Shortly after reaching an agreement with Ford, the Canadian Auto Workers union announced the rather surprising news that it had reached tentative agreements with both General Motors and Chrysler. These deals come about four months before the deadline for a deal was to be hit and stand in stark contrast to the protracted negotiations that recently took place between the Big Three and the CAW's American counterpart, the UAW. Under the new deal, GM promises to keep its Oshawa, Ontario plant open until 2012 and offers buyouts worth up to $125,000 to workers at the Windsor transmission plant, which will soon be shut down. Chrysler, for its part, agreed to continue producing minivans at its Windsor assembly site, continue producing the 300C in Brampton, Ontario and keep its Toronto casting plant open until 2011.
CAW President Buzz Hargrove calls the tentative deals "a win-win" for both the union workers and the automakers. Union workers in Canada will get the chance to vote on the contracts later this month. A GM vote is planned for Friday, May 16. Chrysler's contract vote will follow on Saturday, May 17.
When the second quarter of 2010 rolls along, 1,400 workers at General Motor's Windsor transmission factory will be out of work. The plant, which currently produces four-speed gearboxes for GM, will be phased out at the turn of the decade, with no plans to retool the facility to produce any other components. GM's Canada President, Arturo Elias, made it clear in the announcement that the decision was not a "reflection on our excellent Windsor workforce," but instead is due to a lack of available, "replacement products in the relevant timeframe for this location." Fortunately or unfortunately, today's announcement of the plant's closing takes place as the General negotiates a new contract with the Canadian Auto Workers (CAW) union.
General Motors has been dealing with a lot of strikes lately. The United Auto Worker union's strike against one of its main suppliers, American Axle, has been reducing the General's inventory of trucks and SUVs for about a month now, and also threatened production of the Chevy Malibu before the automaker found more parts to keep production going. Just yesterday the UAW walked out of GM's Lansing Delta Township plant where the Buick Enclave, GMC Acadia and Saturn are built. The latter strike is over what the UAW has only referred to as "local contract issues". Whatever those are, they are important enough to come back today and threaten GM with a walk out at its Fairfax plant, one of the two facilities that builds the hot-selling Chevy Malibu. The union has set a five-day ultimatum, and says it will walk out on Malibu production next Tuesday, April 22 if an agreement isn't reached. The other plant building Malibus is in the Detroit suburb of Orion, but it only builds 2,100 Malibus per week compared to the 3,100 units per week built at the Fairfax plant. Clearly the UAW knows exactly where GM is most vulnerable, and its aiming a strike right at it.
Just hours after threatening to strike at one or more GM plants, the UAW and the General have agreed on two-tier wages for certain job types. The move to clarify which jobs were "non-core" at the national level came as local UAWs were threatening to strike because they felt GM was asking for too many lower-paid positions at their plants. The more regimented deal identifies 16,000 positions that will soon be paid $14 per hour, which will save GM up to a half-billion dollars per year. It will take years to fill all of those positions because GM has to entice existing workers to retire before they can be replaced.
A key part of the labor contract signed between GM and the UAW last year was a second tier of wages for non-crucial, i.e. not involved with building a car, job roles. As higher-paid workers take buyouts and retirement packages over the next few months, the General is allowed replace up to 16,000 roles with lower wages that are half what current workers make at around $14he contract stipulates the total number of second tier jobs, but some union officials say GM has raised the per-plant number at all locations.
While some locals feel they have been fairly represented, at least three feel that GM is trying to allocate too much of their labor as "non-core." The Orion, Michigan plant that produces the Malibu and G6, for example, is being tasked with 580 tier two jobs, while union locals feel the number is actually closer to 300. Union leaders say the solution will need to come from additional bargaining, as if we aren't still burned out on union talk as it is. The good news is that any problems the two sides may have will likely be solved by the end of summer, as July 1 is when buyouts start to take effect and GM will have to start hiring new workers to replace them.
The nine-day-old UAW strike on American Axle has already halted production at five GM plants and seven suppliers, and the two sides have yet to hit the bargaining table. That will change today, as both sides at least agree that they should be trying to reach an accord. The two sides are still far from agreeing on anything else, however, as American Axle wants to cut wage and benefit costs in half, even though the parts supplier is currently profitable.
Following the pattern of wage cuts at other suppliers, American Axle is prepared to offer buyout packages of $80,000 to $110,000. American Axle may also offer buy-down deals that will give workers a bonus for a number of years to cushion the blow of wage cuts. So far the strike has done little to hurt GM, as the automaker has been able to pare-down SUV and truck inventories while its plants are idled, but it's only a matter of time until the best available vehicles are gone. The 20,000 workers at GM and several suppliers that aren't working because of the strike are likely a bit more worried, but at least the two sides are talking.
