For the first time in 12 years, GM's UAW Workers Set to Go on Nationwide Strike.

The United Auto Workers (UAW) said on Sunday that its roughly 48,000 hourly workers at General Motors Co facilities would go on strike as of midnight Sunday after U.S. labor contract talks reached an impasse, the first nationwide strike at GM in 12 years.

“We do not take this lightly,” Terry Dittes, the UAW vice president in charge of the union’s relationship with GM, said at a press conference in downtown Detroit. “This is our last resort.”

GM said in a statement that its offer to the UAW during talks included more than $7 billion in investments, 5,400 jobs - a majority of which would be new jobs - pay increases, improved benefits and a contract ratification bonus of $8,000.

The union has been fighting to stop GM from closing auto assembly plants in Ohio and Michigan and arguing workers deserve higher pay after years of record profits for GM in North America.

GM argues the plant shutdowns are necessary responses to market shifts, and that UAW wages and benefits are expensive compared with competing non-union auto plants in southern U.S. states. In its statement, the automaker said its offer to the union included solutions for the Michigan and Ohio assembly plants that currently lack products.

If the strike is short, hourly workers should not suffer much. But strike pay provided by the UAW, which has been building up reserves in preparation for possible industrial action, is just $250 per week.

I Side with GM

The closures are necessary if GM says they are. Companies do not propose to idle plants unless they believe they need to.

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It is silly to keep unprofitable or even marginally profitable plants open inventories mounting and the global economy on the skids.

The ratification bonus of $8,000 sounds generous.

Ripple Impact

If the strike lasts more than a week, expect significant ripple impacts on parts suppliers, trucking of autos and parts, and also slowdowns at local bars and restaurants near the plants.

Any workers who have not built up a significant personal monetary cushion will struggle from the first missed paycheck. $250 a week in strike benefits will not go far.

The UAW picked a very poor time to strike, not that there ever is a good time.

Rising Inventories

Strike preparation explains increased production and rising dealer inventories. I wonder if sales are somehow over-reported as a result.

Mike "Mish" Shedlock