UAW management struggles to close GM agreement

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UAW Local 163 union members Stephen Alfaro of Southfield, Ryan Pappas of Taylor and Jeremy Council of Romulus, fence in front of General Motors Co. Renaissance Center in Detroit. (Photo: Todd McInturf, The Detroit News)

One month to the longest United Auto Workers national strike against General Motors Co. since 1970, a former senior dealership for a Detroit auto manufacturer floats an obvious question: [19659005] "Does the UAW leadership have what it takes to conclude a deal," asked Colin Lightbody, a retired FCA dealership, in a blog post heading Monday. He's not sure. And it's safe to say, based on background calls in recent weeks, that there aren't many people on the outside looking in either.

Lightboard's "red flag" includes the federal investigation into union corruption, a "ever-changing list" over outstanding issues "that appear to be frustrating and confusing membership, and that" top UAW executives have never really been on the "show" of national contract talks with Detroit's automakers.

He sees the union's decision to pay three strikes simultaneously at GM, at Aramark Corp., at Mack Trucks Inc. as at least an implied dilution of management attention. And continued the signaling that the union might well decide to keep 46,000 GM members on strike between reaching a tentative deal and a ratification vote signaling confidence in the leadership's ability to get a deal ratified – or perhaps the exact opposite?

Based on the results so far, he is asking fair questions. This extended review risks becoming a financial train wreck for GM, for the striking workers, for the Michigan economy, for the Detroit-based industry, and for the federation's ability to sell itself to willing members in the effort to organize unrelated car manufacturers .

Sure, at least one Wall Street analyst expresses his preliminary concern. In a note on Monday, Adam Jonas of Morgan Stanley LLC wrote that GM investors are "comfortable" with an extended strike costing billions as long as the result retains "long-term costs and strategic flexibility."

It remains to be seen. The automaker's outstanding public commitment to save the Detroit-Hamtramck plant from closure, to build a Northeast Ohio Mahoning Valley battery cell, to keep health care costs at a national average, to increase ratification bonuses above $ 8,000 previously confirmed, and to Uncovering the hour-long profit sharing formula will not come cheap.

Strike is supposed to hurt, financially. They should be more costly to employers than to employees, to make significant gains at the bargain table worth the pain at the bar and lean strike payments, to safeguard the long-term interests of employees even at the risk of raising costs for employers.

Whether these calculations hold remains to be seen. Lost wages are collected at the negotiating table, not with strike pay. Although the UAW manages to maintain enviable health care coverage, to achieve a sweet profit sharing formula for members, to secure the $ 9 billion in capital investment already promised by GM in a couple of unprecedented confirmations, other disadvantages are looms.

Profit sharing for 2019, due next year, is sure to hit as the US loses from the strike. GM shares are down nearly 8% since the strike began last month, and hit shareholders – including UAW's Retiree Health-Care Trust, which owns about 7% of the Detroit auto maker in the wake of the bankruptcy a decade ago.

Lost production of High-margin Vehicles is likely to be difficult to recover anymore as the strike lasts, which prolongs the strike effect long after it is settled and a new contract is ratified. And any similar hit for US market shares will exacerbate the surplus capacity problem GM is trying to solve by its controversial decision to move to four US facilities, including two in southeast Michigan.

Striking is the easy part for UAW. The hard work for both sides comes in ending a walkout that shows how little any part of Old Detroit has changed.

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Daniel Howes' column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays at Michigan Radio's "Stateside," 91.7 FM .

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