By on February 26, 2019

Image: GM

Canada’s autoworker union Unifor brought out the guy from Dune to protest a General Motors plant closure, but UAW went a few steps further. The American auto union hit GM with a lawsuit Tuesday, claiming the company’s decision to shutter three plants violates its 2015 collective bargaining agreement.

However, GM may have an out.

In a statement posted this morning, UAW President Gary Jones and VP Terry Dittes said, “For UAW members in GM Warren Transmission Operations, GM Lordstown Assembly and in the GM GPS Baltimore plant in Maryland the UAW is determined to leave no stone unturned to make sure that their contractual rights are honored.

“The UAW believes that General Motors is in breach of the 2015 Collective Bargaining terms,” the two execs claimed. The UAW also provided a link to the lawsuit accusing GM of breach of contract.

Contained within that suit is a letter agreement signed by GM that states the company would “not close, idle, nor partially or wholly sell, spin-off, split-off, consolidate or otherwise dispose of in any form, any plant, asset, or business unit of any type” during the contract’s four-year term. UAW argues that the looming “unallocated” status of the three plants constitutes idling. Thus, GM broke its promise.

(Detroit-Hamtramck Assembly isn’t included in the suit, as GM announced late last week its intention to keep the plant open until January 2020.)

While it would appear that UAW has the automaker over a legal barrel, the same letter contains ammunition for GM. A caveat to the previous quoted statement states, “In making this commitment, it is understood that conditions may arise that are beyond the control of the Company, (i.e. market related volume decline, act of God), and could make compliance with this commitment impossible.”

Image: General Motors

It will be GM’s task to prove to a judge that it needed to stop building the Chevrolet Cruze and various Michigan and Maryland components before the (Sept. 14th) expiration of its labor agreement. True, Lordstown wasn’t a busy place. The plant, which goes dark on March 8th, went from three shifts to two, and then to one, in recent years, with significant amounts of downtime — a symptom of the public’s move away from passenger cars. Demand hadn’t dropped to zero, however.

In an emailed statement to Automotive News, GM claimed it did not breach the contract.

“We continue to work with the UAW on solutions to our business challenges,” the automaker said. “We have no further comments at this time on the lawsuit filed by the UAW.”

[Image: General Motors]

Get the latest TTAC e-Newsletter!

17 Comments on “UAW Slaps GM With Lawsuit Over Plant Closures...”

  • avatar

    Don’t you mean the guy from “Captain Planet and The Planeteers”? Lol.

  • avatar

    So, what, should GM retool the factory to build lunchboxes and pocket knives for 6 months?

  • avatar

    ” claiming the company’s decision to shutter three plants violates its 2015 collective bargaining agreement.”

    As if the UAW doesn’t already have a track record of collectively bargaining their employees out of a job.

    Job Bank, anyone?

    • 0 avatar

      It would be cheaper to pay them off instead of retool for capacity they don’t need, and for only one year of production. Maybe that’s the plan and this is jockeying for the best deal.

      • 0 avatar

        EGSE, Oh, I agree. Especially if the taxpayers pick up the tab and foot the bill for the pay off and pick up the Pension Benefits lost.

        It may be jockeying for the best deal, but if it comes to pass it should stay open longer than just a year, because the lead-in and lead-out are both lengthy and costly.

        IOW, more wasted money if GM can’t sustain it for at least 3-5 years.

        Of course, from a tax-liability point of view, GM can throw its profits against these losses of the one-year operation and will drastically reduce their tax burden.

        And that may be the best deal for GM and its share holders of all.

        After all, if Amazon can have $5BILLION in profits and manage to pay zero in taxes on those profits, GM should be able to do some fancy creative accounting like they did in 2007, 2008, and 2009.

  • avatar

    For the products these plants build, how many days of inventory do they have in the channel and how fast will it sell?

    • 0 avatar
      SCE to AUX

      I don’t know, but GM has 7 *months* of Corvette inventory on its dealers’ hands:

      GM’s inventory management is terrible.

  • avatar

    Good point about Amazon not paying taxes.

    Of course, Amazon would reply, “People pay taxes. Tax us, and we could have to charge them more”. OK. If you did, you might have fewer customers…but I digress.

    One of TTAC’s more informed readers can chime in (and I hope you do), but I have the impression that GM’s pre-bankruptcy losses can be ‘carried forward’ for years, and as a result, GM doesn’t pay Federal income taxes on the profits that it brags about to Wall St. (while telling their workforce that it’s not making enough money and needs to close plants and fire salary employees).

    • 0 avatar

      And Amazon, like many other businesses, plows a ton of money into the neighborhood, the city and the state, which Amazon then writes off as an expense.

      Let me tell you, I miss all those tax write offs we had before we extricated ourselves from the business!

  • avatar

    drop to one model Cruze, make Cruise standard (imagine)

    make three trim levels and only offer three colors, red, white, and blue.

    the tooling is paid for, eliminate incentives and reduce price $2500.

    change the marketing and we’ll need two shifts.

  • avatar

    Good for the UAW. (seriously). I am not a union member, and never have been in my career to date (over 3 decades in working world) Someone needs to get GM’s attention. When they are sourcing more to Mexico ($4 / hour) and China (< $4 / hour ) are Americans suppose to be proud of these types of decisions from "good 'ol GM " ? GM Senior Management is obviously presuming that closing the plants will "blow over".. Maybe they are right ? I'm wondering at what point they will "tick off" a critical mass of citizens (consumers ! )

Read all comments

Recent Comments

  • DenverMike: It’s not just the parking thing. Most Americans simply can’t drive something that big, scared...
  • DenverMike: Unless you were already struggling to feed the beast, yeah a few small changes and you’re good. Yet...
  • golden2husky: Lou you are correct. Some forget that flags, love of country, etc. is for everyone not just those on...
  • golden2husky: Certainly no IQ check. But probably an automatic retrieval of Q drops…right from Clarence Thomas’s wife…
  • Jeff S: Midsize trucks are easier to park and fit in most garages. I believe we might see more compact trucks with...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber