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2007 General Motors strike
The 2007 General Motors Strike was a labor union strike that lasted three days from September 23 to September 25, 2007, organized by the United Auto Workers (UAW) union. The UAW were engaged in talks with General Motors (GM) to negotiate a new labor contract but were unable to come to an agreement before the deadline. Consequently, 73,000 workers walked out forcing 80 GM facilities in 30 states to cease operations. After the two day strike, the two parties reached an agreement in which the UAW union would assume the responsibility for managing retiree healthcare liabilities. The UAW previously went on strike against General Motors in 1970.
The automobile industry landscape in 2007 was drastically different to what it once was. GM's market share had been steadily decreasing as foreign automakers entered the market. Foreign players secured over 50% of market share for the first time in history in July 2007. GM's foreign competitors Nissan, Honda, and Toyota increased their production within the United States. Part of GM's struggles has been its relatively high costs of production. While many of the foreign manufacturers pay less in wages as most of their plants are not a part of a union, GM's labor contracts increase its costs per car by an estimated $2000 impacting its competitiveness. These costs can be attributed to worker pensions and healthcare programs the unions have negotiated.
The number of UAW members at GM has also steadily decreased as the company downsized. At the time of the 2007 strike, the 73,000 workers at GM are far lower than the 400,000 workers GM employed when the UAW last went on strike in 1970. The UAW's lower overall membership was also caused by the increasing prevalence of non-unionized plants and factories belonging to foreign automakers. It once had over 1.5 million workers but by 2007, that number had shrunk to just several hundred thousand.
General Motors' previous labor contract with the UAW union went up until September 14, 2007. Both parties agreed to an extension of 10 days until September 24 as the UAW felt that negotiations were still progressing. However, following the end of this 10 day period, as negotiations came to a stalemate the UAW believed a strike was necessary as GM refused to acquiesce to the UAW's demands in regards to job security and worker benefits.
General Motors' losing market share within the United States automobile market has forced the company to downsize the company. In the two years leading up to 2007, GM had incurred $12.3 billion in losses. In response, GM has since closed down numerous factories and laid off thousands of workers. At the time of the strike, GM was also planning on cutting an additional 30,000 jobs in the coming year. The UAW wanted to ensure job security for the remaining GM workers and demanded for guarantees stipulating that those workers employed under the contract would stay employed until the contract expired.
Another issue of contention between GM and UAW was the company's liabilities to retirees in regards to their healthcare benefits. These liabilities amounted to $51 billion. Both parties were in talks to discuss transferring these liabilities to a trust, which was GM's primary demand. The establishment of a voluntary employee benefit association (VEBA) has been an idea that was widely embraced by GM's investors and managers. Doing so what entail a large initial payment from GM but would allow it to remove workers healthcare benefits as a liability on its balance sheet. It was believed that removing these costs from the equation would allow GM to increase its competitiveness in the industry.
Immediately after the deadline had passed, the UAW union moved to a national strike that involved 73,000 workers walking out of an estimated 80 GM facilities. After the union announced the strike, negotiations continued that same afternoon lasting over five hours. In the UAW's press conference, its president Ron Gettelfinger expressed his disappointment in GM's management and their refusal to meet the union halfway. He believed that the UAW had no choice but to strike stating that: “There comes a point in time where you have to draw a line in the sand”. Many saw this as the UAW refusing to roll over to management's demands from GM. Gettelfinger also expressed that the UAW was willing to consider GM's request to form a trust to take on healthcare liabilities, and that job security remained the union's number one concern.
The effect of the strike was an operational halt that would otherwise produce 12,200 cars a day. Concerns were raised regarding the effect of the strike on GM if an agreement wasn't reached. The strike had the potential to influence GM supply chains and overseas plants that manufacture parts. Nearby operations in Mexico and Canada would also suffer as a result. The strike became a focus within the automobile industry as how it played it out would likely affect negotiations the UAW would later have with Ford and Chrysler given the vulnerable state of the United States’ auto companies.
