Who pays for the health care insurance for the striking workers?
Effective Tuesday, GM employees on strike were no longer covered under the company’s plan. Instead, they will be eligible to sign up for medical assistance or COBRA from the United Autoworkers Union. The change doesn’t represent a loss in health care, just a transition of coverage.
In a statement GM said: “We understand strikes are difficult and disruptive to families. While on strike, hourly employees will be eligible for COBRA so their health care benefits can continue.”
In a letter to the UAW obtained by CNN Business, Scott Sandefur, a vice president at GM, confirmed the company will no longer be paying for employees’ coverage. “Our employees should be eligible for COBRA paid for by the UAW fund so that their health care benefits continue. As a result, we believe that our employees, and your members will not suffer any loss of health care coverage,” Sandefur wrote.
The UAW initially told its members on Monday that their company coverage would continue until the end of the month. But union VP Terry Dittes said that indeed members will need to sign up for medical assistance or COBRA. The UAW has activated its strike fund to pick up the cost.
CNN’s Ryan Young is outside of a GM plant in Flint, Michigan where several workers are picketing.
He talked to some workers who said they plan to stand outside of the factory for their entire shift to “make sure their GM bosses understand how hard they are fighting for this.”
One employee told Young the strike is a “battle for the middle class.”
Watch Young’s full report below from HLN:
Striking workers showed up Tuesday morning outside of a GM factory in Bowling Green, Kentucky.
The factory employs around 1,000 and manufactures the Corvette Stingray, according to GM’s website.
Ray Carter-Wilson, a single father striking at a Detroit-area plant, said surviving with a limited income during the strike is “very difficult.” But he’s ready for it last a while.
“I understand the difficulty of the negotiations and the importance of them,” he told CNN “New Day” anchor Alisyn Camerota. “This being a lengthy strike … I’m fine with it as long as everything gets ironed out and is fair for everyone.”
Shawnte McMichael, a striking GM worker at a Detroit-area plant, said the strike was “mind blowing” because she didn’t think it would happen.
“It’s very scary,” McMichael told CNN “New Day” anchor Alisyn Camerota. “I’m fearful and I want it to end very soon.”
She said she wants the UAW and GM to agree on “something fair.”
The autoworkers union has asked General Motors to shift jobs and manufacturing from Mexico to the United States. GM would not budge on that point, according to a UAW source close to the negotiations.
A GM spokesperson, who asked not to be identified, confirmed that the UAW asked about moving jobs currently held in Mexico to the United States. But the spokesperson said GM understood the UAW’s request to mean autoworkers wanted the company to create more jobs in the United States.
GM has pledged to create more than 5,400 new jobs and invest $7 billion in the United States as part of its offer to the UAW.
Negotiators from General Motors and the United Auto Workers union are due back at the negotiating table Tuesday as Day 2 of the strike by nearly 50,000 workers gets underway.
The talks wrapped up around 9 p.m. on Monday, according to a person familiar with the talks. Typically, negotiators will work late into the night if they are close to an agreement.
GM said it is ready to engage in round-the-clock talks. Union officials repeatedly said Monday that despite some progress the two sides remain far apart on key issues of wages, profit sharing, health insurance, job security and GM’s reliance on about 3,000 temporary hourly workers. The union wants those workers to have permanent and better paying jobs. The union also wants vehicles built in Mexico shifted to US plants now slated for closure.
The strike is costing GM about $50 million a day in lost revenue, according to an estimate from Credit Suisse. Those losses could be partly offset because the company won’t be paying the striking workers.
CNN Business has obtained a letter from Terry Dittes, vice president of UAW, telling union members that during the strike their health insurance will continue through the end of September— paid for by GM.
“To allay any concerns that our Members may have regarding an interruption in health care coverage, I am writing to confirm that the Company will continue health care benefits through the end of the month for all UAW-represented employees as provided for in the contracts,” Dittes wrote.
A source close to the UAW/GM negotiations tells CNN Business that discussions will continue through Monday night.
GM (GM) workers were picketing at 55 GM facilities in 19 states across the country, according to James Kaplan, a spokesperson for UAW.
The states are:
The Teamsters union, which represents many of the truckers who haul GM’s vehicles from ports and factories to dealerships, will not cross UAW picket lines to carry GM vehicles.
This means that, if there are picketers in front of a factory that has finished vehicles ready to be shipped to dealers, Teamster truckers will honor the picket line and refuse transport those vehicles. The same would be true at an international port of entry that had GM vehicles waiting to be transported by trucks.
While Teamsters members will not cross UAW picket lines to pick up vehicles, they will still pick up and transport vehicles from locations where there aren’t any picket lines, as they are contractually obligated to, Teamsters spokesman Brett Caldwell said.
Members of the International Brotherhood of Teamsters handle a “significant portion” of the transportation of GM’s products within the US, Caldwell said, but he couldn’t say exactly how much.
A GM (GM) spokesperson has not yet responded to questions about how much disruption this might cause.
General Motors’ credit rating could topple into junk bond status if the current United Auto Workers union strike last more than a week or two, according to a note from Moody’s. GM’s debt rating is just one step above junk bond status.
