General Motors’ announced plans to close four U.S. plants and lay off an estimated 14,000 workers may hinge on the definition of the word “unallocated” and whether it differs from “closed” or “idled.”
That’s because GM explicitly promised in its collective bargaining contract with the United Auto Workers that it would “not close, idle, nor partially or wholly sell, spin-off, split-off, consolidate or otherwise dispose of in any form, any plant.”
In what unions are describing as an attempt to get around the contract, GM said in its announcement last week that plants in Ohio, Maryland, and Michigan would be “unallocated,” apparently meaning that they would not build vehicles there but that the plants would still technically not be idle. GM made a point of saying that at other plants, outside the U.S., it would “cease the operations,” implying that those were closed, while the U.S. ones weren’t.
In a letter to GM earlier this week, UAW argued that “characterizing the plants as unallocated — rather than as closed or idle — does nothing to relieve the company of its obligation. … We expect the company to honor its commitments and we will use all of our resources to enforce our agreements.”
[Related: Washington backlash tests GM’s resolve on factory closings, layoffs]
GM CEO Mary Barra stuck to the argument that the plants were unallocated, not idle, during a meeting Wednesday on the Capitol with Sen. Rob Portman, R-Ohio, and Sherrod Brown, D-Ohio, according to the lawmakers’ staffs. When the senators pushed Barra to bring other product lines to the plant, however, she replied that “she was going to keep an open mind but does not want to raise expectations up,” Portman told reporters following the meeting.
A UAW spokesman said the union’s lawyers were looking at whether they would pursue the matter as strictly a labor grievance or file suit but declined to comment further about potential legal action. A GM representative did not respond to a request for comment.
GM does have a defense. The collective bargaining agreement also said that “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.” It did not further define the conditions, however.
UAW has a contract renegotiation with GM coming up next year, giving the automaker an incentive to resolve the issue first in order to prevent it from complicating the negotiations.
Labor attorneys on both sides of the issue said the union appeared to have a strong case that the plants were idle, not unallocated. “It is a semantic difference, not a substantial one,” said Steve Bernstein, a management-side attorney with the firm Fisher and Phillips. He predicted that any regulatory agency would deem it as “wordplay.”
Joshua Parkhurst, a New York-based labor-side attorney, said the union had a case based on the plain language of the contract but noted that a lot would depend on the history of prior contracts between the union and company. “To determine what it means, the arbitrator would have to hear from each party, and the arbitrator has a lot of authority,” he said.
[Opinion: On GM plant closures, Sherrod Brown is complaining about something that’s already been fixed]
