By now, you're hopefully aware that members of the United Automobile Workers union walked off the job today at General Motors plants across the country after union leaders and company officials failed to reach an agreement in contentious talks on a new contract. That's a big event - one that hasn't happened since 1970.
As usual, the disagreement is over money. But the primary focus of this round centers around the ongoing cost of benefits as part of the total compensation package.
Here's all you need to know as a HR pro about the strike, and why GM feels compelled to ensure meaningful change this time around. From the Wall Street Journal prior to the strike:
"This time they mean it. The Big Three (General Motors, Ford, and Chrysler) have talked tough
before. They were going to wring concessions out of the UAW in contract negotiations, only to retreat and agree in the end to a costly new labor deal. This time things are different. The Big Three are hemorrhaging money. They say they have to eliminate or narrow the $30-dollar-an-hour cost disadvantage between themselves and their Asian rivals like Toyota, Nissan, and Honda. They have to do something about legacy costs. If the UAW doesn't bend, the companies say they are willing to move investment in plants and people outside the US. The UAW leadership understands the problems and has agreed to some work-rule changes and benefits cuts designed to save money. But the concessions have been small potatoes compared to what the companies say they need. The UAW's leadership has been maneuvering for a couple of years preparing members to cuts. But how far will they be willing and able to go?
That got me wondering what the total talent cost structure was for Detroit automakers. Here's a clip from the AP I found:
"Detroit News columnist Daniel Howes, citing people familiar with the auto industry's bargaining strategy, reported earlier Wednesday that car makers would seek to cut hourly labor costs by 30 percent, from about $71 to around $50, including wages, pension and health care.
The costs then would be comparable to those of Asian automakers, who pay similar wages but have far lower pension and health care costs, and make thousands of dollars more per vehicle than the Detroit automakers do."
For those of you scoring at home, that's an annualized total comp cost of around $148,000 per FTE for the American automakers, vs. $85,000 for the foreign automakers.
And that's why GM allowed the strike. The US automakers won't survive intermediate to long-term with the current cost structure...
This strike cannot last long. If it does it will cripple GM and then the workers will be in a worse situation than they are now. Chances are the strike will be over relatively shortly. NewsVisual did an interesting map and article http://www.newsvisual.com/newsvisual/2007/09/union-and-execu.html on the executive connections between GM and the UAW that could get negotiations back on the table.
Posted by: Marsha | September 25, 2007 at 05:23 PM