GM, UAW to resume talks on Tuesday

DETROIT -- With the two sides still apart on key priorities, negotiations between General Motors and the UAW will continue Tuesday after both sides took a break from the bargaining table late Monday.

More than 46,000 union members will remain off the job for a second day as part of the first national strike since the financial crisis.

Talks will continue Tuesday after the break, though it's unclear when both sides will meet, according to a person familiar with the matter.

The company and UAW remain far apart as they try to hatch a new labor contract covering wages and benefits, the union’s top negotiator said earlier Monday.

“We have many unresolved issues,” Terry Dittes, vice president of the UAW, told Bloomberg News Monday while on the picket lines outside an assembly plant in Detroit-Hamtramck. “It’s not just a couple of things. How long will this take? I can’t say.”

Dittes said the two sides have only settled 2 percent of about 1,000 outstanding proposals and that there are 10 major sticking points which need to be settled, including wages for entry-level workers and treatment of temporary staffers.

GM's initial contract offer also called for workers to pay 15 percent of health care expenses — well below the national average of 28 percent but far higher than the 3 to 4 percent workers currently pay. The union balked at the proposal, and the automaker quickly walked it back and offered to keep members' obligations at existing levels, according to sources.

On pay, the automaker proposed two 2 percent wage increases and two 2 percent lump sum payments, according to Mike Warchuck, president of UAW Local 653, who was briefed on the plan Sunday by UAW-GM VP Terry Dittes.

The strike is testing both the union and GM, Detroit's most profitable automaker in recent years, at a time when the U.S. auto industry is facing slowing sales and rising costs associated with launching electric vehicles and curbing emissions.

Moody's Investors Service, days after lowering rival Ford Motor Co.’s credit rating to junk, said in a note Monday the critical issue is whether GM will "secure the operating flexibility necessary" to address challenges including higher hourly costs than foreign automakers, a potential severe downturn in U.S. auto sales, and the need for automakers "to begin transitioning to the production of more electric vehicles that will likely require fewer workers to assemble." 

Workers at plants across the country marched on picket lines outside GM’s plants early Monday. Del Rese Ballard, a member of UAW Local 22 at the automaker’s Detroit-Hamtramck plant, said one of his biggest priorities is the status of temporary employees. 

“We have temp workers working right beside people, and they’ve been here for years,” he said. “Why can’t you get the same benefits everyone else gets?”

Roughly 7 percent of the union’s hourly workforce are temps, and Warchuck said GM did not offer a solution in its latest offer. 

“It’s important to my membership that that gets fixed,” he said. 

Dittes called the union’s first strike against GM since 2007 a “last resort” after negotiations broke down. 

“It represents great sacrifice and great courage on the part of our members and all of us,” he said Sunday.

A union spokesman said it was a unanimous vote to strike. 

The strike caught the attention of President Donald Trump, who tweeted: "Here we go again with General Motors and the United Auto Workers. Get together and make a deal!"

Dittes, in a letter to Scott Sandefur, GM's vice president of labor relations, expressed disappointment with the automaker's late offer -- describing it as its "first serious offer."

"Had we received this proposal earlier in the process, it may have been possible to reach a tentative agreement and avoid a strike." 

Details the automaker presented about its offer are roughly in line with what workers accepted four years ago as part of its 2015 pact. 

GM said in a statement that its offer to the UAW includes more than $7 billion in U.S. investments, higher pay and improved benefits. The offer includes more than 5,400 jobs, the majority of which would be new.

“We presented a strong offer that improves wages, benefits and grows U.S. jobs in substantive ways and it is disappointing that the UAW leadership has chosen to strike at midnight tonight. We have negotiated in good faith and with a sense of urgency. Our goal remains to build a strong future for our employees and our business,” the company said.

GM, without providing details, also said it has solutions for unallocated assembly plants in Michigan and Ohio. GM’s offer also includes investments in eight facilities in four states and an introduction of electric trucks. 

