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Barra’s Involvement Helps Yield New UAW Deal that GM Can Handle

CEO Mary Barra steps in and helps GM craft a new four-year deal with the UAW to end strike.

General Motors and the United Auto Workers finally reached a tentative new four-year agreement this week after GM CEO Mary Barra got personally involved in the talks. The deal is likely to end a strike by 46,000 GM workers that has stretched for more than a month, with UAW local leaders from across the country scheduled to get a briefing on the pact from top leadership on Thursday morning. Then the rank-and-file votes to approve or reject it.

Interestingly, while Barra apparently threw in some concessions at the end of the process, the deal reportedly is based heavily on GM’s last proposal in mid-September before the UAW called the walkout. The tentative new accord is said to include a mixture of salary increases and lump-sum payouts, enhanced GM guarantees for investment and job increases in U.S. manufacturing, and significant constriction of the company’s previous leeway to use temporary workers who are paid much less than regular workers.

So the extra largesse that GM had to ladle out at the end of the negotiating process would seem to have tied the company’s hands to more expensive promises than it wanted to make—meaning the union achieved some of its goals in bargaining. But that doesn’t necessarily mean Barra allowed her hands to be tied.

For one thing, the reported outline of the accord importantly allows GM to finish shuttering three major U.S. manufacturing operations that Barra targeted to help pare fixed costs and get the company out of manufacturing some sedans that were no longer necessary in an SUV- and truck-fixated era.

Also, Wall Street seems to believe that either GM can recover much of its profits putatively lost to the strikes—variously estimated at $1 billion to $2 billion—or that the dent to its bottom line hasn’t been too severe. GM shares were trading at around $36.50 today, not that badly removed from their price of $38 a share when the strike began. This also likely reflects a sentiment among investors that Barra didn’t give up too much labor or cost flexibility to GM’s future needs and major required investments in electric and autonomous vehicles.

And certainly American consumers haven’t been taking it out on GM. The company fared best of the Detroit Three and most other competitors during the third quarter in terms of U.S. sales results compared with a year earlier. And at about an 80-day supply, GM began the strike with a significantly larger overall inventory than average, including apparently ample supplies of its hot-selling and most-profitable pickup trucks and large SUVs.

Meanwhile, the strike did little to capture the attention or harness any outrage among the American population in general. No folk singers emerged as heroes on the GM picket lines. Nor did the walkout produce much more than a temporary dink in overall U.S. industrial production. GM just isn’t as big an engine of the entire American economy as it used to be, rendering a strike by its hourly workers less important as well than in 1970, the last time the company suffered a long UAW walkout.

However, even if UAW President Gary Jones is able to get GM’s rank-and-file workers to approve the tentative accord, which seems likely, he and top lieutenants still face a widening federal probe into corrupt spending practices. This clearly has been an albatross around the neck of the UAW brain trust during the GM negotiations and strike, and it will continue to be as the union takes the GM-contract template now and tries to strike similar deals with Ford and Fiat Chrysler Automotive.


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