The Effects General Motors Strikes of 2019 Had on the Company's Business

Introduction

The employees of General Motors walked off the job on September 16, 2019, demanding better pay, increased healthcare benefits, and improved job security. General Motors’ improper treatment of employees has led to a strike that is negatively affecting General Motors’ employees, outside suppliers, and even the company itself. Workers who are a part of the United Automobile Workers Union stand in solidarity on the picket line for better treatment and wages. The strike, now twenty-two days long, has caused mass layoffs, considerable profit losses, and the closing of multiple plants outside of the United States (Korosec). Although the repercussions of the strike are significant to General Motors and those who do business with them and to the employees, the Union and the Detroit-based manufacturer are at a stalemate over healthcare, wages, job security, and temporary employees (Colias & Naughton).

Unfair Treatment of Employees

General Motors’ unfair treatment of employees is displayed in multiple ways, including unreasonable increases in healthcare costs, limited wage opportunities, extensive use of temporary employees and lack of job security. As the last contract made between the United Auto Workers and General Motors ended on September 4, 2019, General Motors presented a new contract that very day (UAW Strike Against GM...). The new offer dramatically raised healthcare costs, increased the use of temporary workers, and presented a far smaller pay increase and lump sum package compared to the past contract (UAW Strike Against GM...). As employees of General Motors took to the picket line on Monday, September 16, they demanded a fair offer (Yaffe-Bellany). The new proposal from General Motors calls for employees to pay for fifteen percent of their health care costs, up significantly from the past three percent (UAW Strike Against GM...). The consequential increase in payment is unethical, as that is twelve percent of the employee’s wages taken with no notice and some people still cannot afford their current three percent payment.

One of the more major aspects of the proposed contract from General Motors was its lack of any real job security for a majority of their American workforce (Boudette). As General Motors follows suit with other companies such as Ford and Nissan, production is being halted on SUVs, more economically friendly cars are being produced with fewer parts, and more production is being outsourced to other countries, decreasing the need for fewer employees or any of the currently employed workforce (Johnson; Williams). The switch has shut down many American plants and resolved others to massive layoffs as production is moved elsewhere. General Motors’ use of temporary employees is unethical as they are only used because they can be paid less in wages and healthcare, and often never have the opportunity to become full-time employees. This may be a positive thing for General Motors, but temporary workers get paid an average of fifteen dollars an hour with marginal benefits, compared to a permanent worker who can earn up to twenty eight dollars an hour with excellent benefits (Yaffe-Bellany; UAW Strike Against GM...). General Motors’ rationale for hiring temporary workers is unjust as most do just as much work as full-time employees.

Another major demand of the United Automobile Workers Union is a larger wage boost for its employees (Yaffe-Bellany). The original offer from General Motors proposed a four-year plan with a two percent raise over the first two years and a two percent lump sum payment for the latter two years (UAW Strike Against GM...). Comparatively, the contract that expired on the 14th gave permanent employees a four year plan but offered a three percent raise in the first two years and a four percent lump sum in the latter (UAW Strike Against GM...). If General Motors spent more of their profits, which were at nearly thirty-six billion dollars last year, on their workforce, not only would peoples’ lives be improved, but strikes like that of the current one that is costing the company up to eighty-two million dollars a day, could be avoided (Ferris; GM Strike Has Cost the Company).

Effects of Strike on General Motors, Shareholders, and Outside Suppliers

The current suspension of production in the United States facilities is causing massive profit losses, the closure of multiple General Motors facilities outside of the United States, and significant layoffs in supplying workforces. Since the walkout of nearly fifty thousand workers across the rustbelt, General Motors’ stock has fallen nearly ten percent and has lost more than a billion dollars in value (Rosenberg; Wayland). Not only has the strike cost General Motors a significant amount of money, but Ford and Fiat-Chrysler stocks have also fallen by eight percent and ten percent respectively (Wayland). Shareholders and investors are getting impatient as the strike nears its twenty third day, with no end in sight. The strike is not only affecting General Motors’ employees - those who work at outside suppliers, facilities that rely on GM-made parts, and other GM factories, are facing layoffs and cut-backs (Wayland). As the strike enters its fourth week, General Motors has idled or reduced work at five plants in Ontario and Mexico, nearly ten thousand non-UAW employees have been affected, and suppliers are laying off up to half of their workforce (Smith; Noble, Breana, et al.; Jackson, Emily, et al.). The work stoppages are rendering people jobless with little to no income very abruptly, as well as with no end in sight. Not including the layoffs, suppliers are already feeling the repercussions of the strike as the movement and production of raw components and auto parts are halted. General Motors’ past mistreatment of employees has significantly hurt its stock, profits, and those who they supply and receive from, all of which could have been avoided if General Motors was just with their decisions and employees.

Effects of Strike on Employees of General Motors

The effects of the strike of General Motors’ employees has not only had a negative impact on General Motors itself, but has had a consequential impact on the strikers as they earn significantly less in wages from the United Automobile Workers Union and subsequently, many are struggling to support their families. As day twenty-three of the strike approaches, those on the picket line are only earning two hundred and fifty dollars a week, and that is if they protest full time (Wayland; Kaufman). In comparison, a temporary employee can make up to six hundred and forty dollars a week, and a full-time employee can earn up to twelve hundred. The sudden drop in wages has made it difficult for many families to pay mortgages, buy food, and support their children and families at all (Gibson). Strike pay boils down to six dollars and twenty-five cents an hour, which is below the federal minimum wage, and over the course of a year is only thirteen hundred dollars, which is just above the federal poverty line (Fordham). With no end in sight, some families have had to resort to food banks and loans (Noble, Breana, et al.). The rust belt-wide walkout of General Motors facilities was not in bad faith as it was for better treatment and benefits, but it has created a financial and emotional burden on its employees and their families.

Conclusion

General Motors’ unreasonable employment negotiations are becoming antiquated as a strike of nearly fifty thousand of its workers continues to deplete its stock and profits, and damage its employees financially. Despite this, employees of the United Automobile Workers Union stand in solidarity on the picket line in an effort to mitigate the negative effects of the company’s position and to demand better wages, healthcare, and job security. Although the strike has negatively impacted the employees, the Union efforts put forth are worthwhile to counter the company’s unjust negotiations and proposals.