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Howes: The old Detroit is dead, but expectations haven't changed for UAW-GM workers

UAW GM workers striking with signs
Katie Raymond
Michigan Radio

The United Auto Workers strike against General Motors is the longest in 49 years. And a lot has changed.

The union’s 49,000 GM employees are a fraction of the 340,000 who walked off the job for 67 days in 1970.

daniel howes
Credit Daniel Howes / Detroit News
Detroit News

Competitors from Japan, Germany and South Korea now account for more than half of the vehicles sold in the United States — and a big chunk of those are built in non-union plants in the Midwest and down south.

Detroit’s No. 1 automaker still has the highest hourly labor costs in the States, despite its historic bankruptcy a decade ago. That’s a key reason an end to the strike is proving so elusive: GM wants to narrow the cost gap with its rivals and the UAW essentially wants to widen it.

GM collapsed into bankruptcy a decade ago thanks in part to high fixed labor costs.

Yet expectations haven’t changed. In the Old Detroit, GM’s strong North American profits and record profit sharing meant the automaker would be able to afford to increase wage rates, to maintain Cadillac health-care benefits, to reduce its use of temporary workers.

But this isn’t Old Detroit anymore. It’s dead — or should be. Reviving the discredited thinking that led to those historic bankruptcies would be an epic mistake — proof that some people never learn.

Stripped of the usual jargon, the UAW-GM bargaining battle is a giant fight over dollars and cents. Ann Arbor’s Center for Automotive Research says GM’s hourly labor costs are 13 bucks an hour higher than the 50 dollars an hour average for non-union foreign automakers operating in the States. Rival Ford is 11 bucks an hour higher.

That gap is unsustainable in the hyper-competitive global auto industry. It’s also indefensible — a slap to salaried employees, to shareholders, and to taxpayers who financed GM’s rescue.

And it’s a major reason why GM builds more vehicles in Mexico than any other major automaker; why it imports the Buick Envision from China and other models from Germany and South Korea; why it uses more temp workers than Ford — but a whole lot less than Toyota.

Curtailing those practices like the UAW wants risks one of two unintended consequences: widening the labor cost gap and reducing competitiveness. Or, requiring the use of more temps and off-shore production to restrain costs.

Why is that so hard to understand?

GM and the UAW are stuck at this point partly because the automaker’s bankruptcy a decade ago didn’t use the power of Chapter 11 to bring its labor costs in line with its foreign rivals.

A former general director of GM labor relations involved in the bankruptcy negotiations recently told me: “Nobody who was working in 2009 took a pay cut, a pension cut, or a health care cut.”

Doing so would have offended the Obama administration's union-friendliness. And it would have incited a war with the UAW that likely would have mired GM in bankruptcy for years — imperiling the economy of the electorally vital industrial Midwest and the years-long recovery of Michigan.

That never happened, making increased competition a relentless force continuing to strain UAW-GM relationship to its breaking point.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.

Daniel Howes is columnist and associate business editor of The Detroit News. A former European correspondent for The News, he has reported from nearly 25 countries on three continents and in the Middle East. Before heading to Europe in 1999, Howes was senior automotive writer and a business projects writer. He is a frequent contributor to NewsTalk 760-WJR in Detroit and a weekly contributor to Michigan Radio in Ann Arbor.
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