Date
14 October 2019
GM's plan to shut down three assembly factories in Ohio and Michigan is among the issues behind a dispute between the management and the UAW. Photo: Reuters
GM's plan to shut down three assembly factories in Ohio and Michigan is among the issues behind a dispute between the management and the UAW. Photo: Reuters

Why the GM strike drags on

The United Auto Workers’ (UAW) strike against General Motors has already lasted more than three weeks. In the past, such strikes, which would hurt both employers and workers badly, usually ended in a couple of days.

It’s estimated that GM may suffer a loss of US$50 million to US$100 million per day during the strike, which is also beginning to affect the automaker’s operations outside of the US, including in Mexico and Canada.

Meanwhile, workers don’t get any salary, only a weekly subsidy of US$250 from the UAW.

There were reports over the weekend that the union and the company appeared to have reached agreements on most major issues, including wage increases and a path for temporary workers to become permanent employees.

But GM’s plan to shut down over the next four years three assembly factories in Ohio and Michigan, which involves over 6,000 jobs, is said to have met strong opposition from the union.

In recent years, GM has been moving labor-intensive assembly factories to countries such as China and Mexico to cut costs.

The union has urged the automaker to modernize some of these old plants to keep the jobs at home, but the automaker has flatly rejected that idea.

The popularity of electric vehicles could be part of the reason why GM is so anxious about cutting costs.

Having lost customers to EV brands like Tesla, GM is under a lot of pressure to transform itself to compete more aggressively in this new segment, leaving it with little room to keep operations that aren’t cost-effective enough.

EV could also be the same reason why the union stands firm on its job-security demand.

The design of EV typically simplifies the assembly process. Up to 35,000 jobs will be eliminated in coming years, as traditional automakers shift to manufacture more EVs, according to UAW. That represents about 4 percent of the total auto workers in the US.

This article appeared in the Hong Kong Economic Journal on Oct 8

Translation by Julie Zhu

[Chinese version 中文版]

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RC

Hong Kong Economic Journal columnist