GM deal leaves 15 factories pondering future

[Oracle of Delphi]

DETROIT - In the document that spells out the tentative pact between General Motors Corp. and the United Auto Workers, their futures are listed as: "demand and business case dependent," "no future product allocation," or even possible sale or closure.

Fifteen factories in places such as Wentzville, Missouri; Wilmington, Delaware; and Flint, Michigan, have been left on shaky ground by the pact that the UAW hailed as having won unprecedented job security from GM.

Most of the 15 factories, which together employ more than 40,000 hourly workers, will see their current work go out of production in 2011, when the four-year contract would expire, with the next generation of their main products listed as dependent on demand and business cases, according to a UAW document called the "white book" that spells out contract details.

At four of the factories, the document says no future product has been identified for them.

The automaker has 58 factories in the United States.

UAW officials, in a summary of the contract, touted job security pledges won in the negotiations including commitments for new products at 16 assembly plants. About 74,000 hourly GM workers are voting on the pact this week and next, with a final tally to be done by Oct. 10.

A summary of the contract provided to local union leaders last week said that GM has agreed not to sell or close any assets or business units beyond those already identified. Three facilities, a service and parts operation in St. Louis and powertrain plants in Livonia and Massena, New York, are identified by GM as exempt from the closing moratorium, the summary said.

The uncertainty over additional plants has led a union dissident to urge members to vote against the tentative agreement.

The average UAW member understands that General Motors has never lived up to its job security guarantees," said Gregg Shotwell, a GM worker and frequent critic of the UAW.

GM will pit the 15 plants against each other to extract more concessions at a later date, Shotwell predicted.

But Mike O'Rourke, president of a local in Spring Hill, Tennessee, which has "demand and business case dependent" listed after its main product, said the new pact is no different than previous contracts.

"To me that's business as usual," said O'Rourke, whose factory is being retooled to make a new Chevrolet crossover vehicle and will make a future GM sport utility vehicle. But the replacement for the crossover is "demand and business case dependent beyond 2012."

The new contract will make GM more competitive with its Asian rivals and it will need its factory capacity to meet increased demand, O'Rourke predicted.

But Morgan Stanley analyst Jonathan Steinmetz said the job security assurances could become a problem if GM's sales drop.

UAW spokesman Roger Kerson would not comment on the plants, nor would GM spokesman Tom Wickham.

Workers members at several locals have backed the tentative contract that may serve as a pattern for talks with Ford Motor Co and Chrysler LLC.

GM rivals Ford and Chrysler LLC may have to wait for the UAW to complete its ratification votes on the GM contract before their own crucial round of negotiations begin.

Ford, which has seen its U.S. market share drop down to the 13 percent level it has projected for the basis of a sweeping restructuring plan, has indicated a resistance to agree to the same kinds of job security and investment pledges that GM offered the union, a person familiar with the talks said.

link: http://www.msnbc.msn.com/id/21120048/

[Flybrian]

I don't understand why Wentzville's future would be shaky. GM should be owning the fullsize van market because the Econoline is garbage on 15" steelies.

[91z4me]

I don't understand why Wentzville's future would be shaky. GM should be owning the fullsize van market because the Econoline is garbage on 15" steelies.

IDK but the Wentzville UAW was picketing pretty strongly during those couple of days. Made the news each morning.

[Mr.Krinkle]

The beginning of the end. The end of what I have no idea.

[thegriffon]

I don't understand why Wentzville's future would be shaky. GM should be owning the fullsize van market because the Econoline is garbage on 15" steelies.

But it still outsells the GM vans on a regular basis. You can understand why GM may be reluctant to commit to a replacement, when clearly a 20 yo van will do just fine. Such a lot of this market is actually for conversions—many are converted into A- and B-class school buses, airport shuttles, step-vans, RVs etc., and any new design requires extensive retooling by customers as well as GM and Ford. A number of these converters offer both Ford and GM versions, and a new design may see them drop that version rather than retool. That's why the trucks get a new design while the related vans do not, and may not next time either. A new IP, powertrain upgrades and minor cosmetic changes may be the limit that the (demand and business case) allow. In Europe there is a much, much smaller market for such extensive conversions, and much more competition to drive upgrades (even with co-operation pacts there are still GAZ/LDV, Renault/Nissan/GM, Fiat/PSA, Mercedes and Volkswagen [sharing one class and competing in others], Iveco at the top end and the odd Toyota Hiace).

The business case will not always be about sufficient demand, but sometimes sufficient capacity. External economic factors, demographics etc will effect the product mix, and 2012 is a long way away, even if volume remains stable, so GM will want flexibility to move products around to increase production of some models and decrease others.

[ellives]

Gregg Shotwell seems like a whiner to me. Not sure why it *wouldn't* make sense to leave some plants unprotected or to pit them against each other for new products for that matter. Seems to me it mirrors real life out there in the care business. He needs to go off and be a mail man or a teacher where there is no competitive pressure and unions thrive. Taxpayers have infinite pockets, right?

[thegriffon]

Oh, not a mail man. All those other white and brown and yellow vans have made business pretty tough.