G.M. Chief’s Test: Satisfy Striking Workers and Sustain Bottom Line
Mary T. Barra has often referred to her years of experience on the General Motors factory floor. So it was familiar terrain when the chief executive embarked this year on a tour of plants across the Midwest and South, a mission to create good will among unionized workers ahead of contract talks.
At the Lake Orion assembly plant near Detroit, she said G.M. was going to spend $300 million to prepare the plant to make a new electric vehicle, creating 400 jobs. She traveled to Spring Hill, Tenn., to announce $22 million in spending, and chatted with workers in Lansing, Mich., where G.M. had chosen to make a new sport utility vehicle.
“The success of our new trucks and S.U.V.s and crossovers is allowing us to create jobs all over the company,” she said at a pickup plant in Fort Wayne, Ind., which was tabbed for $24 million in upgrades.
The effort hasn’t engendered as much harmony as G.M. might have hoped. Negotiations that started over the summer failed to head off a walkout by 49,000 members of the United Auto Workers on Sunday night, the first against G.M. since 2007.
“It was just a show,” Sergio Cristian, 60, who works in paint repair at the Lansing Delta Township assembly plant, said of Ms. Barra’s visit there. “If she cares about us, where is she now? She figured she’d step in there, show her face, show that she’s concerned. You are? I don’t think so.”
Finding a formula that will satisfy a restive work force without upending the company’s financial calculus has become Ms. Barra’s biggest challenge.
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A Michigan native, she started working at G.M. at 18, studied electrical engineering at the company’s own university, and rose through the ranks to hold senior positions in manufacturing, personnel and product development. In 2014, she became the first woman to head a major automaker.
She came into the job just in time to manage G.M. through a scandal in which faulty ignition switches had caused a series of fatal accidents. Under her watch, which has coincided with a surge in demand for big, high-margin vehicles, G.M. has generated record profits and won plaudits for forging a future of electric and autonomous vehicles.
“She has done a good job setting a vision and moving the company in the right direction,” said Sam Abuelsamid, an analyst with Navigant Research. “She’s made some tough decisions, like getting rid of cars and products that weren’t performing and getting out of Europe.”
Now she faces a worldwide decline in the industry’s sales that has forced the company to reconsider its model choices and production.
G.M. hasn’t gained much ground so far with the electric model Ms. Barra has championed, the Chevrolet Bolt compact, Mr. Abuelsamid said. “They haven’t executed as quickly as people would have liked,” he added. “The Bolt is not the right car for the market at this time.”
And as the company ponders cutbacks — like its decision this year to shut its assembly plant in Lordstown, Ohio — Ms. Barra must contend with opposition not only from the union but sometimes from the White House. President Trump has been a frequent antagonist of the company over its foreign operations, including its use of plants in Mexico while paring its head count in the United States, a criticism he reiterated on Monday after the strike began.
“I don’t want General Motors building plants in China and Mexico — this was before my watch, and I don’t think they’ll be doing that,” Mr. Trump told reporters. “I had meetings with Mary Barra, the head of G.M., and I don’t want them leaving our country.”
The president and Ms. Barra met at the White House early this month, though it is not clear how broad the discussions were.
Contract negotiations continued Tuesday, the second full day of the strike, in a conference room at the Renaissance Center in downtown Detroit, where G.M. has its headquarters. While Ms. Barra is not at the table with U.A.W. leaders, she is staying nearby and taking an active role, people close to the negotiations say.
Union and management officials were breaking into groups to discuss specific issues, like the use of temporary workers and how production is allocated to various sites, and then reconvening in larger meetings, according to people with knowledge of the talks.
G.M. is hoping to bring its labor expenses — especially health care costs — more in line with those of Toyota, Honda and other foreign automakers that operate nonunion plants in the South. According to the Center for Automotive Research, an hour of U.A.W. labor costs G.M. $63 in wages and benefits, compared with $50 for labor in foreign-owned nonunion plants.
The union counters that G.M. is highly profitable in North America under the current labor contract. Last year, the company made $10.8 billion in the region — more than the North American units of Toyota, Honda and Nissan combined.
Tensions between the two sides increased on Tuesday after G.M. stopped covering the cost of health care premiums for striking workers. The U.A.W. told members that it would provide heath care assistance or temporary coverage until the matter was settled.
In addition to resisting higher payments for health care, the U.A.W. wants G.M. to rework its pay structure, which differentiates between those hired before and after 2007, and to increase pay for temporary workers. Many of the more recent hires and temps make $15 to $25 an hour, or roughly $30,000 to $50,000 a year before overtime or the profit-sharing checks that have averaged $11,000 in the last three years. Veteran workers doing comparable work can make $31 an hour and many take home $90,000 a year and up with overtime and profit-sharing.
Over the weekend, G.M. offered to invest $7 billion in United States plants, and create 5,400 new jobs. The offer, a person close to the talks said, included building a battery plant near the shuttered Lordstown factory and keeping open a Detroit car plant slated to close in March, and leaving worker heath care contributions largely unchanged.
In a letter to G.M., Terry Dittes, the U.A.W. vice president leading the negotiations, complained that those offers arrived two hours before the contract expired Saturday night. “Had we received this proposal earlier in the process, it may have been possible to reach a tentative agreement and avoid a strike,” he wrote.
The union’s decision to strike took place the next morning, about 12 hours after G.M. made its offer, and the walkout did not begin until midnight that night.
While the details of the talks are particular to G.M., the outcome is meant to serve as a template for contracts with the other Detroit automakers, Ford Motor and Fiat Chrysler. In 2014, an accord was reached just before the previous contract expired, and the union’s G.M. membership approved it in a close vote. Some workers say the U.A.W. failed to gain enough in that round, and are pressing for a better outcome.
The good will that Ms. Barra set out to gain this year remains elusive.
“I hope she stands for what she said,” said Mr. Cristian, the paint-repair worker in Lansing and a 40-year G.M. veteran. “Everybody makes promises. We’ll wait and see on her. I’m hoping for the best.”
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