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UAW strike could cost GM about US$1 billion – and counting

by Ace Damon
Picketing at a GM facility in Langhorne, Pa.

Tom Krisher and Mike Householder, Associated Press

Published Wednesday, October 2, 2019 3:28

DETROIT – With United Auto workers striking General Motors in its third week, pressure is mounting on both sides to reach an agreement, with the company losing about $ 1 billion and workers living with US. $ 250 a week in strike payment – about a fifth of what they usually do.

Both sides hope the strike will not last much longer, but as negotiations continue, the main trade union negotiator says they are very far away on important issues, including wages, job security, health care and a path for temporary workers. become full time. .

"We have to last a day longer than them, and I think we're prepared for it," said Gerald Lang, vice president of a local union at a factory in Orion Township, Michigan, about 40 miles north of Detroit. . "No contract, no cars."

On Tuesday, a parts shortage due to the strike forced the company to close pickup and transmission factories in Silao, Mexico, arresting 6,000 workers and taking a major source of revenue for GM. The factory produces light versions of the Chevrolet Silverado pickup and has been providing US dealers with GM's best-selling and most profitable vehicle.

UAW Vice President Terry Dittes, GM's chief negotiator, told local union leaders in a letter on Tuesday that a company proposal made late Monday fell short of union demands and also sought new concessions. . The UAW countered on Tuesday and is awaiting a response.

GM said the company continues to exchange proposals and remains "committed to reaching an agreement that builds a stronger future for our employees and our company."

Even as negotiations continue, the company is wary of resolving the strike and burdening itself with the costs it will have to pay later, putting it at a disadvantage for foreign factories in the south, with lower labor costs, he said. Kristin Dziczek, vice president of the president of the Center for Automotive Research, an industry think tank. It costs GM $ 63 an hour in salaries and benefits at its factories, while foreign automakers pay an average of $ 50, she said.

"In the short term, this is absolutely costing them," Dziczek said. "This goes back to cost versus principle. What things would they have to do to break the strike precedent they would be living with in the coming decades?"

The strike has cost GM just over $ 1 billion so far, JP Morgan analyst Ryan Brinkman estimated Tuesday.

Losses increase each week as the strike continues, costing about $ 480 million in the first week and another $ 575 million in the second, Brinkman wrote in an investor note. The company is losing $ 82 million a day, he estimated.

GM records vehicle building revenue as soon as they switch hands from the factory to the company that sends them to dealers. Therefore, revenue has already been counted for almost all vehicles that are in the hands of the dealer.

Chuck Browning, director of a UAW region in Detroit, told picket line workers at an engine plant in Romulus, Michigan, on Sunday that the union wants a small chunk of the billions of dollars GM is producing. "All these people care about money, and you're bleeding right now," Browning said in a video posted on a UAW Facebook page. He said the time will come when GM's board will say enough and tell executives to give workers what they want.

So far, the strike seems to have little impact on people looking for a new GM vehicle, because many dealerships stocked up before the September 16 stoppage.

"My lot is full," said Mark Gratsch, general manager of Wally Edgar Chevrolet, which has enough supplies to last four months.

On Monday, there were about a dozen large Tahoe and Suburban SUVs that have been missing in the country since the strike began. There were also dozens of small Silverados and Equinox SUVs – GM's bestsellers. Dealers in the Washington, D.C., and Miami areas reported similar supplies.

But Gratsch said they are being squeezed by repair parts and is starting to cause cancellations.

The strike has shut down many of GM's 22 US parts warehouses, but some remain open, managed by management. GM said it will provide borrowed cars to people who cannot get recall or warranty assistance due to missing parts, and is working to ship more parts or ship them directly from parts factories.

In the picket lines, the workers said they were determined to stay out as long as necessary, but acknowledged that some are facing financial difficulties and want the strike to end.

"It all depends on how people feel about their pockets," said Jaleea Young as she walked the picket lines in Romulus. A former temporary worker who worked full time for three years, Young says she will be on strike so that temporary workers can get permanent jobs. She also wants to preserve the health benefits provided by the company by the union.

At the union near the Orion factory, where workers manufacture the Chevrolet Bolt electric car and the Sonic subcompact, the union already had to help some members who were "unlucky," said Louis Rocha, the local president. The site has a food pantry to help members in need and has received numerous donations, he said.

"I have high hopes that we can get things done," Rocha said of the talks. "While they're talking, things are changing. It's only scary if they stop, but they're not."

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