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General Motors can face first strike in 12 years



Contract negotiations between United Auto Workers and Detroit automakers usually go down to the wire. But this round, the chances of a walkout at General Motors are seen as running roughly.

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"There is little doubt about the recent years of a strike, which positively does not say it will be a strike," said Harley Shaiken, a professor in working relationships at the University of California at Berkeley, to CBS MoneyWatch.

GM and UAW's current four-year contract expires on Saturday at midnight.

"At that point we will have a statement on whether it is a proposed tentative agreement, an extension or a strike. But for the time being, they are still negotiating," a UAW spokesman told CBS MoneyWatch via email.

A spokesperson for GM said the talks with the working group "are evolving."

When negotiations between UAW and GM began in July, the sides were far apart on issues including pay and job security, Shaiken said. "It's an unusually restorative membership, and UAW leaders don't just have to negotiate a contract, they have to get it ratified."

UAW said earlier this month that more than 96% of GM workers had voted to authorize a strike.

Related video: FBI raids home of UAW president

Stagnant salary

Average hourly wage in the US auto industry peaked in 2010 and has since fallen about 2%, or 16% when adjusted for inflation, according to Kristin Dziczek, Vice President of the Industrial and Labor Economics Group at the Center for Automotive Research. Senior UAW workers received two 3% wage increases during that period.

Together with a wage increase, the UAW wants to limit the ranks to temporary workers GM can use, a figure that this year averaged about 7% of the US workforce. Temporary workers are paid as little as $ 15 an hour. Senior employees hired by GM before 2007 earn between $ 30 to $ 33 an hour, while entry-level hires brought in after 2007 start at around $ 17 an hour, with an eight-year progression to become a senior worker.

"You can be on the line earning $ 33 and the person next to you earning $ 15 an hour as a substitute," Shaiken said, noting that multiple levels of pay and status could weaken the union's solidarity.

Preparation for strike

Signals that a strike is a clear possibility come from both the union and GM, with the UAW preparing members for a possible walkout and GM increasing their car inventory ahead of a potential production decline.

"Historically, when Detroit automakers have strikes, they are not trying to operate the plants as some other industries have tried to do," Shaiken said. "One thing they can do is increase inventory – the more cars that are on the dealer's plots, the longer they can go when a strike starts."

Automakers strive to have at least a 60-day supply of vehicles, and GM currently has a 77-day supply, Shaiken noted.

The last strike against GM came in 2007 and ended after two days. Since then, US motorists have bought a record number of new vehicles, and GM has a record high profit and bought back $ 10 billion of stock since they went bankrupt in 2009.

UAW is looking for a bigger piece of this pie and to fight the closures of four American plants. However, GM is poised for a financial downturn in the coming years and is resisting UAW efforts that will increase long-term costs.

GM has stated that the majority of the investments are made in the United States, where it has 33 plants operating compared to four plants in Mexico.

A federal corruption probe into the union adds a new tipping point. Last month, the FBI attacked the homes of Gary Jones, the current president of United Auto Workers, and his predecessor, signaling a dramatic escalation of a four-year probe into illegal payments. Corruption research has so far led to the conviction of eight people. On Thursday, a UAW regional director was charged with defrauding union funds as part of the expanded government survey.

"Although these allegations are very offensive, we strongly believe that the government has misunderstood a number of facts and emphasizes that these are merely allegations, not evidence of wrongdoing," the UAW said in a statement Thursday. "We will not let this distract us from the critical negotiations that are underway with GM to get better salaries and benefits for the more than 400,000 members of our union."


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