GM offer rejected as strike forces 6,000 layoffs in Mexico

The United Auto Workers union said on Tuesday it rejected a new comprehensive offer from General Motors Co. to end a two-week-old strike, saying the automaker came up short on several fronts including wages, healthcare and temporary workers.

The union said it made a counterproposal and warned “there are still many important issues that remain unresolved.” Also on Tuesday, GM said the strike by U.S. workers forced it to halt production at its pickup and transmission plants in Silao, Mexico, resulting in temporary layoffs of 6,000 workers.

About 48,000 UAW members went on strike on Sept. 16 seeking higher pay, greater job security, a bigger share of the leading U.S. automaker’s profit and protection of healthcare benefits.

UAW Vice President Terry Dittes told members in a letter the GM offer “came up short” on issues like healthcare, wages, temporary workers and job security, “to name a few.” The union said it is committed “to exploring all options in order to reach an agreement.”

GM said in a statement it continues “to negotiate and exchange proposals, and remain committed to reaching an agreement that builds a stronger future for our employees and our company.”

The statements on “comprehensive proposals” indicate the talks have shifted into a higher gear as the dispute is taking a toll on both the automaker and striking UAW workers, whose $250 a week from the union strike fund is a fraction of their normal pay. Analysts estimate the strike could cost GM over $1 billion.

Both sides face broader risks should the U.S. economy slow down. Data released on Tuesday showed the U.S. manufacturing sector contracted in September to its weakest level in more than a decade. Stocks fell broadly on the report, and GM’s share price was down more than 3%.

The strike had previously forced GM to lay off at least 2,000 Canadian workers and temporarily close an engine plant in Mexico. Many suppliers have halted or scaled back some operations.

JP Morgan auto analyst Ryan Brinkman estimated in a research note that the strike has cost GM over $1 billion but it may be able to recover some lost profit in the fourth quarter. He said GM has $82 million a day in lost profit.

GM in Mexico said that “for the moment” its three other Mexican plants – Ramos Arizpe, San Luis Potosi and Toluca — are working normally. A spokesman in Mexico said the plants still had parts available but the company could not say how many more days the plants would remain open. The spokesman declined to estimate the daily cost of suspending operations at the Silao complex.

The 6,000 affected workers are being paid a percentage of their salary, the spokesman said, with some workers using vacation time to continue receiving their full salaries.