Thousands of General Motors autoworkers went on strike nationwide yesterday after talks between the automotive giant and the United Auto Workers union on a new labor contract broke down.
It is the first nationwide autoworkers strike since 1976.
Talks resumed between the two sides yesterday.
Negotiators were at the bargaining table for more than 25 straight hours from Sunday morning until the strike, which started about 11:30 a.m., when talks broke down over job security, the UAW said.
Union officials said they want GM to promise that future cars and trucks such as the replacement for the Chevrolet Cobalt small car or the Chevrolet Volt plug-in electric car, still on the drawing board, will be built at U.S. plants.
“We’re shocked and disappointed that General Motors has failed to recognize and appreciate what our membership has contributed during the past four years,” UAW President Ron Gettelfinger said.
Health care costs are another sticking point. The nation’s largest auto manufacturer wants to cut rising labor and health care costs, and the union is determined to protect pay and benefits of the 73,000 members at GM’s 82 plants and warehouses. UAW membership has shrunk by two-thirds over the past three decades.
“The auto industry plays a less important role than it has in the past. But what”s important is what this says about health care benefits and health insurance,” said Mike Davis, a professor and economist with Southern Methodist University’s Cox School of Business.
“The impact on GM will be negligible if it”s a short strike. However, there is a new reality facing companies: Employers can no longer afford the great benefits they promised to employees.”
The shutdown will cost GM about 12,200 vehicles in the U.S. each day to start, CSM Worldwide Inc. estimated. That may spread to more than 18,100 a day counting Canada and Mexico.
General Motors Corp.’s inventory of unsold cars and trucks provides a cushion for the company, analysts said yesterday.
“Current inventories are adequate to sustain dealers for two to three months,” said Brian Johnson, a Lehman Brothers analyst in Chicago. The Detroit company needed to halt production for about 15 days “making a two-week strike actually, ironically, a lower-cost way to adjust inventory,” he said.
GM officials said they were disappointed in the UAW’s decision.
“The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company. We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors,” the company said on its Web site.
GM is restructuring so it can better compete with Asian automakers, but must deal with the labor strike as some of its new products begin to catch on with consumers.
Workers are taking a big risk, giving up pay and hindering GM in an uncertain economy.
“Job security is one of our primary concerns,” Mr. Gettelfinger told reporters after talks broke off. “We’re talking about investment and we’re talking about job creation” and preserving benefits, he said.
The UAW has been trying to set up a union-controlled health care trust fund, which could free GM, Ford and Chrysler from roughly $95 billion in long-term liabilities. That deal would require a large cash payment from the automakers to fund the trust, and the two sides have not found common ground on the size of that payment.
GM pushed hard for the trust — known as a Voluntary Employees Beneficiary Association — so it could move $51 billion in unfunded retiree health costs off its books. GM has nearly 339,000 retirees and surviving spouses.
The two sides agreed last week on the basic outline of the trust, but they could not agree on other contract issues, which ultimately will determine how much money GM can put into the trust.
Detroit’s Big Three automakers — GM, Ford and Chrysler — combined for $15 billion in losses last year.
Autoworkers were off the job for 67 days when they went on strike in 1976. The union has conducted plant-by-plant strikes in the years since. In 1998, GM vehicle output was shut down nationwide by local strikes at the Flint Metal Center and a Delphi parts plant in Flint. The shutdown stopped GM’s North American production for 53 days and cost the company $2 billion.
c This article is based in part on wire service reports.