General Motors (GM) is currently dealing with labor unrest on two fronts, which comes as a surprise considering the usual success of pattern bargaining in the industry.
In addition to the ongoing strike by the United Auto Workers in the U.S., Canadian auto workers have also gone on strike against GM. This puts further pressure on the car maker.
The strike involves approximately 4,280 auto workers across three GM sites in Canada, according to the Unifor union. 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 stated in an email, “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 supports for retired workers, and meaningful steps to transition temporary workers into permanent, full-time jobs.”
Pattern bargaining has been the typical approach of unions when negotiating with Detroit’s three major auto makers: GM, Ford Motor (F), and Chrysler parent Stellantis (STLA). Once an agreement is reached with one automaker, it serves as a template for negotiations with the other two.
Unifor workers at Ford recently ratified a new agreement in late September, albeit with relatively thin margins, as only 54% of workers voted in favor. The agreement includes base wage increases of approximately 15% to 20% over the contract’s three-year duration, as well as significant improvements to retirement programs.
In response to the ongoing strike, GM Canada expressed disappointment at not being able to reach a new collective agreement with Unifor at this time. However, they remain committed to continuing negotiations and reaching a fair and flexible agreement with Unifor.
Workers’ Strike at GM Facilities in Southern Ontario
The ongoing strike at three facilities in Southern Ontario, namely the Oshawa Assembly Complex, St. Catharines Powertrain Plant, and Woodstock Parts Distribution Centre, continues to impact General Motors (GM). The Chevy Silverado, a crucial vehicle for the company, is manufactured at the Oshawa plant. It is worth noting that GM also produces Silverados in the United States and Mexico.
In contrast, the UAW (United Auto Workers) in the United States has adopted a different strategy. They are simultaneously negotiating and striking with the Detroit Three automakers, aiming to establish a collective agreement that can be used as a template for negotiations with the other two automakers. Therefore, once an agreement is reached with one of the Detroit Three, it will pave the way for resolving the labor dispute at the remaining two companies.
For GM, Ford, and Stellantis, this strike represents the fourth week of ongoing unrest. Approximately 25,000 workers are currently on strike out of the 145,000 UAW workers employed by the Detroit Three. Moreover, an additional 4,500 workers have been temporarily laid off due to disruptions in the manufacturing system as a result of this strike.
The UAW President, Shawn Fain, initiated the union’s strike by calling for a walkout at one plant per auto worker on September 15. The strike was then expanded on September 22 and September 29. However, on October 6, there was no further expansion of the strike. Fain commended GM for demonstrating resilience during negotiations by agreeing to treat workers in EV battery plants in the same manner as other manufacturing workers. This was a significant concession on GM’s part, given their preference for unionized battery workers to negotiate separate contracts.
Despite news of the strike, GM stock saw a 0.5% increase in premarket trading on Tuesday. It is important to note that strike news does not always have an immediate impact on stock prices, but it does have an influence nonetheless.
Over the past three months leading up to Tuesday’s trading, both GM and Ford shares experienced a decline of approximately 21%, while the S&P 500 saw a slight decrease of about 1%. In contrast, Stellantis shares observed a positive trend, with an increase of around 9%.
Stellantis, being the most globally-oriented among the Detroit Three, is comparatively less affected by the U.S. strike. Additionally, it is also a more affordable stock, currently trading at less than four times the estimated 2024 earnings. In comparison, GM trades at less than five times, and Ford stock trades at less than seven times the same earnings estimate.