DETROIT -- The UAW on Monday selected General Motors as its initial target for a new contract as labor pacts with the Detroit 3 automakers are set to expire Sept. 14.
GM's selection as the target means contracts with Ford Motor Co. and Fiat Chrysler Automobiles would likely be patterned around what the union can negotiate with Detroit's largest automaker.
The two sides have significant challenges to overcome involving plant investment, labor costs and use of temporary workers. One of the largest sticking points will involve GM’s decision last November to “unallocated" five of its North American assembly plants at a time the union is trying to protect jobs and win additional investment.
“They’re biting off the hard one first,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich. “GM is difficult because of the unallocated plants, but it goes beyond that. There’s a bunch of other plants that aren’t running at full capacity.”
GM has been the target in three of the past four regular rounds of contract talks (2007, 2011, 2019). FCA went first in 2015, and workers voted down the first deal presented to them.
"Mary Barra said from the outset of these talks that we will stand up as we tackle a changing industry," UAW President Gary Jones said in a statement. "We are ready to stand strong for our future."
The two sides have significant challenges to overcome. GM has the highest labor cost, at $63 per worker, and the highest gap between with the transplant automakers among the Detroit 3.
GM also has about 4,650 temporary workers, representing 10 percent of the 46,000 people in its U.S. hourly work force, though its annual average runs closer to 7 percent. The UAW is attempting to lower the number of temps used by the Detroit 3 and offer them a path to full-time work.
But the biggest challenge of all involves the automaker’s five “unallocated” plants. GM in November said it would not allocate products to Lordstown Assembly in Ohio, Oshawa Assembly in Ontario, Canada, and Detroit-Hamtramck Assembly in Michigan. Powertrain plants in Maryland and Michigan also have not been given new products. The move put the fates of roughly 6,700 hourly and salaried factory employees -- 3,800 in the U.S. and 2,900 in Canada -- in jeopardy. GM and Canada's Unifor union in May agreed to allow GM to convert Oshawa into an aftermarket operation, salvaging 300 jobs.
And the automaker is in discussions with electric vehicle producer Workhorse Inc. to potentially sell the Lordstown plant.
"We will leave no stone unturned to protect our brothers and sisters at the locations put on the block,” Jones told GM officials at the ceremonial handshake to kick off negotiations in July. “We call on GM to keep these plants open and allocate more products on American soil. It can be done."
Art Wheaton, a labor expert at Cornell University, said the union “seems to have some bones to pick with” GM because of the plant idlings.
“GM was one of the ones that has the higher potential of a strike because of … games playing or working with semantics,” he said.
Beyond the unallocated plants, Dziczek said the union has some opportunities to win back product and investment.
GM is running at about 72 percent capacity utilization at its North American plants as of 2018, according to LMC Automotive. Meanwhile, Ford is running at about 81 percent and FCA is at 92 percent, according to LMC.
The union on Monday also released results of its strike authorization vote. Union workers at GM voted overwhelmingly at 96.4 percent, the highest of the Detroit 3, to approve the procedural move, which allows the union to strike if negotiations fall apart.
Dziczek said choosing GM first doesn’t necessarily mean a higher chance of a strike, although this round of talks is likely to be the most contentious in years.
The discussions could also be complicated by an ongoing corruption probe, which has recently expanded to involve officials formerly involved with the UAW-GM department.
Federal prosecutors last month accused Michael Grimes, a former UAW official, of accepting bribes and kickbacks in the form of cash, checks and other valuable items worth hundreds of thousands of dollars. He is the ninth person charged in the ongoing scandal, but the first affiliated with the UAW-GM department.
The Detroit News reported Joe Ashton, a former UAW vice president who sat on GM’s board of directors until resigning two years ago, was implicated in the investigation.
“We look forward to having constructive discussions with the UAW on reaching an agreement that builds a strong future for our employees and our business,” GM said in a statement.
Hannah Lutz contributed.