The United Automobile Workers union are on strike after contract talks with General Motors fell apart over the weekend.
The UAW wants better wages, a narrowing of wages between new hires and veteran workers, and for GM to add jobs at plants or reopen three idled plants, such as the Lordstown, Ohio plants that made the Chevrolet Cruze, according to The New York Times.
The Cruze, which comes as a compact sedan and hatchback, ended production in March 2019. Steep discounts were offered to consumers this summer to sell the remaining cars and hatchbacks. The Cruze is just one of many sedans discontinued by GM as automakers adjust production lines to keep up with consumers’ increasing preferences for crossover SUVs instead of sedans. In 2019, GM discontinued the Chevy Volt PHEV and Chevy Impala full-size sedan, the Cadillac XTS, and Buick LaCrosse. Sales of the Cruze dropped 40 percent in the past four years since the last UAW contract negotiation, the Times reports. In that same time period, sales of sedans have dropped 10 percent to 22.9 percent of market share, according to Experian, while sales of crossovers have grown 10 percent to make up nearly half of all new cars sold in 2018. In 2014, each segment had 34 percent of new vehicle sales.
On the other side, GM expects union employees to share more health care costs, increase productivity, and be more flexible in GM’s 12 remaining U.S. factories and 22 parts plants.
These arguments are nothing new, but this is the first strike since 2007 when GM was losing money as the first signs of the looming global recession surfaced. With help from a government bailout 10 years ago, as well as a strong economy, GM clawed back from bankruptcy and the automaker reported $8.1 billion in profit after taxes in 2018.
Even though the auto industry is not as mighty as it once was, it still accounts for 3 percent of GDP, according to the Times. Automakers are bracing for contractions due to global economic instability, fueled in part by tariff wars with China.
On Monday, 49,000 full-time and temporary UAW workers at GM went on strike. The UAW negotiates its contract every four years and has since called off talks with Ford and FCA until the GM dispute is settled. The GM contract could serve as a template for union contracts with other automakers.
The strike comes at a time when leaders of the UAW are being investigated and charged with using union money for lavish personal spending. Last week, UAW regional director Vance Pearson, who oversees 17 states, was arrested on six charges, including embezzlement of union money and money laundering, according to The Detroit Free Press. UAW President Gary Jones and several other top leaders were also implicated on corruption charges for using union dues on everything from expensive cigars to golf vacations.
They are not alone. In 2017, one FCA labor executive was investigated for using union dues to buy a $365,000 Ferrari 458 Spider.
Jones got a union vote of confidence Friday, and Pearson was involved in union meetings and the strike vote on Sunday, the Times reported.
Union members on strike get $250 a week in strike pay instead of their regular earnings, and stand to lose more on annual profit-sharing checks.