General Motors Faces Labor Unrest on Multiple Fronts

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General Motors (ticker: GM), one of the leading car makers, is currently grappling with labor disputes in both Canada and the United States. This situation comes as a surprise considering that pattern bargaining has historically been effective in the industry.

Canadian Auto Workers Strike Against GM

Striking auto workers in Canada are adding further pressure to GM. The Unifor union reports that approximately 4,280 employees from three GM sites in Canada are participating in the strike. The workers officially walked out at midnight on Tuesday after failing to reach a temporary agreement before the Monday deadline.

Unifor National President Lana Payne states, “This strike is about General Motors stubbornly refusing to meet the pattern agreement. The company knows our members will never let GM break our pattern—not today—not ever. The company continues to fall short on our pension demands, income support for retired workers, and meaningful steps to transition temporary workers into permanent, full-time positions.”

Pattern Bargaining and Unifor Workers at Ford

Pattern bargaining has traditionally been the approach employed by unions in negotiations with major auto manufacturers such as GM, Ford Motor (F), and Stellantis (STLA), the parent company of Chrysler. Once an agreement is reached with one automaker, it serves as a template for reaching agreements with the other two.

In late September, Unifor workers at Ford ratified a new agreement, albeit with a narrow margin of 54% yes votes. The three-year contract includes base wage increases ranging from 15% to 20% over its duration. Furthermore, it introduces significant enhancements to retirement programs, including improved pension benefits and increased contributions.

GM Canada’s Response

Although progress has been made in recent weeks on several important priorities, GM Canada expressed disappointment over the inability to secure a new collective agreement with Unifor at this time. In a statement, the company affirmed its commitment to continued negotiations and working collaboratively with Unifor towards a fair and flexible agreement.

General Motors will need to find a resolution to these labor disputes to ensure the smooth functioning of its operations and maintain positive relationships with its workforce.

Workers on Strike at GM Facilities in Southern Ontario

The ongoing labor dispute between workers and General Motors (GM) continues as employees at three facilities in Southern Ontario, including the Oshawa Assembly Complex, St. Catharines Powertrain Plant, and Woodstock Parts Distribution Centre, remain on strike. Notably, the Oshawa plant is responsible for manufacturing the popular Chevy Silverado, a key vehicle for the company. It is worth mentioning that GM also builds Silverados in the United States and Mexico.

Meanwhile, in the United States, the United Auto Workers (UAW) union has taken a different approach. Instead of targeting a single automaker, they are simultaneously bargaining with and striking at all three major automobile manufacturers in Detroit, known as the “Detroit Three.” The UAW intends to establish a mutually beneficial agreement with one of the companies, which will then serve as a template for negotiations with the other two.

At present, the UAW strike has entered its fourth week, affecting GM, Ford, and Stellantis. As a result, approximately 25,000 workers are currently on strike out of the total 145,000 UAW workers employed by the Detroit Three. Additionally, approximately 4,500 additional workers have been laid off due to disruptions in the manufacturing system caused by the strike.

The UAW initiated the strike on September 15 by walking out at one plant per auto worker. Subsequently, the strike was expanded on September 22 and September 29. However, there was no further expansion on October 6. UAW President Shawn Fain acknowledged GM’s cooperation in this decision, as the company agreed to treat workers in electric vehicle (EV) battery plants similarly to its other manufacturing employees. This concession was significant, as GM likely preferred a separate contract negotiation process for unionized battery workers, similar to other auto suppliers that have union representation.

Although news of the strike does not always have an immediate impact on stock prices, it does exert influence over time. Pre-market trading on Tuesday saw GM stock rise by 0.5%. Over the past three months, both GM and Ford shares have experienced a decline of approximately 21%, while the S&P 500 has dropped by around 1%. Conversely, Stellantis shares have witnessed a 9% increase.

It is worth noting that Stellantis, being the most globally diversified of the Detroit Three, is relatively less affected by the strike in the United States. Furthermore, Stellantis stock stands out as a more affordable option, trading for less than four times the estimated earnings for the year 2024. In comparison, GM trades for less than five times and Ford stock for less than seven times the estimated earnings for the same period.

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