Auto Analyst Examines UAW-GM Strike
At midnight Sunday night, the United Auto Workers Union struck General Motors over the failure to reach agreement on a new contract. Picket lines quickly went up in front of Lansing’s GM facilities.
The strike occurs amid an ongoing corruption scandal involving the current and immediate past presidents of the union.
The UAW is seeking improvements to wages and benefits. They also want the automaker to bring new product to plants that have been running below capacity, in hopes of keeping them open.
WKAR’s Scott Pohl asked Paul Eisenstein of TheDetroitBureau.com about those plants, and how he thinks the strike might play out.
PAUL EISENSTEIN: We have one in Michigan that the UAW would like to keep open, and that is the Poletown plant on the border of Hamtramck and the city of Detroit. GM has so far kept that open longer than they planned. They've shut down another plant out in Lordstown, Ohio, and they have indicated that they may be able to put a product, an electric pickup, into that plant to keep it open. So there is the possibility that at least the UAW could succeed in keeping one plant open. GM has also indicated that it might put billions of dollars into the United States to expand production and bring some more product back here. I think, if I remember correctly, the number they were talking about is something like 5,400 jobs.
SCOTT POHL: Do you know of any particular implications for the Lansing plants?
EISENSTEIN: Unfortunately, no. The union has been pretty quiet about specifics, as has General Motors. Clearly there are a number of plants around the U.S. that are running well below capacity, and one of the things that the UAW wants is commitments to those plants for new product that will keep them open. There's quite a few that could close as GM consolidates operations, or they get some sort of agreements going with the UAW, that increases the number of products they have in these in these poorly performing plants.
POHL: We're hearing that GM has quite an inventory of unsold vehicles. That has to be a factor in how long or short a strike might be.
EISENSTEIN: As is often the case, when an automaker risks the possibility of a strike, they try to build up inventory as much as they can before any confrontation can take place. General Motors has done that. They have about 15 or so days more inventory than they normally would, and typically it runs about 61 days. GM is close to 80, if I remember correctly, particularly on the truck side, which of course is where the big sales are taking place these days.
Now, that said, inventories can wind down very quickly, particularly if some of the hot selling models, meaning that people could walk into showrooms and say, ‘yeah, you have that pickup, but it's not the type I want’ and walk across the street to a Ford or Fiat Chrysler Ram showroom. That's something that they worry about. And complicating matters, the Teamsters have said that they will not ship vehicles that are coming from, say, the factory to a dealership, or even from a train to a dealership, until the strike ends. So in fact, there's a lot of those cars that are supposedly in inventory, which really can't be sold at this point.
POHL: Short strike, long strike, something in between…do you have a gut feeling on day one?
EISENSTEIN: This is a weird situation. We can make a scenario that tells you why it'll only last a day, or a week, or six months. There's a lot of anger out there on the part of union workers, and the UAW leadership knows that if they don't come in with the right contract, they're not going to get it ratified. We've seen that happen before. You may remember earlier in decade, when workers did reject a contract, and right now that's going to be a complicating factor. Workers aware of this scandal, this ongoing scandal, are going to want to have absolute assurance, a lot of comfort, that what the union delivers in the form of the settlement really is the best thing they can get. If they don't get it, this strike could drag on and on and on.