This case is about the collective bargaining agreement between one of the world's leading automobile manufacturers, General Motors Corporation (GM), and the United Auto Workers (UAW) in late 2007. The agreement, which a number of experts have termed as 'historic', was the result of a very complex bargaining process. GM, which dominated the US market until 1980, with a market share of 46 percent, saw its market share decline steadily after the entry of Japanese competitors. In addition to issues relating to its products and marketing, GM's fortunes were severely affected with under-funded pension liabilities, rising employee and retiree health care costs, and a decreasing market share in the US automobile market. The company's US market share fell to less than 25 percent in 2006. In 2007, GM inked a new labour contract with UAW, which analysts felt, would change the competitive landscape of the US auto industry and go a long way to ensuring GM's survival. Analysts felt that the deal also showed the changing role of the labour union in the 21st century. The case will help students to: (1) understand the challenges faced by GM in the US automobile market while competing with Japanese competitors; (2) understand the impact of GM's health care and other legacy costs on its ability to compete in the US automobile market; (3) understand issues and concepts related to the collective bargaining process, and, also study how GM negotiated a historic deal with the union that was expected to contribute to its turnaround strategy; and (4) explore and discuss the changing role of trade unions in the 21st century. The case is meant for MBA / MS students as part of the human resources management / human resource and industrial relations curriculum. The case can also be used in the business strategy curriculum. The teaching note includes the abstract, teaching objectives and target audience, teaching methodology, assignment questions, feedback of case discussion, and suggested readings and references. It does not contain an analysis of the case.
