The GM Auto Workers’ Strike is Over – What Lessons Can We Learn?

After the longest Auto Worker strike in almost 50 years, GM employees across the country have returned to work following the ratification of a successor contract.  48,000 workers left work at more than 30 GM factories, and the impact of the strike was deep on both sides.  In total, workers lost about $1 billion in wages, and the auto maker lost almost $2 billion in production. 

Let’s take a look at what the employees gained:

  • Workers were granted three percent pay raises and four percent lump sums in alternating years. 
  • GM removed the cap on profit sharing (employees can earn $1,000 for every billion dollars the company earns, with a previous limit of $12,000 per year).
  • GM agreed to keep the Detroit-Hamtramck factory open, which was slated to be shut down.  The company will make a $3 billion investment in the factory to build electric trucks and vans there. 
  • The company also agreed to invest $1 billion in two other factories in the U.S.
  • The parties agreed to create a permanent track for temporary employees after three years.
  • The top rate for employees was increased from $30 to $32 an hour, and it will only take employee four years to reach the top rate. 
  • Probably most importantly, health insurance costs will remain the same after the company had previously announced it would be raising premiums. 
  • Permanent workers will get an $11,000 signing bonus and temporary employees will get $4,500 (this was to cover basic wages lost during the duration of the strike). 

One area where the union was unsuccessful was in its efforts to have the company re-open its plant in Lordstown, Ohio.  Much had been made of the company’s decision to shutter that plant and send its operations to foreign countries, especially after a certain politician made promises to the constituents of that state that manufacturing jobs would return.  However, the company held fast to its management right to control operations, and upheld the plant’s closure. 

The strike took a major toll on the company.  Not only had production at its U.S. factories ground to a halt, but non-union workers in both the U.S. and Mexico had to be laid off at auto parts suppliers, resulting in shortages for auto service at car dealerships. 

The strike also placed a great amount of pressure on workers, who were provided only $275 a week from the union’s strike fund.  In the end, the pressure on employees led to them agreeing to a deal which was not far from the deal offered by the company prior to the strike. 

What lessons can we learn from the GM Auto Workers’ strike?  The first is obviously that strikes can take a tremendous toll on both workers and the company.  The amount of production and wages lost as a result of the strike were enough to support a small country.  Second, even if people abstain from striking, or are totally ancillary to the dispute, they can still be heavily impacted. 

Third, it is always necessary to have a strike plan in place to deal with the fallout if workers walk off the job.  With a company as large as GM, the effects were wide-ranging, and led to closures in even their foreign plants.  One has to understand the fallout from a strike, including impacts on supporting companies as well as possible sympathy strikes from other unions with whom the employer has agreements. 

Fourth, employers are incredibly leery of giving up any management rights.  The fact that GM agreed to include its decision not to close a plant in the final agreement is almost miraculous to those who have been a part of contract negotiations.  Employer-side negotiators know that once they have made a management rights issue part of negotiations, they will never be able to take those rights back without paying a price. 

Finally, both parties need to stay at the table.  Stepping away from the bargaining table and letting the pressure of a strike decide the company’s and workers’ fate will leave both sides bitter and resentful, no matter what compromise is struck.  In this case, the parties did not end far from where they were before the strike took place, and were only forced into agreement for terms previously proposed when the pressure of the strike became too much.  It is never too late to come to a resolution. 

Contract negotiations can be hard on both sides, and require a clear understanding of both your best alternative and worst alternative to a negotiated agreement.  If you or your organization are involved in tough labor negotiations, contact the Wiley Law Office, for negotiations experience that works.