GM strike, Day 2: Nearly 50,000 workers off the job in 19 states
Negotiators from General Motors and the United Auto Workers union are due back at the negotiating table Tuesday as Day 2 of the strike by nearly 50,000 workers gets underway.
The talks wrapped up around 9 p.m. on Monday, according to a person familiar with the talks. Typically, negotiators will work late into the night if they are close to an agreement.
GM said it is ready to engage in round-the-clock talks. Union officials repeatedly said Monday that despite some progress the two sides remain far apart on key issues of wages, profit sharing, health insurance, job security and GM's reliance on about 3,000 temporary hourly workers. The union wants those workers to have permanent and better paying jobs. The union also wants vehicles built in Mexico shifted to US plants now slated for closure.
The strike is costing GM about $50 million a day in lost revenue, according to an estimate from Credit Suisse. Those losses could be partly offset because the company won’t be paying the striking workers.
CNN Business has obtained a letter from Terry Dittes, vice president of UAW, telling union members that during the strike their health insurance will continue through the end of September— paid for by GM.
“To allay any concerns that our Members may have regarding an interruption in health care coverage, I am writing to confirm that the Company will continue health care benefits through the end of the month for all UAW-represented employees as provided for in the contracts,” Dittes wrote.
A source close to the UAW/GM negotiations tells CNN Business that discussions will continue through Monday night.
GM (GM) workers were picketing at 55 GM facilities in 19 states across the country, according to James Kaplan, a spokesperson for UAW.
The states are:
- North Carolina
- New York
The Teamsters union, which represents many of the truckers who haul GM's vehicles from ports and factories to dealerships, will not cross UAW picket lines to carry GM vehicles.
“Teamsters and the UAW have a decades-long relationship of having each other’s back," Teamsters president Jim Hoffa said in a statement posted to the Union's web site.
This means that, if there are picketers in front of a factory that has finished vehicles ready to be shipped to dealers, Teamster truckers will honor the picket line and refuse transport those vehicles. The same would be true at an international port of entry that had GM vehicles waiting to be transported by trucks.
While Teamsters members will not cross UAW picket lines to pick up vehicles, they will still pick up and transport vehicles from locations where there aren't any picket lines, as they are contractually obligated to, Teamsters spokesman Brett Caldwell said.
Members of the International Brotherhood of Teamsters handle a "significant portion" of the transportation of GM's products within the US, Caldwell said, but he couldn't say exactly how much.
A GM (GM) spokesperson has not yet responded to questions about how much disruption this might cause.
General Motors' credit rating could topple into junk bond status if the current United Auto Workers union strike last more than a week or two, according to a note from Moody's. GM's debt rating is just one step above junk bond status.
GM's ability to contend with a one-to-two week strike is "comfortably supported" by having 77 days of vehicles to sell, $17.5 billion of cash available, and the ability to borrow $16.5 billion under its current loan agreements, said a note from Moody's.
"Beyond the initial one-to-two weeks, the financial burden of a strike will become more material and the prospects of a contract that avoids erosion the company's current competitive position is less likely," said the note from analyst Bruce Clark.
Having its credit rating reduced to junk bond status would make borrowing money more difficult and more expensive. GM was downgraded into junk bond status in 2005, several years before it ended up in bankruptcy court and in need of a federal bailout. It took until 2013 for it to shake that rating, and have its debt classified as "investment grade."
GM did not have any immediate comment on the Moody's note.
Here's the latest from CNN Business' Vanessa Yurkevich, who is on the ground outside of a Detroit-area plant:
Watch more here:
Michael Burson, a striking GM employee, told CNN Business that he likes his job and its benefits. But he's hoping that the automaker listens to the employees' demands for profit sharing and raises.
"If you pay the people good money, this is what's going to grow the economy," Burson said. "It's not paying the rich guy and making the big companies richer. That's not going to grow the economy ... you got to pay the people."
Watch the full interview here:
Throughout the current contract negotiations with General Motors, the United Auto Workers union officials have repeatedly said that their membership saved the once troubled US automaker.
"We stood up for General Motors when they needed us most," said UAW Vice President Terry Dittes, who leads the union's talks with GM.
The union's sacrifices actually go back before the company's bankruptcy and bailout of 10 years ago, to 2007, the last time the union struck GM. At the time, GM, Ford and Chrysler were paying the equivalent of thousands of dollars per vehicle to provide healthcare to UAW retirees, putting them at a huge competitive disadvantage. After brief strikes at GM and Chrysler, the union agreed to have that health care coverage provided by trust funds rather than the automakers.
But it wasn't enough. When the 2008 financial crisis hit, sales plunged and the automakers started to hemorrhage cash. GM and Chrysler ended up in bankruptcy, kept alive by a federal government bailout.
The union agreed to reopen the contracts and grant new concessions, including paying new hires on a cheaper pay scale with fewer benefits.
In some ways the union had no choice: Bankruptcy court judges have the power to break union contracts. Failure to grant concessions also could have killed the three US automakers, costing the union far more jobs and leaving the US industry with only foreign-owned non-union automakers.
The UAW also did better than many unions in bankruptcy. For example, the pension plans stayed intact.
But it is indisputable that the union and its members did make concessions that helped save the US automakers.