Abstract

This case is about the collective bargaining agreement between one of the world’s leading automobile manufacturers, General Motors Corporation (GM), and the United Auto Workers in late 2007. The agreement, which a number of experts have termed as ‘historic’, was the result of a very complex bargaining process. GM, which dominated the US market till 1980, with a market share of 46 percent, saw its market share decline steadily after the entry of Japanese competitors. In addition to issues relating to its products and marketing, GM’s fortunes were severely affected with under-funded pension liabilities, rising employee and retiree healthcare costs, and a decreasing market share in the US automobile market. The company’s US market share fell to less than 25 percent in 2006. In 2007, GM inked a new labor contract with UAW which, analysts felt, would change the competitive landscape of the US auto industry and go a long way in ensuring GM’s survival. Analysts felt that the deal also showed the changing role of the labor union in the 21st century.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the challenges faced by GM in the US automobile market while competing with Japanese competitors
• Understand the impact of GM’s healthcare and other legacy costs on its ability to compete in the US automobile market
• Understand issues and concepts related to the collective bargaining process, and, also study how GM negotiated a historic deal with the union that was expected to contribute to its turnaround strategy
• and Explore and discuss the changing role of trade unions in the 21st century.

Keywords

Collective bargaining, Negotiation, Collaboration, Trade union, Strike, social contract, Labor union, Labor contract, Human Resource, attrition program, Turnaround, Strategy, Competition, Japanese competitors, competitive advantage, restructuring, VEBA, Healthcare, GM, Ford, Chrysler, Toyota, Honda, UAW