GM settles strike but gains little
By Tim Minahan -- Purchasing, 9/1/1998 2:00:00 AM
With a 54-day strike resolved at two major parts plants, General Motors Corp. may have survived a battle, but it certainly hasn't won the war.
At press time, GM and the United Auto Workers agreed to settle strikes at two Flint, Mich.-based plants: a GM metal fabrication facility and the Delphi East plant, which makes spark plugs, fuel systems, instrument clusters, and other vehicle parts. The nearly three-month strike at these locations halted production at 27 of GM's 29 North American assembly operations, costing the nation's No. 1 automaker an estimated $2.2 billion in lost profits. The strike also caused dozens of GM suppliers to curb production and lay off workers.
Under the agreement, which was overwhelmingly approved by union members, GM has agreed to drop a contract-violation lawsuit against the UAW and refrain from selling the Delphi East plant and a pair of Dayton, Ohio-based brake plants at least until the year 2000. In return, the UAW will agree to increase productivity and not to strike at parts plants in Flint and Grand Blanc, Mich.; Dayton, Ohio; and Indianapolis.
The deal was expected to let GM resume production at all of its assembly plants sometime last month. However, most industry watchers say neither GM nor the union gained much through the settlement.
"It's only a short-term fix," says one supplier to GM. "The same issues will come up again and again."
Indeed, analysts say GM has yet to resolve its two biggest problems: less-than-inspiring vehicles and a bloated head count. All told, GM needs to cut between 38,000 and 50,000 jobs to remain competitive with its domestic and foreign rivals.
However, the UAW, realizing the automaker's plans to reduce its work force, has been fighting GM all the way. Evidence: The recent strike marks the 22nd time workers have staged walkouts at GM facilities since 1990, including a 17-day strike at the Dayton brake plants in 1996, which cost GM $900 million in lost production. By contrast, rival automakers Ford Motor Co. and Chrysler Corp., both which rely on outside suppliers for the bulk of their parts and materials, have experienced almost no work stoppages in this decade.
Upshot: GM's labor troubles are far from over. (A lingering strike threat at the company's Saturn division in Spring Hill, Tenn., is evidence of that.) The recent settlement only delays an inevitable (and painful) showdown between GM and the UAW. Until the employment issue is resolved, GM will continue to be faced with bloated labor costs and productivity problems.
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