FILE - In this July 16, 2019, file photo United Auto Workers President Gary Jones speaks during the opening of their contract talks with General Motors in Detroit. A strike against General Motors looms large with just over a day left until the United Auto Workers’ national contracts with the three Detroit automakers expire. The union’s national agreements with GM, Ford and Fiat Chrysler end at 11:59 p.m. Saturday, Sept. 14. (AP Photo/Paul Sancya, File)

Strike possible as UAW contracts about to expire

September 13, 2019 - 8:55 am

DETROIT (AP) — A strike against General Motors looms large as contracts with the United Auto Workers and Detroit's three automakers is about to expire.

The union's national agreements with GM, Ford and Fiat Chrysler end at 11:59 p.m. Saturday, and the union has picked GM as its target company. That means it's the focus of bargaining, and if there are any strikes, GM will be the first victim.

It's possible that the contracts will be extended or an agreement could be reached, but it's more likely that 49,200 UAW members could walk out of GM plants as early as Sunday because union and company demands are so far apart.

Art Wheaton, an auto industry expert at the Worker Institute at Cornell University, expects the GM contract to be extended for a time, but he says the gulf between both sides is wide.

"GM is looking through the windshield ahead, and it looks like nothing but land mines," he said of a possible recession, trade disputes and the expense of developing electric and autonomous vehicles. "I think there's really going to be a big problem down the road in matching the expectations of the union and the willingness of General Motors to be able to give the membership what it wants."

Plant-level union leaders from all over the country will be in Detroit on Sunday to talk about the next steps, and after that, the union likely will make an announcement.

But leaders are likely to face questions about an expanding federal corruption probe that snared a top official on Thursday. Vance Pearson, head of a regional office based near St. Louis, was charged with corruption in an alleged scheme to embezzle union money and spend cash on premium booze, golf clubs, cigars and swanky stays in California. It's the same region that UAW President Gary Jones led before taking the union's top office last year.

In a 40-page criminal complaint, the government alleged that over $600,000 in UAW money was used to pay debts by union officials at area businesses, including restaurants, a golf resort, cigar shop and rental properties, between 2014 and 2017.

The union said the government has misconstrued facts and said the allegations are not proof of wrongdoing. "Regardless, we will not let this distract us from the critical negotiations under way with GM to gain better wages and benefits," spokesman Brian Rothenberg said.

He wouldn't comment on what might happen next in the talks, and GM said only that its goal is to reach an agreement that builds a strong future for the company and its employees.

Here's where the company and union differ:

— GM is making big money, $8 billion last year alone, and workers want a bigger slice. The union wants annual pay raises to guard against a possible economic downturn, but the company wants to pay lump sums tied to earnings. Automakers don't want higher fixed costs in a possible downturn.

— The union also wants new products for four factories GM is trying to close, two in the Detroit area, one in Lordstown, Ohio, near Cleveland, and another outside Baltimore. The factory plans have irked some union members, even though most laid-off workers will get jobs at other GM factories. GM currently has too much U.S. factory capacity.

— All three companies want to close the labor cost gap with workers at plants run by foreign automakers. GM's gap is the largest at $13 per hour, followed by Ford at $11 and Fiat Chrysler at $5, according to figures from the Center for Automotive Research, an industry think tank. GM pays $63 per hour in wages and benefits compared with $50 at the foreign-owned factories.

— Union members have great health insurance plans but workers pay about 4% of the cost. Employees of large firms nationwide pay about 34%, according to the Kaiser Family Foundation. The companies would like to cut costs.

If there is a strike, it would be the union's first since a short one against GM in 2007.

The union may have to strike at least for a while to show workers that it got as much from the company as it could, Wheaton said. Some workers, he said, mistrust union leaders due to the corruption scandal.

Negotiators are usually tight-lipped about the talks, but a week ago, Vice President Terry Dittes wrote in a letter to local union leaders that GM has been slow to respond to union proposals. GM answered in a letter sent to factories by Vice President of U.S. Manufacturing Phil Kienle that said GM is moving as quickly as it can.

"We are working hard to understand and respond to UAW proposals and we have offered to meet as often as needed," he wrote.