The United Auto Workers (UAW) is striking against General Motors Co. (NYSE:GM) for the first time in 12 years.
The union and GM are fighting over job security, profit sharing and medical benefits. The strike that took effect at midnight may cost GM about $50 million U.S. a day in earnings before interest and taxes due to lost production, according to an analysis by Credit Suisse. GM’s share price fell 3.2% in pre-market trading on Monday morning.
While GM touted an offer to invest in plants across the U.S. and boost wages and benefits, UAW has been rocked by an internal corruption scandal and needs to show willingness to bring the fight to an automaker that’s been scaling back its workforce in recent years.
GM has offered $7 billion U.S. of investment in eight U.S. plants and more than 5,400 additional jobs, most of which would be new hires. But the union said GM’s proposal fell short in key areas including health care, use of temporary workers and the length of time it takes for shorter-tenured members to get to the top pay scale.
The union is seeking pay raises for entry-level workers, who currently start at less than $20 an hour, and to get them to the peak wage of almost $30 an hour in three or four years, instead of the current period of eight years. GM countered that it made the union a generous offer to invest in factories in four states, including a new vehicle in the Detroit-Hamtramck sedan plant.
GM also offered workers a signing bonus of $8,000 U.S. per member if they ratify the deal, plus wage gains or lump-sum payments in all four years of the contract. The car maker says it’s offering to keep members’ health-care contributions the same as in the current contract.
The current walkout is only the second "national" work stoppage at GM since a 67-day strike in 1970. GM did have a 54-day strike at a key plant in Flint, Michigan, in 1998 that effectively shut down most of its assembly plants.
