Human Capital

GM Workers Approve Contract After 40-Day Strike

“It’s a rich contract for workers. The health care coverage would be the envy of nearly every worker in America.”
Matthew HellerOctober 28, 2019
GM Workers Approve Contract After 40-Day Strike

After the longest nationwide strike against General Motors in half a century, union members ratified a four-year contract that will increase the automaker’s labor costs by an estimated $100 million per year.

The 40-day work stoppage ended with United Auto Workers members winning annual lump-sum bonuses or raises and $11,000 ratification bonuses. They also avoided any change to their “gold standard” health insurance, which requires them to cover only 3% of the total costs.

GM also agreed to invest $7.7 billion in current plants but the deal also allows the company to close three idled factories permanently, eliminating excess manufacturing capacity at a time when auto sales are slowing.

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“We delivered a contract that recognizes our employees for the important contributions they make to the overall success of the company, with a strong wage and benefit package and additional investment and job growth in our U.S. operations,” CEO Mary Barra said in a news release.

The contract was supported by 57% of UAW members who voted. “It’s a rich contract for workers,” Patrick Anderson, chief executive of Anderson Economic Group, told The New York Times. “The health care coverage would be the envy of nearly every worker in America.”

The strike — the longest by the UAW against GM since a 67-day walkout in 1970 — cost union members thousands of dollars each, GM as much as $2 billion in lost profits and shareholders more than 5% in the value of their stock.

According to the Detroit News, the walkout also “idled parts of the automaker’s sprawling supply base, weakened economic growth and raised fears the Michigan economy risked slipping into recession.”

Under the new contract, workers will receive wage increases of 3% in the second and fourth years and 4% lump sum payments in the first and third years. The deal also phases out a “two-tier” wage structure that was adopted in 2007 over fierce internal resistance.

The facilities to be closed include Lordstown Assembly in northeast Ohio, a parts distribution center in Southern California, Baltimore Operations in Maryland, and Warren Transmission in southeast Michigan.

Bill Pugliano/Getty Images