The Ongoing General Motors Strike Affecting up to 150,000 Auto Industry Workers
The fallout from the ongoing strike at General Motors by the United Auto Workers (UAW) union is having a ripple effect throughout the auto industry, especially in Michigan where the automaker is headquartered. A new report released on Tuesday by research and consulting firm Anderson Economic Group estimates the strike is affecting nearly 150,000 workers in the auto industry.
The stike began on Sept 16 and is currently the longest work stoppage at GM in a decade. The UAW union is seeking higher pay, greater job security, a bigger share of the automaker's profit and protection of healthcare benefits for its members.
In a statement GM said, "Our goal remains to reach an agreement that builds a stronger future for our employees and our business."
However one of the key issues in job security, the UAW's top negotiator wrote in a letter released on Tuesday. General Motors is working to electrify its lineup and building electric cars takes far fewer workers. Electric vehicles are also less complicated to produce, which threatens the future of GM's current engine and powertrain factories.
The union also wants GM to commit to building vehicles sold in the United States at UAW-represented factories, UAW Vice President Terry Dittes wrote in a letter to union members.
Some of GM's popular models, including the 2019 Chevy Blazer SUV, Trax and GMC Terrain are built in Mexico to save on labor costs, a move has angered union members as well as President Trump, who has pressured GM to keep its manufacturing in the U.S. GM was further criticized for closing three factories including two in the U.S., while production in Mexico continued.
"We have made it clear that there is no job security for us when GM products are made in other countries for the purpose of selling them here in the U.S.A.," Dittes said.
"We believe that the vehicles GM sells here should be built here."
Last November, GM announced it was laying off nearly 15% of its salaried workforce amid a global restructuring plan, as the automaker discontinues poor-selling sedan models and shifts toward SUVs, crossovers, fully-electric vehicles and self-driving cars.
At the time GM said it expects to save $6 billion in cash as a part of the restructuring, and part of that is closing plants where discontinued models were built.
The 2019 Chevy Blazer is built in Mexico.
The automaker shuttered its Lordstown, Ohio assembly plant in March where it built the Chevy Cruze. The Cruze has been discontinued due to slowing sales, displacing around 1,700 workers.
GM's Detroit-Hamtramck Assembly Plant which builds the Cadillac CT6 and Chevrolet Impala was scheduled to close in June. However GM is keeping it open an additional seven months until Jan 2020. Both the CT6 and Impala sedans will be discontinued after the final production ends later this year.
The stike is also impacting GM's massive supplier network. About 75,000 employees of auto parts suppliers have either been temporarily laid off or have seen their wages shrink due to the slump in demand from GM, according to the AEG report.
About 5,000 workers at GM suppliers in Michigan have filed for unemployment benefits as a result of the strike, the state's Unemployment Insurance Agency said on Tuesday. The total number of workers hit by the strike includes about 25,000 GM salaried workers affected by the plant shutdowns, it said.
AEG estimates that the strike has resulted in a $660 million profit hit for GM and more than $412 million in direct wage losses for all employees through the third week of the strike.
GM's share price dropped by 2.5% on Tuesday. The automaker's share price has lost 9% since the strike began, erasing more than $4 billion from the automaker's market value in under a month.
The stoppage has also led to $155 million in lost federal income and payroll tax revenue and $9.1 million in lost Michigan income tax revenue.
The ongoing stike is now affecting GM's workforce in Mexico. As week ago, GM idled a plant in Mexico that produces its highly-profitable Chevrolet Silverado and GMC Sierra 1500 pickups models, temporarily laying off 6,000 workers.
Although both side have been negotiation a deal to end the stike talks soured over the weekend. UAW representatives said talks surrounding a new four-year labor contract took a "turn for the worse" on Sunday after the UAW rejected GM's latest offer to its employees.
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