Success may trip up GM in talks
General Motors Corp.'s improving outlook could be a handicap during labor
negotiations this summer, when the automaker will be in the delicate
position of trying to sell its comeback on Wall Street while also attempting
to wrest concessions from the United Auto Workers.
For now, GM seems to have pulled out of the tailspin it was in a year ago,
when multibillion-dollar losses and skidding market share dominated
Sales are up -- 3.7 percent in February. Operating costs are down. And the
company is on track to report a profitable quarter for the first time in two
years Wednesday when it releases fourth-quarter and full 2006 financial
Such positive signs may make it tougher to sell an already wary UAW on the
idea that major givebacks are still needed to safeguard the company's
Top UAW officials have publicly acknowledged that GM needs the union's help,
but some local UAW leaders and rank-and-file members say the automaker isn't
as bad off as it seemed even a year ago.
"They understand that if they show profit, it's going to be something we
look at," Chris Sherwood, president of Local 652 in Lansing, said of GM.
Local 652 represents workers at a Cadillac plant.
"Hopefully, they won't get carried away. They've got to take into account
that a lot of our folks are saying, 'Enough is enough.'"
Contract talks should wrap up in September when the UAW's four-year
GM is working to craft a finely tuned message grounded in the idea that any
recent gains could be lost if GM still can't compete against lower-cost
"The union understands that better than anybody," GM North America President
Troy Clarke said in a recent interview.
"If they show very good earnings, it's going to be a tougher job for GM,"
said Harley Shaiken, a labor expert at the University of California,
Berkeley. "Both management and labor are going to be walking a very fine
GM is not expected this week to report a profit in North America and has
made it clear that getting the unit in the black and keeping it there
depends on reducing health costs for active and retired workers.
"We cannot, as an American auto industry in the long-term, survive with the
legacy cost burden that we've gotten," Bob Lutz, GM vice chairman of global
product development, said last week at the Geneva auto show. "We need to
work with our UAW partners to find some sort of solution."
Downsizing by Detroit automakers has cut tens of thousands of workers from
the union's ranks, but the UAW remains an influential force within GM, Ford
Motor Co. and DaimlerChrysler AG's Chrysler Group, Shaiken said. Even in
tough times, he said, "union leaders do not want to give up things won with
The UAW already has taken the unusual step of agreeing to health care cuts
in a landmark 2005 deal with GM that was ratified by 61 percent of
workers -- a margin slim enough to make GM nervous.
At the same time, analysts say the UAW is realistic about the challenges
facing GM, Ford and Chrysler. While GM is faring better than its crosstown
rivals, the picture is far from rosy. As GM execs are quick to point out,
even a few billion dollars in profit is hardly stellar given GM's size.
Then there's the issue of health care. By 2008, GM is expected to spend more
than $1,900 on health care for every vehicle it builds in the United States,
according to the credit rating firm Fitch Inc.
"They're both struggling so badly that neither side can afford to let things
go downhill," labor expert Jim Hendricks of the Chicago-based law firm
Fisher & Phillips said of GM and the UAW. "That hasn't changed just because
they've had some good news."
Whatever deal UAW negotiators strike with GM will have to be approved by
workers, who have never voted down a national contract, although the margins
"We're not going to let GM dupe us at the bargaining table -- we've got
people at international just as smart at their guys," said George McGregor,
president of UAW Local 22, which represents workers at GM's Hamtramck
factory. "But we know we've got to make some sacrifices. We're going to do
what we need to do to keep our members working as long as we can."
The credit belongs to the man who is actually in the arena; whose face is
marred by dust and sweat and blood; who strives valiantly; who errs and
comes short again and again; who knows the great enthusiasms, the great
devotions and spends himself in a worthy cause. Who at the best, knows the
triumph of high achievement; and who, at the worst, if he fails, at least
fails while daring greatly.
T.R. April 10, 1899