It turns out that the three-day inventory of parts that was stockpiled by OEM supplier American Axle is not nearly enough to weather a strike by the United Auto Workers union. The strike began early Wednesday, and though it's only Friday, General Motors is preparing to shut down its second, third and fourth assembly plant on account of parts shortages from American Axle. GM shut down its Pontiac, MI truck plant yesterday, which will be followed by the Fort Wayne, Flint and Oshawa plants, which build the Chevy Silverado and GMC Sierra, at midnight tonight. That's a lot of truck plants off-line, but there's one more in Silao, Mexico that builds the Suburban, Tahoe, Yukon XL and Cadillac Escalade and ESV that will remain running for now.
Unlike the strikes levied by the UAW against GM and Chrysler during contract negotiation talks last year, the current strike against American Axle is no token bargaining tool that will end before the paint on the picket signs is dry. Despite that, it does give GM an opportunity to lower its inventory of unsold trucks and SUVs, so for the time being the giant automaker isn't panicking. The strike has the potential to wane on, however, considering that the UAW is deeply committed to fighting against a proposed cut that would trim American Axle's hourly labor costs from $70 to between $20 and $30. The supplier wants to recoup its $3 billion investment in its plants, but the workers are fighting to ensure that it's not at their expense.
In this blustery economy, we often hear of jobs being outsourced to save money. The auto industry, however, and in particular Ford, is set to start a new trend: insourcing. Rather than contracting with suppliers to build certain components or sub-assemblies, automakers are now considering doing that work internally with union employees. The Detroit Free Press reports that Ford will be one of the first this spring when it begins assembling its own instrument panels for the Ford Taurus and Lincoln MKS sedan at its plant in Chicago.
The motivation to insource is the same it is for outsourcing: saving money. The United Auto Workers union signed new contracts with Ford, General Motors and Chrysler LLC. that allow each automaker to hire union workers at a new second-tier wage of around $14, or about half of the previous starting wage. Coupled with lower benefits, it's now cheaper in some cases to have the union do what was previously outsourced to a supplier.
It appears that the UAW had this in mind all along. The Big 3 actually agreed in writing with the UAW to begin insourcing a certain number of jobs – 3,000 for GM, 1,500 for Ford and 1,025 for Chrysler. The UAW even secured the right to effectively bid for future work along with the suppliers, for whom all of this does not bode well. Automakers, however, are not out to destroy their supplier base, as there'll still remain plenty of parts that make more sense to outsource and plenty that need to still be produced in the mean time.
GM is making better, more attractive vehicles, yet after losing nearly $40 billion in 2007 (most of which was an accounting adjustment, mind you), the Detroit automaker still has a lot of work to do to become profitable again here in the States. Even though GM shed 34,000 jobs in 2006, the company still has 46,000 retirement-eligible workers on the books. Those workers still make $28 or more an hour, and have some of the best benefits money can buy.
To get high-paying workers out and less expensive replacements in, here's what GM is offering in its newest round of buyouts. Retirement-eligible general labor folks are being offered $45,000 lump sum payouts and $62,500 are up for grabs for skilled tradesmen. Those who choose the buyout option can take a single lump sum payment, or elect to put all the money in a tax-free 401k. Non retirement-ready workers, meanwhile, can receive between $70k and $140k to walk away form the line. UAW chief Ron Gettelfinger estimates that 20,000 out of 74,000 remaining workers will take a package, and the General would likely love it if union Ron were right. Since the cash-saving VEBA contained in the latest union contract won't take effect until 2010, cutting labor costs is GM's best bet for making money in the U.S., aside from developing more attractive vehicles.
The European Parliament has called for Formula One to adopt more environmentally-friendly engine alternatives, and the FIA seems to be all for it.
The CARS 21 report, passed with 607 EU legislators in favor, 76 against and 14 abstentions, praised the FIA's actions to make F1 greener, but called on the sanctioning body to do more. The report concluded by calling on the FIA to revise its formula to include "environmentally friendly technologies like bio-fuels, four-cylinder engines or hybrid". FIA president Max Mosley, who has been vocal in his desire to make F1 greener, subsequently issued a statement supporting the EU report.
Several racing series - including A1GP, ALMS, Champ Cars and IndyCars - are now running on bio-fuels, and Formula One has been toying with electric hybrid regenerative braking technologies. As we reported earlier, the moratorium on engine development in F1 was shortened from ten years to five, and the FIA is preparing to launch a new engine formula within the next couple of years. If regulatory bodies like the EU and the FIA get their way, F1 cars in a few years could be powered by four-cylinder electric-ethanol hybrids.
GM is making better, more attractive vehicles, yet after losing nearly $40 billion in 2007 (most of which was an 
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