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GM’s proposed deal with the UAW actually looks pretty good for Trump (GM)

GM’s proposed deal with the UAW actually looks pretty good for Trump (GM)

After contract negotiations between General Motors and the United Auto Workers (UAW) broke down over the weekend, the union ordered its membership to strike. It's the first major action against GM since 2007 and the first big US strike since 1982.

GM took the unusual step of disclosing its offer in a statement. The UAW focused on its membership's contribution to years of GM profits and said in its own statement that negotiations had hung up on "affordable healthcare."

More on that in a minute. But first, the union might have been counting on President Donald Trump weighing in with some snap reaction. Trump, after all, has been roiling the US auto industry since 2016, when he was campaigning and attacked Ford for plans to build a new factory in Mexico.

Read more: The US auto workers union just decided to walk out on GM — here's why they're striking

On the GM front, Trump has harried CEO Mary Barra about the company's decision to idle four US plants, including one in the re-election-critical state of Ohio — more on that in a minute, too.

But soon after GM's roughly 50,000 UAW members walked off the job on Sunday, Trump's reaction wasn't exactly fiery. "Here we go again with General Motors and the United Auto Workers," he tweeted. "Get together and make a deal!"

So why the blunt directive? Perhaps because the GM deal looks quite good for Trump.

Bringing idled factories back to life

The Lordstown GM factory would be repurposed for battery production.

Thomson Reuters

On idled factories, GM proposed to bring a new vehicle to the Detroit-Hamtramck plant and, in a bit of a surprise, to convert its Lordstown plant in Ohio to battery production. The Lordstown factory had been building a slow-selling sedan, the Chevy Cruze, prior to GM's decision to "unallocate" it in 2018. It appeared as if the company was going to either shut it down permanently or sell it to a small producer of electric delivery trucks.

GM also said it would invest $7 billion overall in multiple states and hire 5,400 new workers — all music to Trump's ears, as he could plausibly claim credit for pushing GM to bulk up its workforce in the US.

It's dangerous to over-interpret a Trump tweet, but it's fair to point out that he might be lacking patience for a long strike. Much of this could be because while GM is effectively giving him what he wants, the UAW's leadership, including President Gary Jones, is under investigation by federal authorities over allegations of corruption. It would be awkward for Trump to throw himself into the negotiations due to that alone.

The wildcard plays his hand

United Auto Workers (UAW) union President Gary Jones addresses UAW delegates at the 'Special Convention on Collective Bargaining' in Detroit.


It's also unclear whether Trump actually cares about what might be the only real negotiating impasse, the UAW's desire to eliminate so-called "two-tier" wage structures and create a path for temporary workers to achieve membership status. For him, the decisions on Lordstown and Hamtramck are already big wins.

A long strike would also be difficult for Trump because he might have to support a UAW membership that he sees as important to his voting base, but that's already garnered the quick approval of Democratic candidates running for president, such as Kamala Harris, Elizabeth Warren, and Bernie Sanders.

Furthermore, he can't push GM much on the union's issues around health and care and capturing a share of GM's profits. Following a solid 2018, GM paid out $11,000 in profit sharing to UAW members, and the company is offering an $8,000 contract signing bonus. The membership already has one of the best health plans available, contributing just 3% to its costs — and GM proposed to retain that arrangement.

Trump was a wildcard in the UAW's strike decision. It's still early, but it seems that the President has played his cards, and he's betting on a short strike.