UAW Warns of GM Strike If Contract Fails

Dow Jones Newswires

United Auto Workers leaders are pressing members to ratify a proposed contract from General Motors after a handful of factories turned it down in initial rounds of voting, with union officials saying a costly strike is likely unavoidable if the deal fails, according to several people familiar with the matter.

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The UAW's voting on GM's proposed agreement to 52,700 of its U.S. factory workers began late last week and ends Saturday.

Workers at a number of components plants and four assembly plants approved the contract, but workers at two other assembly plants and one transmission plant have rejected it, leaving open the possibility that the UAW could see an offer rejected for a second time in this round of negotiations with Detroit's auto makers.

UAW officials are under significant pressure to get the GM deal ratified after having run into resistance to a Fiat Chrysler Automobiles deal in October. It took the UAW two rounds of negotiations to come away with an offer members would approve. Workers have demanded raises and a closing of the pay gap between entry-level workers and those with more seniority.

A work stoppage would come at a time when GM is racing to make enough trucks and SUVs to keep up with U.S. demand. Reporting a 16% sales increase in October compared with the same period in 2014, GM said it had enough inventory to last it past the end of the year.

Much of that inventory, however, is composed of passenger cars that are not as popular as light trucks. Demand for vehicles like the Chevrolet Silverado and Cadillac Escalade were primary drivers behind GM's record third-quarter operating profit. GM is planning an 8% increase in truck production in the fourth quarter, according to data provider WardsAuto.com, but that plan would be wrecked by a strike.

The last time the UAW struck GM was in 2007 when the union held a two-day walkout at its U.S. factories. The UAW hasn't staged a prolonged work stoppage against a Detroit car maker since the late 1990s and both GM and Fiat Chrysler--then known as Chrysler Group LLC--were barred from striking in 2011 as part of their 2009 bankruptcy agreements.

A strike against GM would lead to an estimated loss of revenue of $243 million per work day, or $26 million in daily operating profits.

GM negotiators and UAW officials agreed to a deal in late October using the Fiat Chrysler contract as a template. GM, which is far bigger than Fiat Chrysler and more profitable, offered bigger signing bonuses and billions of dollars in product commitments to sweeten the deal.

The UAW's push at GM precedes negotiations with Ford Motor Co. that are expected to be tense.

Officials at Ford see the template set by GM and Fiat Chrysler as being more generous than expected, and have told UAW officials that an agreement patterned off its rivals' deals will likely shift a big portion of the auto maker's investment plans away from U.S. factories, people directly involved in these negotiations said.

For now, the priority is avoiding a battle with GM, the largest of the U.S. auto makers. Several GM workers have told The Wall Street Journal that UAW leadership has told them GM has made a final offer and rejection would trigger a walkout.

In a message posted on UAW Local 31's Facebook page by the unit's president, Vicki Hale, earlier this week, members were told that UAW leadership have determined that if the tentative agreement fails nationwide the union "will have no other choice than to strike." Ms. Hale said GM's board of directors discussed the situation with UAW leaders and "made it absolutely clear that there are no more economic concessions to give at this time."

Ms. Hale couldn't be reached to comment on her post. The UAW secured strike approval from members prior to kicking off negotiations with GM in the summer.

Workers at GM's large Chevrolet Malibu sedan plant in Kansas City, Kan.,--represented by Ms. Hale--overwhelmingly rejected the deal.

Workers in Arlington, Texas, building GM's profitable full-size SUVs, also turned it down. Workers at three plants in Michigan, however, have voted it up.

Several other major GM assembly plants are voting through the end of the week. Local UAW leaders representing members at those plants release voting results to members via social media or other methods.

Write to Christina Rogers at christina.rogers@wsj.com and John D. Stoll at john.stoll@wsj.com