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HRM Case Study: General Motors & United Auto Workers

Instructor: Nick Chandler
In 2007, tens of thousands of GM workers went on strike at multiple factories around the US. Learn the background to this dispute, the outcome, and its impact on workers and the company.

Tense Relationships: UAW and GM

If you weren't getting paid enough for your job, you might feel like you couldn't do anything about it. But what if all your coworkers in your job, and across the country in the same job all walked out at the same time?

This is just what happened to many General Motors' workers who belonged to a union.

The United Automobile Workers (UAW) is an American Labor Union that was set up in the 1930s and represents auto workers in the US and Canada. Nowadays, the members are not only in the auto industry but also in a range of areas from casino gambling to healthcare to higher education.

General Motors (GM) has been one of the auto giants in the US for many decades. However, it is also known for its problems with workers. For example, in the 1970s the workers protested about the heavy workload at a plant in Ohio - they even went on strike. This happened again in 2007, when thousands of workers across the country went on strike. Let's take a look in more detail, starting with some background.

Background

Although the relationship between UAW and GM was likely to be a stormy one, in the 1940s they worked together well - at least until 1945, that is. UAW saw its workers suffer a wage freeze during the war, and so not long after the war ended in 1945 they wanted a 30% increase for their workers in the auto industry.

What is surprising is that UAW accepted a raise of 18.5% from Ford and Chrysler but they held out for 30% from GM - even to the point of going on strike for more than 2 months. Eventually, the union accepted the same deal of 18.5% from GM.

The ups and downs of GM's relationship with UAW continued up to the 2000s. GM needed to reduce labor costs to remain competitive in the industry. They dismissed staff, called layoffs and reduced benefits packages to workers.

The company was in real trouble during this time and had massive yearly losses, which finally led to 35,000 workers being offered early retirement packages in 2006. In 2007, GM realized it needed to make even more changes to cut costs and remain competitive.

2007 Negotiations And Strike

Workers were concerned about their jobs after seeing 35,000 workers leave in 2006. They wanted to know that their jobs were safe. They also were unhappy that GM was unwilling to pay health care costs for retired workers. GM and UAW needed to negotiate worker contracts following the massive layoffs.

However, the negotiations broke down, and the two sides couldn't agree. This is called an impasse. UAW staged a national strike. Luckily, the strike was over in a few days, but even then it meant that production had stopped for two days at 82 factories, involving 74,000 workers.

Ending The Strike

The strike ended when GM offered for workers to receive a 4-year contract to give them job security, i.e. to make workers feel that they weren't going to lose their jobs. GM also offered to set up a trust to pay for retiree health care. GM would pay into the fund for workers, workers would pay into the fund three times a year, and UAW would manage the fund.

To further increase job security, GM agreed to a moratorium on outsourcing work, for the four years as well as commit to using existing plants for work. The union held a vote, called a ballot, and 65% accepted the new contract. GM was actually handing out bonuses to workers that signed the new agreement, as well as some promise of cash payments later.

Another aspect of the agreement involved what was called the 'Jobs Bank', which paid laid-off workers whilst GM tried to find suitable positions for them. One aspect of the new agreement between GM and UAW is that there will be a limit of how long a worker can receive payments from the bank after being laid off.

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