Barra Steps into Higher-Profile Role as GM Strike Reaches 1-Month Mark

As it hits the one-month mark this weekend, the United Auto Workers’ strike against General Motors has become a highly material event that has rightly riveted the attention of both GM CEO Mary Barra and UAW President Gary Jones. The stakes for each have increased markedly in a walkout that is the union’s longest against America’s largest automaker since 1970.

Barra now effectively has owned the strike and its consequences in new ways, whether she wanted to or not. She asked this week to meet personally with Jones and his top aide for GM relations because she wasn’t satisfied with how hard the two sides were working on remaining issues. Barra now has seen the likely toll on GM’s profits top the $1-billion mark. And the company’s inability to get the union to settle so far is threatening the good reputation that Barra has established for strategy and governance with investors and other key constituencies.

One of the hallmarks of Barra’s five-year tenure has been her willingness to press the envelope in the present to stay ahead of the future. That’s why, for example, she decided late last year to close a handful of U.S. manufacturing plants and deep-six some slow-selling GM sedan models, despite what she knew would be strong objections to the move from the UAW – and President Trump.

Applying this sort of thinking to the walkout that began September 16, Barra apparently has calculated that taking a strike now – and sustaining a significant short-term hit to GM’s profits during a time of relative prosperity — would be worth keeping a tighter rein on the company’s long-term costs and ensuring greater flexibility for deploying workers as demand for labor eases in the industry’s transition to electric vehicles. The rule of thumb is that building an all-electric vehicle requires about 30 percent less labor than does building a gas-engine vehicle.

Some may argue that the walkout finally got away from her and that GM didn’t take seriously enough the union’s demands for higher wages, more profit-sharing, more investment in U.S. facilities over those in Mexico and elsewhere, health-benefit guarantees, and faster equalization of wages between unionists and temporary workers. This week, the company reportedly had to up its proposal for new investment in U.S. plants, for example. Few in or outside the industry had anticipated a month-long strike at GM at a time of general prosperity in the industry and no obvious lightning-rod issues.

But maybe things didn’t get away from Barra at all. No doubt the stakes have gotten higher for both sides, so pressure is growing on Barra. Yet GM’s sales remain strong, with its third-quarter U.S. sales increase of 6.3 percent – besting trends at main rivals Ford and Fiat Chrysler by far – indicating that the walkout hasn’t hurt showroom traffic. Meanwhile, dealership inventory for GM products remains at an estimated 81 days’ supply, far in excess of the industry-standard ideal level of about 60 days.

Plus, if the strike ended tomorrow, GM could make up a significant portion of the output it has lost over the last month. That might require a lot of overtime on the part of UAW workers who would have just accepted a new labor agreement. But after spending a few weeks pocketing only $250 in union strike benefits instead of their regular GM paychecks, and operating under terms of a new and more lucrative agreement, presumably many GM workers would welcome the quick injection of higher income.

An interesting sidelight: Since his initial offer to help settle the dispute, Trump hasn’t publicly tried to use the bully pulpit of the presidency to influence the course of the strike. Sure, the president is preoccupied these days with impeachment and Syria, but what’s happening at General Motors goes to the heart of the policy and politics of the Trump administration: American manufacturing jobs, and union rank-and-file that are filled with men and women who helped candidate Trump get over the top in key states such as Michigan and Ohio. It had to have been tempting for Trump to weigh in, but it’s highly likely that Barra somehow signaled to the president to butt out.

In any event, Jones remains part of the picture as well. The strike began inconveniently within days of the announcement of an expansion of a federal probe into possible corruption within the UAW – a union whose leadership, over the decades, has prided itself on keeping pretty clean. Reports surfaced that Jones and other top lieutenants were key targets in the investigation, a development that presumably is what prompted Jones to stay out of the media spotlight as the strike began.

The probe also likely played a role in fermenting the strike because, ultimately, rank-and-file workers must ratify any new labor agreement between GM and the union. A suspect UAW leadership would be more likely to be able to “sell” a tentative new GM pact to the rank-and-file after a strike demonstrating to union members that their negotiators obtained the best possible deal.