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GM on Strike

The Sunday night deadline quickly approached both General Motors factory workers in the South and the Midwest and General Motors upper management.  It was that time when another union contract was set to take effect.  However, no agreement between the United Auto Workers, which is the union that represents General Motors factory workers, and General Motors’ upper management was agreed upon.  This lack of an agreement called for a strike to take effect on Sunday, September 15th at midnight, halting production in numerous GM factories across the United States.  According to the New York Times, the causes of the strike were determined to be reduced health care benefits, idle plants within the United States and improved wages.  These factors pushed more than 50,000 union workers to start picketing that following Monday morning.

The first step in initiating a strike is to have a union vote on it.  According to the New York Times, the United Auto Workers’ union leadership voted unanimously to authorize the strike.  This is the first strike in over a decade, the last strike against GM occurred in 2007.  A GM factory employee by the name of Patty Thomas who spoke with CNBC released a statement saying that “the strike in 2007 was political” referring to the U.S. Government giving General Motors an $11 billion bailout and not using the money for the employees’ direct benefit.  The same worker said that this strike will be “more serious” according to CNBC.

Many GM workers including Patty Thomas fear losing health care benefits and possibly being laid off, since GM plans to shut down four manufacturing plants in the United States, according to CNBC.  Aside from potential layoffs, GM workers face reduced wages resulting from the strike.  Since many of the GM factory workers are hourly, they are not being paid since they are “off the clock.”  However, these workers are receiving strike pay.  According to CNBC, the only caveat is that strike pay does not go into effect until the eighth day of the strike and that payment is not received by the workers until the fifteenth day of the strike.  GM factory workers are losing one week of pay as a result of the strike.  According to the Wall Street Journal, another couple who works at a GM transmission factory in Flint, Michigan brought home $500 in combined strike pay, which is roughly a quarter of their normal take-home pay.  Another GM employee reported cutting back on her grocery bill and forgoing a weekly date night with her fiancé.  Even with the strike pay, many GM factory workers are still struggling to make ends meet.  Many of the employees who were interviewed said they had children to feed, mortgages, car payments, education, and other expenses to cover.  To cover these fixed expenses with a lower strike income, many GM employees might have to tap into their savings accounts, retirement plans, or borrow funds.

Along with reduced pay caused by the strike, GM factory workers face a reduction in health care benefits.  According to CNBC, GM factory workers pay only 3% of their health care costs out-of-pocket, which is far below the 30% out-of-pocket expense for both the national average and the average in the auto industry.  During negotiations between General Motors and the United Auto Workers, GM proposed raising the amount of out-of-pocket health care costs by 15% from 3% to 18%.  This is still far below the national average of 30%.  However, the UAW argued that GM factory employees would be unaccustomed to paying that much money for health care expenses out-of-pocket.

The strike is not only impacting GM employees but also stakeholders of the company.  Stakeholders include any person who has an interest or stake in GM and is impacted by either great or poor company performance.  According to the Wall Street Journal, dealerships and mechanics have a shortage of GM vehicle parts.  This will dramatically increase the cost of vehicle repairs for the American consumer if parts are available.  A GM dealer in Michigan shared his story with the Wall Street Journal, claiming that smaller car parts, such as oil filters, are difficult to find.  The same dealer also claimed that more crucial vehicle parts, such as transmissions, are now impossible to find.

Even when both sides are at odds, the UAW and GM were willing to come to the table for negotiations.  The first round of negotiations occurred on the seventeenth day of the strike, October 2nd.  The UAW would not comment on negotiations but claimed health care benefits, temporary workers, and wages were some of the topics discussed.  According to CNET, GM refused their offer, thus continuing the strike.