Rod Meloni: Perspective on the UAW-GM national strike

DETROIT – The United Auto Workers opted today for what amounts to the nuclear option.

Read: UAW strike against GM: What we know

At a 10 a.m. meeting, the UAW-GM leadership unanimously voted to approve a national strike against General Motors. While the contract expired last night at 11:59, the strike will start at 11:59 p.m. tonight [September 15, 2019]. In plants like Flint Assembly, where GM makes very profitable trucks on three daily shifts, union members will spend the rest of the day doing an orderly shutdown of operations and then walk out of the plant to start a picket line. When the trucks stop moving on the assembly line the company stands to lose roughly a quarter of a billion dollars a day just on the assembly plants alone.

LATEST50,000 union workers walk off jobs across country

This puts enormous financial pressure on the company.

Simply stated, the union is gambling here. It is saying yes to considerable pain for its own membership looking to hit the jackpot. Union members each stand to lose hundreds of dollars a day in income. Strike pay is only $250 a week. The last time The UAW green lighted a national strike was September 24th 2007. 

This time around you will often hear the number $35 Billion. That is the amount of profit GM has earned in the past four years during record setting U.S. Auto sales. The union is looking for its cut. The UAW's strong stance is best explained by a sign we saw hanging on the UAW Local 22 front gate Sunday afternoon. It reads: "#GMinvestinUS--GM We Invested in YOU Now it's your turn to INVEST in us!"

In its news conference today, the UAW hammered home the point. UAW Vice President Terry Dittes said "What we are asking for is simple and fair. We are standing up for fair wages, we are standing up for affordable quality healthcare, we are standing up for our share of the profits." 

The tough talk signals to every line worker in the union, not just the 47,000 working for GM, the union is not going to play nice this time around. It is a message many of the union faithful have been dying to hear. There had been about a dozen years of relative union peace during the bankruptcies and the recovery where the union worked hand in hand with the automakers to ensure mutual viability. They openly declared each other "partners" to bring the automakers back. The UAW held its nose, did what it hates to do, and ratified concessionary contracts. Not this time! Many are screaming there's no "partnership" here! 

Now, you've often heard the phrase ‘we won't negotiate in the media'. Traditionally, the issues, differences and specifics of these national talks have been closely guarded secrets. Both sides swear each other to secrecy and officers who leak and get caught get into serious hot water. In that light, GM decided if the union is going for broke it would swing back in kind. This afternoon it released the basics of its offer to the UAW. Here is GM's list: Best-in-Class wages and benefits, wage or lump sum increases in all four years, an improved profit-sharing formula, a ratification payment of $8,000, allow the UAW to retain nationally-leading health care benefits, new coverage for autism therapy care, chiropractic care and allergy testing. GM also says it offered more than $7 Billion in plant investments and the opportunity for more than 5,400 new or retained jobs, solutions for unallocated assembly plants in Michigan and Ohio, investments in eight facilities in four states, introduction of all-new electric trucks, an opportunity to become the first union-represented battery cell manufacturing site in the U.S. and finally, additional new vehicle and propulsion programs. 

There is a likely reason for that unusual revelation. When strikes get going there is a public relations game that gets played. Former "partners" start working against each other to move public opinion to their favor. The UAW today wrapped itself in the union flag and stated unequivocally it is on strike for the entire American middle class. GM wants everyone watching to know it made a generous offer and the union turned up its collective nose at it. But this unkind cut slices much deeper. You'll notice UAW President Gary Jones is not quoted here. He was at today's UAW meeting; he gave an impassioned speech sending the union on its way to its biggest battle in a generation. But he did not publicly announce this strike, as past UAW presidents have done. He did not take any questions from the media. He did not attend the news conference. Why? Because he doesn't want to have to answer tough questions about his union's ongoing scandals. He doesn't want to answer questions about why the FBI and IRS raided his Canton home last month. He doesn't want to have to explain what he knows about why his successor as UAW Region 5 Director, Vance Pearson, ended up arrested last Thursday. Pearson is charged with embezzlement, wire fraud and conspiracy among other things in a breath-taking criminal complaint that told of Pearson and four other high level, current and former unnamed UAW executives spending a million dollars in union dues on themselves. To hear the Feds tell it, Pearson and the others would spend January and/or February in the Palm Springs desert playing golf, eating in expensive restaurants, drinking expensive wines and Scotch, smoking fine cigars, and otherwise living lifestyles of the rich and famous in rented private, gated villas offering pools and hot tubs. This of course happening while back in Michigan and Ohio, the union faithful trudged to their jobs in a foot of snow in below zero temperatures. Ultimately, there is that truly pesky and uncomfortable question for Jones about whether he is one of the other unnamed executives discussed in the complaint. GM condemned union leadership last week when the Pearson news broke. Today, no doubt, GM wants to connect a national strike coming at the same time there is the specter of criminal wrongdoing. Could there be a worse look for union leadership? For its part the union today refused to address any of these issues, forcefully saying it is only focused on the strike and getting a contract the union faithful can ratify. 

To state it mildly, this entire situation is a uniquely awful mess. The gulf between the union and GM is vast. The union faithful, I am told internally, are torn. Many are angry at Jones for the criminal scandal and want him to step aside. Others can't believe he or his team would do such things and want him to stay. The UAW Board did not move on Jones, which is why he is still the President. But Local Four News has learned a Michigan crisis media relations team Jones and the UAW hired to advise them in these precarious times has opted out on the UAW. The crisis communications teams advised, among other things, that Jones should step aside at least temporarily to calm the storm. Jones and his team refused. The P.R. firm dropped its reluctant client as a result. 

So tonight, the locals will go into strike mode. The picket signs will get pulled out of dusty back closets and repaired. New signs will get printed. The strike committees will publish the picket line schedules [everyone is required to walk], they'll assemble food and drink for the picketers, the union faithful will now brace for a major pay cut. General Motors will look to make certain its plants are all safely properly ready for shut down, negotiators will go back to the drawing board to figure out what kind of new offer they can bring. The bean counters will look to see how large the losses will be and how quickly they will mount. It's important to point out here the last national strike in 2007 lasted a mere 17 hours. This one doesn't look to go that quickly. How long can either side last? How much brinksmanship can either side stand? As Wayne State University Business Professor Marick Masters told me today "this is as big as it gets with the Detroit 3 and negotiations." "I think it's going to be difficult to settle early because of the state of the UAW leadership." 

The clock ticks, the meter runs, the era of labor peace in Detroit is over. We'll watch to see if the damage done by both sides is repairable. Let's face it, this is pattern bargaining and Ford and Fiat Chrysler are up next. Auto profits can disappear in the blink of an eye. They threaten to here. No one wants to spend Thanksgiving or Christmas making $250 a week while walking a picket line in the wind and snow. And yet, unless something changes here quickly, all of these things are distinct possibilities. Cooler heads prevailing on both sides would be welcome.

About the Author:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.