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Strike lessons

General Motors has not had a banner year. Sales aside, the biggest issue the American manufacturer faced by far in 2019 was a labor strike that some estimate has cost GM upwards of $2 billion. Initiated on September 16th, approximately 50,000 hourly workers stopped working, making the strike the largest GM strike in 12 years. It was also the longest strike in 50 years (within the auto industry) and a massive hit as earlier stated to GM’s bottom line. On October 16th a new labor contract was reached with wages rising 6% during the four-year life of a contract. This equates to $32.32 per hour.

Make no mistake

Make no mistake, other manufacturers were watching this scenario unfold, observing the fall-out and no doubt calculating how best to stop the same occurring with their workforce. Ford is one such manufacturer, and it should come as no surprise that just days ago they announced a tentative agreement for a new labor deal between the company and the United Auto Workers union. Ford hopes this will help to stem any strike decisions by the union and keep this other U.S. giant from incurring similar losses that GM suffered.

The United Autoworkers Union is a powerhouse and used their strike with GM to push Ford Chairman Bill Ford’s hand. Ford smartly accepted the invitation to negotiate and the two sides arrived at a new four-year agreement that is expected to be like the deal reached with GM. Most unions, regardless of the sector, will pick the issues that previous deals agreed upon to structure new deals. If there is a precedent with another labor contract in the same industry, then that is a strategic point to negotiate with moving forward. This strategy has worked well with the Autoworkers Union, allowing them to secure economic gains around salaries and benefits all the while retaining nearly 10,000 jobs.

Deal is still awaiting

The deal is still awaiting final approval, and ratification is not a sure thing. In fact, in 2015 Chrysler union members ended up rejecting a similar deal at this same stage. Ford however has historically had an easier time negotiating with the union than other Detroit manufacturers. Bill Ford likes to refer to the union as “family,” and negotiations as discussions between family members. While calculated for sure, this no doubt helps when one sits down at the table. If you feel like you are talking and negotiating with a brother or sister, that’s a whole lot different than an enemy or rival.

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