New GM-UAW contract bodes well for the Valley

2For 52 years now, that axiom has gained considerable traction as an analogy equating the economic health of the nation to the economic vitality of one of its leading corporate giants.

Even though the impact of that statement, originally attributed to former Secretary of Defense Charles Wilson, has been diluted over the years as GM has undergone massive downsizing, its application locally still carries considerable weight.

To be sure, what’s good for GM truly is good for the Mahoning Valley.

STABILITY FOR FOUR YEARS

That’s why we welcome the news that the United Auto Workers has formally ratified a new four-year contract with the Detroit-based automaker. The agreement, finalized Friday, ensures stability for the Lordstown GM Complex and its 4,500-plus workforce, which represents about 8 percent of the total unionized GM American workforce and ranks as the largest private employer in our region.

As with all domestic autoworkers who have reached agreements with GM, Ford and Fiat-Chrysler over the past month, the local workforce joins in sharing the bounties the agreement dispenses.

The contract covers GM’s 52,000 workers at 63 U.S. facilities. It raises wages by about 7 percent through 2019 and promises $8.3 billion in U.S. factory investments over four years, including hundreds of additional jobs. Icing on the cake are $8,000 signing bonuses to each and every member just in time for the holiday season.

For the company, the new pact brings good tidings as well.

At first glance, however, it may appear that the fattened wage packages would burden GM and other domestic automakers. In reality, decades of employee downsizing have shaved labor costs so dramatically that the slightly higher wage costs will barely register a blip on the companies’ bottom lines.

As a story on Page A1 of Sunday’s Vindicator from The Blade in Toledo documented, total labor costs for the Detroit Three automakers have been halved from $34.6 billion in 1999 to $17.0 billion in 2014. In 2007, labor costs represented 15 percent of the total cost of a vehicle compared with only 7 percent of its price today. All of that results from the contraction of the American UAW labor pool from about 300,000 in the early 2000s to about 140,000 today.

FOCUS ON VEHICLE QUALITY

All of which means GM, Fiat-Chrysler and Ford can now move forward without the potentially disastrous consequences of labor strikes looming large. It also means they now can focus less on long-term financial uncertainties and more on meaningful short- and long-term improvements to the quality, efficiency and safety of their fleets.

Nowhere is that more important than at the Mahoning Valley’s sprawling GM fabrication and assembly plants – home of the world-renowned Chevrolet Cruze.

Over the past five years, the Cruze has risen as the darling of the small-car market in the United States, winning praises from auto analysts and robust sales from American consumers. It’s also played a solid role in keeping members of UAW Locals 1112 and 1714 working round the clock to satisfy the ravenous demand.

Clearly then, much rides on continuation of that success when the newly redesigned and rewired Cruze hits showroom floors in the spring. Early reviews show great promise for it leading the way again in the small-car market in the United States.

Toward that end, it should now be full speed ahead. As the tense and time-consuming task of labor contracting has been concluded, the road is clear for ensuring car buyers get the best bang for their bucks.

The future fortunes of the Lordstown plant and the $450 million economic impact it makes annually on the Valley in wages and payroll taxes ride heavily on that ongoing success.

Now that the bustling Lordstown complex and its workers have received an early holiday gift in the form of a secure and growth-oriented four-year contract, nothing should stand in the way of a roaring, rewarding and robust rollout of the 2016 Cruze.