 1 plant in Oshawa will stop making the Chevy Impala at 3AM EST Tuesday. The No. 2 Oshawa plant will stop making the Pontiac Grand Prix and Buick Allure (LaCrosse) at the end of the business day on Tuesday. Meanwhile, the highly profitable Oshawa truck plant that makes the Chevy Silverado and GMC Sierra has enough inventory to last about three days. Unfortunately, the GM Transmission plant in Windsor has already shut down, and another powertrain component plant in St. Catherine's, Ontario will stop altogether shortly, as well.

As for whether or not the strike is a "token strike" or will have the legs to last a significant amount of time, Hargrove said, "I think this thing's going to drag on for a while."

[Source: Canadian Press]