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GM workers ratify contract, 40-day strike to end

UPDATED: Fri., Oct. 25, 2019

Union member Lindsey Higgins leaves the United Auto Workers  union hallin Wentzville, Mo., on Thursday, Oct. 24, 2019, with her two children after voting on the offer made to workers by General Motors. (Associated Press)
Union member Lindsey Higgins leaves the United Auto Workers union hallin Wentzville, Mo., on Thursday, Oct. 24, 2019, with her two children after voting on the offer made to workers by General Motors. (Associated Press)
By Tom Krisher Associated Press

ROMULUS, Mich. – General Motors workers voted 57.2% in favor of a new contract with the company, bringing an immediate end to a contentious a 40-day strike that paralyzed GM’s U.S. factories.

Workers voted 23,389 in favor of the deal, with 17,501 against it, according to a statement Friday from the United Auto Workers union.

The union now will turn its attention to bargaining with crosstown rival Ford Motor Co.

The vote means that workers will put down their picket signs and return to their jobs. Some will start as early as Friday night, and some production could resume on Saturday.

Skilled trades workers will begin restarting factories that were shuttered when 49,000 workers walked out on Sept. 16.

The deal includes a mix of wage increases, lump-sum payments and an $11,000 signing bonus. But GM will close three U.S. factories.

The five-week walkout was big enough to help push down September U.S. durable goods orders by 1.1%, the largest drop in four months.

Trades workers such as machinists and electricians likely will enter the plants quickly, restarting boilers and preparing paint shops, robots and other equipment to restart production.

On the picket line at a transmission plant in Romulus, Michigan, worker Tricia Pruitt said the wage gains were worth staying off the job for more than five weeks, but she’s ready to return to work.

Pruitt, a 15-year GM employee, was happy that the contract brings workers hired after 2007 up to the same wage as older workers in four years.

Although GM dealers had stocked up on vehicles before the strike and many still have decent supplies, analysts say GM won’t be able to make up for the lost production. Had the strike been shorter, GM could have increased assembly line speeds and worked the plants on overtime to catch up and refill its stock. But many of the plants that make popular SUVs and pickup trucks already were working around the clock to keep up with demand before the strike began.

Also, companies that supply parts to the factories and halted production during the strike will need time to restart, although GM has some parts in stock.

Jeff Schuster, senior vice president of the consulting firm LMC Automotive, estimates that GM has lost production of 300,000 vehicles, and he said maybe only a quarter of it can be made up.

“You can’t add days to the week and you can’t add hours to the day,” he said.

Some production losses will help thin inventory, especially of cars, Schuster said. But in late October and early November, GM will likely run short of colors and models of trucks and SUVs that are in high demand until stocks are replenished, he said. Although truck and SUV buyers generally are loyal to a brand, customers in a hurry for a new vehicle could go elsewhere, Schuster said.

“There are definitely going to be some limitations on choice, and that is a risk,” Schuster said. “Consumers can opt to wait, or they can go down the street to their competitor.”

Now the union will move on to bargain with Ford, using the GM deal as a template. It’s not clear yet if there will be another strike, but it’s unlikely that Ford will be happy about being stuck with the GM terms.

GM traded the ability to close the three factories in Lordstown, Ohio; Warren, Michigan; and near Baltimore for higher labor costs, David Kudla, chief investment strategist for Mainstay Capital Management of Grand Blanc, Michigan, wrote in a note to investors. The contract maintains worker health benefits with low premiums, something that both Ford and Fiat Chrysler wanted to change when negotiations began.

“Ford and FCA didn’t have three factories that they wanted to close, but will have to work around this new framework for higher wages and unchanged health care that the UAW and GM have set,” wrote Kudla, whose firm manages investments for many auto industry workers.

Workers at factories that GM will close have been transferred to plants across the nation, and they campaigned against the deal, which was reached Oct. 16. Workers in Lordstown, for instance, voted 412-61 against it, with 88% of production workers voting “no.”

In the end, economic gains and a $7.7 billion GM investment pledge for U.S. factories were too much to turn down.

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