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2007 General Motors strike
The 2007 General Motors Strike was a labor union strike that lasted three days from September 23 to September 25, 2007, organized by the United Auto Workers (UAW) union. The UAW were engaged in talks with General Motors (GM) to negotiate a new labor contract but were unable to come to an agreement before the deadline. Consequently, 73,000 workers walked out forcing 80 GM facilities in 30 states to cease operations. After the two day strike, the two parties reached an agreement in which the UAW union would assume the responsibility for managing retiree healthcare liabilities. The UAW previously went on strike against General Motors in 1970.
The automobile industry landscape in 2007 was drastically different to what it once was. GM's market share had been steadily decreasing as foreign automakers entered the market. Foreign players secured over 50% of market share for the first time in history in July 2007. GM's foreign competitors Nissan, Honda, and Toyota increased their production within the United States. Part of GM's struggles has been its relatively high costs of production. While many of the foreign manufacturers pay less in wages as most of their plants are not a part of a union, GM's labor contracts increase its costs per car by an estimated $2000 impacting its competitiveness. These costs can be attributed to worker pensions and healthcare programs the unions have negotiated.
The number of UAW members at GM has also steadily decreased as the company downsized. At the time of the 2007 strike, the 73,000 workers at GM are far lower than the 400,000 workers GM employed when the UAW last went on strike in 1970. The UAW's lower overall membership was also caused by the increasing prevalence of non-unionized plants and factories belonging to foreign automakers. It once had over 1.5 million workers but by 2007, that number had shrunk to just several hundred thousand.
General Motors' previous labor contract with the UAW union went up until September 14, 2007. Both parties agreed to an extension of 10 days until September 24 as the UAW felt that negotiations were still progressing. However, following the end of this 10 day period, as negotiations came to a stalemate the UAW believed a strike was necessary as GM refused to acquiesce to the UAW's demands in regards to job security and worker benefits.
General Motors' losing market share within the United States automobile market has forced the company to downsize the company. In the two years leading up to 2007, GM had incurred $12.3 billion in losses. In response, GM has since closed down numerous factories and laid off thousands of workers. At the time of the strike, GM was also planning on cutting an additional 30,000 jobs in the coming year. The UAW wanted to ensure job security for the remaining GM workers and demanded for guarantees stipulating that those workers employed under the contract would stay employed until the contract expired.
Another issue of contention between GM and UAW was the company's liabilities to retirees in regards to their healthcare benefits. These liabilities amounted to $51 billion. Both parties were in talks to discuss transferring these liabilities to a trust, which was GM's primary demand. The establishment of a voluntary employee benefit association (VEBA) has been an idea that was widely embraced by GM's investors and managers. Doing so what entail a large initial payment from GM but would allow it to remove workers healthcare benefits as a liability on its balance sheet. It was believed that removing these costs from the equation would allow GM to increase its competitiveness in the industry.
Immediately after the deadline had passed, the UAW union moved to a national strike that involved 73,000 workers walking out of an estimated 80 GM facilities. After the union announced the strike, negotiations continued that same afternoon lasting over five hours. In the UAW's press conference, its president Ron Gettelfinger expressed his disappointment in GM's management and their refusal to meet the union halfway. He believed that the UAW had no choice but to strike stating that: “There comes a point in time where you have to draw a line in the sand”. Many saw this as the UAW refusing to roll over to management's demands from GM. Gettelfinger also expressed that the UAW was willing to consider GM's request to form a trust to take on healthcare liabilities, and that job security remained the union's number one concern.
The effect of the strike was an operational halt that would otherwise produce 12,200 cars a day. Concerns were raised regarding the effect of the strike on GM if an agreement wasn't reached. The strike had the potential to influence GM supply chains and overseas plants that manufacture parts. Nearby operations in Mexico and Canada would also suffer as a result. The strike became a focus within the automobile industry as how it played it out would likely affect negotiations the UAW would later have with Ford and Chrysler given the vulnerable state of the United States’ auto companies.