GM’s ability to contend with a one-to-two week strike is “comfortably supported” by having 77 days of vehicles to sell, $17.5 billion of cash available, and the ability to borrow $16.5 billion under its current loan agreements, said a note from Moody’s.
“Beyond the initial one-to-two weeks, the financial burden of a strike will become more material and the prospects of a contract that avoids erosion the company’s current competitive position is less likely,” said the note from analyst Bruce Clark.
Having its credit rating reduced to junk bond status would make borrowing money more difficult and more expensive. GM was downgraded into junk bond status in 2005, several years before it ended up in bankruptcy court and in need of a federal bailout. It took until 2013 for it to shake that rating, and have its debt classified as “investment grade.”
GM did not have any immediate comment on the Moody’s note.
Last week Moody’s downgraded rival Ford into junk bond status. It said it was concerned about Ford’s ability position to pull off a planned $11 billion restructuring plan.
Here’s the latest from CNN Business’ Vanessa Yurkevich, who is on the ground outside of a Detroit-area plant:
Watch more here:
Michael Burson, a striking GM employee, told CNN Business that he likes his job and its benefits. But he’s hoping that the automaker listens to the employees’ demands for profit sharing and raises.
“If you pay the people good money, this is what’s going to grow the economy,” Burson said. “It’s not paying the rich guy and making the big companies richer. That’s not going to grow the economy … you got to pay the people.”
Watch the full interview here:
Throughout the current contract negotiations with General Motors, the United Auto Workers union officials have repeatedly said that their membership saved the once troubled US automaker.
“We stood up for General Motors when they needed us most,” said UAW Vice President Terry Dittes, who leads the union’s talks with GM.
The union’s sacrifices actually go back before the company’s bankruptcy and bailout of 10 years ago, to 2007, the last time the union struck GM. At the time, GM, Ford and Chrysler were paying the equivalent of thousands of dollars per vehicle to provide healthcare to UAW retirees, putting them at a huge competitive disadvantage. After brief strikes at GM and Chrysler, the union agreed to have that health care coverage provided by trust funds rather than the automakers.
But it wasn’t enough. When the 2008 financial crisis hit, sales plunged and the automakers started to hemorrhage cash. GM and Chrysler ended up in bankruptcy, kept alive by a federal government bailout.
The union agreed to reopen the contracts and grant new concessions, including paying new hires on a cheaper pay scale with fewer benefits.
In some ways the union had no choice: Bankruptcy court judges have the power to break union contracts. Failure to grant concessions also could have killed the three US automakers, costing the union far more jobs and leaving the US industry with only foreign-owned non-union automakers.
The UAW also did better than many unions in bankruptcy. For example, the pension plans stayed intact.
But it is indisputable that the union and its members did make concessions that helped save the US automakers.
CNN Business’ Vanessa Yurkevich caught up with two GM workers who are striking outside of a Detroit-area plant.
“I feel proud,” a factory worker told Yurkevich about being on the picket line. “This is an awesome thing that we come out and support what we believe in. There is strength in numbers”
Workers want profit sharing and raises now that the company is profitable. “Everything is going up but our pay,” another GM employee said.
Watch the full Facebook Live video here.
Ford, Chrysler and General Motors’ autoworkers contracts were scheduled to expire over the weekend. So why are GM’s hourly employees the only autoworkers on strike?
The United Auto Workers union has traditionally held a couple of months of preliminary talks with all three automakers and then picked a “target” with which it will try to reach the first deal. The union then tries to get the other automakers to agree to the same basic labor deal.
This year, the target is GM, which is the only US automaker in the process of closing American plants. That’s why the contracts were temporarily extended at Ford and Fiat Chrysler.
Companies typically prefer to be the target, despite the risk of a strike, because they can reach a deal with the union that addresses their bargaining objectives.
Going second or third in the talks doesn’t necessary reduce the chance of a strike. The last time the UAW struck in 2007, it held strikes at both GM and Chrysler.
In a rare move, GM publicly announced Sunday what it was offering the United Auto Workers, including more than $7 billion in investments and the addition of more than 5,000 jobs.
That tactic, according to CNN Business’ Christine Romans, shows that GM is trying to “own the message,” and that the company understands some of its employees are angry with the company with the recent spate of plants being unallocated, such as a plant in Warren, Michigan.
“They’re saying ‘We are making concessions here,’” Romans added.
Watch more here:
General Motors’ US plants are shut down by the first strike to hit the company in 12 years. But its dealerships will have plenty of vehicles to sell for weeks to come.
In anticipation of a possible strike, GM built up its vehicle supply above what’s typical for the industry, according to an analysis by Cox Automotive. GM has a 59-day supply of car models, according to the report. The industry average is 53 days.
Automakers typically have a larger supply of trucks and SUVs because they come in so many different configurations. General Motors (GM) has about an 80-day supply of those models, which are top sellers, compared to an industry average of 64 days. GM has an even larger supply of some of its most profitable trucks, like the Chevrolet Silverado and GMC Sierra. GM did not dispute the Cox analysis of its inventory.
Here are new pictures from GM’s Wentzville Assembly plant in Missouri, where many workers are striking.
The factory employs roughly 4,000 and produces the Chevrolet Colorado, GMC Canyon and Savana, according to GM’s website.
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