According to conditions written into the federal loan agreement that General Motors signed last month, the automaker will be forced to default on the loan should “any labor union or collective bargaining unit shall engage in a strike or other work stoppage.” This stipulation means that if the UAW was to strike, GM would be forced to pay back the loan immediately - forcing GM into bankruptcy.
The United States Treasury set many conditions that would trigger a default, though the terms hadn’t been disclosed until earlier today when GM filed the necessary documents with the Securities and Exchange Commission.
The deal requires the UAW to accept lowered wages by February 17, though many analysts have stated that the incoming Obama administration would have the power to change this stipulation.
Union leaders met with GM officials earlier this week to talk about how the loan agreement’s demands would have to be met. UAW President Ron Gettelfinger stated that the union has no intention to reopen its labor contracts.
The UAW says it will ask its members to vote on concessions before it agrees to them. Official negotiations are set to begin early next week.
The UAW also says it plans to push the Obama administration to modify the terms of the loan after January 20, when the president-elect is sworn into office.
“I can’t see that a strike would serve any benefit right now,” analyst Aaron Bragman of IHS Global Insight told the Detroit News. “It sounds like maybe some Republican union-busting language got in there, which would not surprise me.”