GM's offer to the UAW would allocate an electric truck to the Detroit-Hamtramck assembly plant and battery cell manufacturing to the Lordstown Complex, according to a person familiar with the matter.

GM also offered workers a signing bonus of $8,000 per member if they ratify the deal in addition to the wage increases and lump-sum payments. 

In the 2015 deal, the union said it won $8.3 billion in investment over the life of the contract. That included $1.9 billion in new investment, along with $6.4 billion GM had previously committed to earlier in 2015. 

The union also won a commitment for 3,300 created or retained jobs. 

“It’s a significant commitment of investment,” Kristin Dziczek, vice president of industry, labor & economics
at the Center for Automotive Research, told Automotive News. “It touches many of the points the union has been talking about, misses a few, but without the details you can’t know if it’s going to be enough.”

Lost production may cost GM about $50 million a day in earnings before interest and taxes, Dan Levy, an analyst at Credit Suisse, wrote to clients.

The Teamsters union on Sunday said it would stand in solidarity with the UAW. A spokesman confirmed to Automotive News a Fox Business report saying roughly 1,000 Teamsters workers would refuse to deliver GM vehicles to dealerships as long as the UAW was on strike. 

'Fool me twice'

GM already has spent much of the year battling with its union in Canada. Jerry Dias, president of Canada's Unifor union, fought GM over its decision last year to idle its Oshawa assembly plant near Toronto. After several weeks of protests, Unifor won an agreement from GM in May to establish an aftermarket operation on the site, salvaging about 300 of the 2,600 jobs at the plant.

"Workers have had enough," Dias told Automotive News in a text on Sunday. "We gave so much and paid for our blind faith in GM. Things unfold as they should. Fool me twice, shame..."  

Unifor also has been on strike against Nemak, a GM supplier, in Windsor, Ontario, and defied a Canadian court order to stop blocking access to the plant. But late Sunday the union reached an agreement with the supplier and returned to work as of 11 p.m. EDT. 

The UAW's previous four-year labor agreement with GM expired Saturday at midnight, but workers were told to continue without a contract under the terms and conditions of the 2015 deal. Units negotiating with Ford Motor Co. and Fiat Chrysler Automobiles have extended their contracts while GM talks proceed.

Roughly 850 UAW-represented janitorial workers at five GM plants in Michigan and Ohio struck at midnight, leading to confusion and frustration as UAW-represented assembly line workers crossed the picket lines of their union colleagues. 

Corruption probe

The talks have been further roiled by an ongoing federal corruption probe. UAW President Gary Jones has been implicated in the scandal, according to reports. The union's International Executive Board called an emergency meeting Friday afternoon, but Jones did not resign and it was unclear whether he was asked to.

Vance Pearson, the UAW Region 5 director charged last week in a federal corruption probe, was in the meetings in Detroit on Sunday, according to those in the room, and remains on the union’s International Executive Board. 

While the union struck GM and Chrysler in 2007, the walkouts lasted only a few days. The last prolonged national strikes occurred against GM and Ford in the 1970s. GM workers went on strike for 67 days in 1970, while Ford workers were off the job for 28 days in 1978.

The union has been bracing for a work stoppage for some time. UAW leaders earlier this year announced a 25 percent boost in the strike payments members would get, to $250 a week. That amount is set to rise to $275 in January. 

The weekly strike pay goes into effect on the eighth day of a strike. UAW members would also receive healthcare coverage during a strike.

Workers who are actively on strike get strike benefits, while those idled because of lack of parts during a bottleneck strike would collect unemployment insurance and supplemental unemployment from the company.

GM has stockpiled high levels of new cars and trucks in recent months, meaning it would likely take a prolonged strike to dent sales of most vehicles.

The automaker has a 77-day supply of new vehicles, according to a report by Cox Automotive, placing it well ahead of the industry average of 61 days. 

Bloomberg contributed to this report.