|
GM sues UAW over strike
|
 |
July 14, 1998: 6:54 p.m. ET
Automaker says walkout violates terms of national pact with union
|
NEW YORK (CNNfn) - General Motors Corp. upped the ante against striking auto workers Tuesday by asking a federal judge to declare the strike illegal.
The move, the latest salvo in an escalating battle of wills between the world's largest automaker and one of the nation's most powerful labor unions, could prove risky for GM.
But GM officials defended the tactic on the grounds that the 40-day walkout is quickly draining its coffers of vital cash to compete around the world.
"Our future viability is on the line," Donald Hackworth, GM's group vice president for North American car operations, said in a recorded strike update Monday, before the lawsuit was filed.
"We continue to lag behind our competitors…As they continue to get better, our volumes continue to shrink," Hackworth said.
UAW calls suit a publicity stunt
The United Auto Workers was quick with a retort Tuesday, insisting in a statement its 9,200 striking workers are "within their rights" in walking out of the two parts plants, and accusing GM of filing the lawsuit "more for its Wall Street PR value than for anything else."
"Unfortunately," the statement continued, "today's court filing does nothing to move us any closer toward resolving the outstanding issues that are still before us." It accused GM of complying with its own contractual agreements "only when it suits its purposes to do so."
More than anything, GM's complaint, filed Tuesday in U.S. District Court in Flint, underscores the fraying of GM's relationship with a union movement that it blames - rightly or not - for the company's image as a straggler and has-been in the competitive arena.
From GM's standpoint, fracturing that relationship is a better alternative than betraying the automaker's commitment to investors who fear the consequences of future labor unrest on GM's stock price.
Explaining the reasons for the steeliness of GM negotiators, Hackworth added: "It would make no sense whatsoever to settle in Flint and then turn around and face a strike at another plant."
Tuesday's 20-page complaint alleges the strikes at the Flint Metal Center and the Delphi East complex violate the no-strike clause of its 1996 national agreement with the UAW.
That clause permits workers to strike over limited issues such as production standards and certain subcontracting issues. But it bars walkouts over health and safety issues, except in situation where "abnormally dangerous working conditions" may pose a perceived risk.
According to the lawsuit, GM and UAW leaders at Flint Metal agreed in January 1995 to steps that would improve operations.
But after the union refused to implement work rules changes, GM said on Feb. 6 of this year it would not follow through with new investments and would shift work elsewhere.
Throughout the rest of that month, GM said in the lawsuit, the union filed ``a barrage of unrelated 'strikeable' grievances.'' For example, the number of pending production standard grievances shot up to 188 from six.
The UAW represents the 9,200 striking workers at talks in Flint. Those talks have followed a desultory course over the past couple of weeks, with negotiators from both sides issuing salvos of conflicting messages about what, if any, real progress has been made.
It is the walkout by 3,400 workers at the metal-stamping plant June 5 that instigated a similar strike by 5,800 of their peers at the neighboring Delphi diversified parts facility six days later.
In the 40 days since, the strike has snowballed into a labor calamity on a national scale.
The nation's largest automaker has been forced to idle more than 165,000 workers at 26 of 29 assembly plants across its North American operations.
The closures have cost GM $1.2 billion to date, resulting in an 81 percent plunge in second-quarter profits from a year ago, when GM posted net earnings of $2.1 billion.
The suit filed Tuesday asks for injunctive relief and unspecified damages from the UAW. The strike has forced GM to cut back on spending and rethink a number of product programs. GM also has threatened to cut off health benefits for the striking workers.
Issues are not strikeable, GM says
GM contends the union is striking over the issues of capital investment and product allocation as well as product sourcing. Those issues, the automaker said, are not strikeable under the national agreement.
GM said it also reserved the right to ask the court to force an end to the strike.
Meanwhile, talks at the two parts plants ended Tuesday with no progress reported, but negotiators are expected to resume work again Wednesday morning.
After losing more than $2.8 billion from strikes over the past three years, GM says it is determined this time to reach a deal with the workers that includes at least some guarantees of future labor peace.
Workers have voted to authorize strikes at three other GM plants -- a stamping plant in Indianapolis, a brake facility in Dayton, Ohio, and an engine and powertrain components operation in Flint.
Can't afford to cave in
While GM has been willing in the past to broker compromises with the striking workers, the automaker says it no longer can afford to do so.
Both sides have proven they have the resilience, and the financial reserves, to hold out for weeks, or even months more if necessary. The UAW has a cash fund of $725 million that it can tap to pay $150-a-week strike benefits and health insurance for the striking workers. The non-striking members receive $200 to $300 a week in unemployment insurance, depending on the states in which they live. However, GM is challenging that.
GM, despite its quarterly earnings hit, remains a cash cow, with nearly $14 billion on tap at the end of the first quarter.
Nonetheless, with each passing day that the strike is not settled, GM stands to lose $75 million. Wall Street so far has stood behind management, fearing that GM stock will be hit harder by a cave-in than by standing firm and wresting concessions from the local unions that could be parlayed to the national level.
Michael Ward, an auto analyst with Paine Webber in New York, estimated that GM would likely burn through $5 billion of its cash reserves in July and as much, or more, in August, if the strike endures. After that, the company may begin to feel the pinch, he said.
"If you go through the math on that, they'll be running out of liquid cash very quickly, and in fact we'll probably have some cash pressures in the next couple of weeks," Ward said.
Shares of GM ended up ¾ at 69-5/8 in composite trading on the New York Stock Exchange Tuesday.
|
|
|
|
|
 |
|
