Business Week: UAW Concedes to GM

By September 26, 2007Briefly Legal

Business Week’s David Welch has what seems to us an accurate portrayal of the UAW-GM settlement:

For General Motors (GM), a new labor contract represents a step forward. For the United Auto Workers, a big step back.

The two sides came to a tentative agreement on a new, four-year labor pact at 3:05 a.m. EDT Sept. 26, ending a two-day strike. If UAW President Ronald Gettelfinger can get the deal ratified by his 74,000 GM workers in the coming days, the contract will pull the automaker much closer to Toyota’s (TM) cost structure. But for the UAW, it will roll back contract benefits and wages won over years of collective bargaining.

In many ways, the union had no choice. Detroit’s carmakers have been under siege from foreign competition, which have lower costs in their factories, both in Japan and the U.S. Health-care costs have sapped $1,400 from the profit of any vehicle. GM lost a total of $12.4 billion in 2005 and 2006, and its North American business is running at breakeven this year. GM Chairman and CEO G. Richard Wagoner Jr. cut 34,000 jobs and got health-care concessions in the past two years. But GM still isn’t making real money at home. The struggling chairman simply couldn’t take anything but a concessionary labor contract to his board of directors.

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