Overshadowed by U.S. corruption probe, UAW, GM near contract deadline

DETROIT (Reuters) – A federal corruption probe of high union officers stirred rising uncertainty about collective bargaining talks on Saturday, as the present labor contract between the United Auto Staff (UAW) and Basic Motors Co (GM.N) was set to run out on the stroke of midnight.

FILE PHOTO: United Auto Staff President Gary Jones delivers remarks on the opening plenary session of the Nationwide Affiliation of the Development for Coloured Individuals’s annual conference in Detroit, Michigan, U.S. July 22, 2019. REUTERS/Rebecca Cook dinner/File Picture

This yr’s talks between the union and GM, Ford Motor Co (F.N) and Fiat Chrysler Cars NV (FCA) (FCHA.MI) (FCAU.N) all the time promised to be robust, with thorny points resembling healthcare prices and profit-sharing on the desk at a time when gross sales of recent autos in the US are declining.

Usually when the four-year contracts with Detroit’s automakers expire, the query is will contract talks be prolonged or will union employees exit on strike?

This time issues are extra difficult.

Over the past two weeks, the longstanding federal investigation into corruption on the union has raised questions on UAW President Gary Jones, who a supply mentioned was an unnamed official talked about in a searing federal grievance this week detailing alleged embezzlement by union leaders.

On Friday, the union’s govt board met, however no modifications had been made to management, a union spokesman mentioned.

The union had focused GM as the primary automaker with which it wished to conclude contract talks.

The spreading probe raises contemporary questions in regards to the union’s choices and its leaders’ standing with rank-and-file members. Final month, greater than 96% of GM’s hourly employees voted to authorize a strike if obligatory, that means if no deal is reached Jones may name for a walkout with out additional approval.

GM’s employees final went out on a quick two-day strike in 2007 throughout contract talks. A extra painful strike occurred in Flint, Michigan, in 1998, lasting 54 days and costing the No. 1 U.S. automaker greater than $2 billion.

However the latest strike authorization vote was held earlier than the dramatic occasions of the previous couple of weeks, which included a late August FBI raid on Jones’s dwelling and different areas as a part of the corruption probe.

Sources briefed on the matter this week mentioned GM might search a short lived extension of the contract and pursue different choices together with looking for help from a 3rd social gathering. Whereas the UAW has not granted that to GM, it has prolonged the deadline indefinitely with Ford and FCA.

Elected in 2018, Jones was chosen as an outsider with a clear slate as a result of he ran the union’s Area 5 – which incorporates 17 western and southwestern U.S. states removed from the epicenter of scandal in Detroit.

However the federal grievance this week in opposition to Vance Pearson, Jones’ former second in command and successor as head of Area 5, listed lavish events and spending by union leaders in that area, together with “UAW Official A.”

Sources have confirmed that Jones is Official A, and in line with the grievance, brokers seized $30,000 in money from Official A’s residence.

Reporting by Nick Carey and Ben Klayman in Detroit; Modifying by Daniel Wallis and Tom Brown

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