Case : GMFC Impasse Assume you are director of industrial relations for GMFC. Th

Question

Case : GMFC Impasse
Assume you are director of industrial relations
for GMFC. The company and the union
have failed to agree on a new contract, and
the old contract expired last week. Two
issues are unresolved, and no movement has
been made on these for more than 10 days.
The union is demanding 10 cents an hour
more than the company is willing to offer,
and management continues to demand some
employee co-payments for medical care. This
is the first negotiation in 15 years in which a
new contract has not been ratified before the
old one expired.

Local 384 voted a strike authorization
about a month ago, but the leaders have not
indicated at this point whether they intend
to strike. Production managers are lobbying
for a lockout to avoid material losses if the
heated steel treating process must be shut
down rapidly. Marketing managers want
production maintained to meet orders scheduled
for shipment. They argue the union
doesn’t intend to strike because it hasn’t
already done so.

In the executive council meeting this morning,
financial officers briefed the top executives
of GMFC and indicated the company
could accept a labor cost increase of 5 cents an
hour more, but only if this is a firm figure and
not subject to increases over the term of the
contract. Unfortunately, the union appeared
adamant that it will not agree to any health
care co-payment.

It is now your turn to recommend strategy
to the company in this impasse. Considering
the evidence, what action should the
company take? Outline the action, including
processes used and timetables.

Explanation / Answer

Trade unions have the right to declare strikes and to do certain acts in furtherance of industrial disputes. A strike is a tool available for Trade Unions to negotiate their demands with the management. Likewise, lockout is a tool available with the management to negotiate with the Trade Unions their demands. The option of strike by the Trade Unions and the option of Lockout by the management has to be used very judiciously as both result in temporary cessation of work in the industry and further loss of production effecting the overall revenue of the company.

In the case in hand, GMFC management has agreed the labor cost increase 5 cents an hour, which the Trade Union has also accepted in principle against their demand of 10 cents an hour. However, the management has still not been able to make the Trade Union accept its demand of some employee co-payments for medical care. As of now it seems unlikely that the Trade Union shall go on strike as they have turned down demands for the same as the Trade Union is looking at using the option of strike prudently. The strategy at this point of time should be to bring the Trade Union back to the negiation table and with the help of a trained and experienced mediator try to make the Trade Union accept its demand of employee co-payments for medical care. If the Trade Union is still adamant then again try to reduce the amount of co-payments to be made by the labor in order to create a win win situation. As of now GMFC should not try to test the endurance levels of the Trade Union and also should not got for the option of lock out as orders have to be fulfilled through scheduled production in order to maintain the commitments of the customers/clients.

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