In a statement loaded with qualifiers, United Autoworkers (UAW) Vice President Terry Dittes announced “the achievement of a Proposed Tentative Agreement” with General Motors Co. (NYSE: GM). Union negotiators voted to recommend to the UAW’s GM nation council that it accept the “proposed tentative” deal because it “represents major gains for UAW workers.”
Both the union and the company declined to comment on the details of the proposed tentative deal, but Bloomberg reports that sources claimed that the agreement includes a “key compromise that opens a path to full-time work for temporary staffers after three consecutive years of employment.”
The strike began on September 16 when some 46,000 GM workers struck 55 company locations in the United States. According to the Center for Automotive Research, GM is losing about $450 million a week as a result of the strike, while lost wages for more than 575,000 workers at suppliers and other firms amount to around $857 million a week. Personal income tax payments to state and federal treasuries are down by about $114 million, and FICA payments (Medicare, Medicaid, unemployment insurance, workers’ compensation insurance) are off by about $108 million.
When the strike began, the UAW was seeking higher wages, added health care benefits, profit sharing and added job security for new and temporary workers. GM wanted union members to pay a greater share of their health care costs (around 15% instead of the current 3%) and to increase productivity and flexibility in auto plants by hiring more temporary workers at a much lower hourly pay rate and with no benefits or paid vacation.
The company reportedly caved quickly on health care benefits. On the other issues, there was more argument and we’ll have to wait for details at least until Thursday when the UAW’s GM national council meets in Detroit to vote on whether to recommend that the union’s full membership vote on the proposed tentative agreement.
Even if the union council votes to approve the agreement the strike may not end until after a full ratification vote is held. That could add several weeks to the U.S. shutdowns and cost the U.S. economy an additional $1.5 billion a week in lost sales for GM, lost wages for American workers and lost tax payments for government treasuries.
GM stock traded up more than 2.5% following the announcement but has since dropped back to about a gain of around 1.6% to trade at $36.83. The stock’s 52-week range is $30.56 to $41.90, and the consensus 12-month price target is $47.44.