A2| Friday, September 20, 2019 THE WALL STREET JOURNAL.**
plauded the decision
Many workers say they feel
betrayed, having sacrificed pay
and benefits as the company
slid into its 2009 bankruptcy,
only to be pummeled by clo-
sures a decade later, when the
company is posting some of its
strongest profits in history.
President Trump has in-
flamed tensions by publicly cas-
tigating GM for the closures and
assailing car makers for not
building more in the U.S.
Ms. Barra, a onetime plant
manager, worked well with the
UAW for much of her career.
Following a crippling 54-day
strike in 1998 at GM’s assembly
plant in Flint, Mich., she was as-
signed to an internal-communi-
cations post to mend relations.
During her CEO tenure,
though, relations between GM
and the UAW have frayed.
In recent years GM’s profit-
ability has soared as U.S. auto
industry sales remained
strong and customers shifted
to buying pricier trucks and
SUVs—long the company’s
sweet spot. GM posted a re-
cord operating profit of $12.
billion in 2016 and again in
2017, before slipping to $11.
billion last year.
Still, Ms. Barra has had to
fend off two separate activist in-
vestors and contend with a
stalled stock price.
Last year, GM further in-
censed UAW workers by reveal-
ing it would build a new Chevy
Blazer in Mexico.
Last October, Ms. Barra con-
vened her top leadership team
in a conference room at GM’s
headquarters and said the com-
pany needed to better prepare
for the eventual downturn in
U.S. auto sales, according to a
person at the meeting. She gave
her team six weeks to find $
billion in annual cash savings,
according to the person.
Newly appointed Chief Finan-
cial Officer Dhivya Suryadevara
was sharpening GM’s focus on
cash flow, believing it needed to
improve to better court inves-
tors, according to other peopleDetroit car companies and more
work being sent to Mexico.
The union has tried to build
clout by trying to represent
workers at the foreign-owned
car plants in the U.S. South, but
organizing drives at Nissan Mo-
tor Co., Toyota Motor Corp. and
Volkswagen AG have failed.
In June of last year, the UAW
elected as its president Mr.
Jones. Unlike many past UAW
presidents, Mr. Jones was inex-
perienced in auto-industry bar-
gaining and had yet to negotiate
a national contract.
At a convention in Detroit
this spring, he made clear the
union was ready to take a stand.
“We are preparing for a con-
flict,” Mr. Jones said amid
cheers and blaring horns. He
told members the union was in-
creasing its strike pay from
$200 to $250 a week.
Mr. Jones is under pressure
to show strength as a Justice
Department investigation into
corruption dents workers’ confi-
dence in their top brass.
Formal contract talks began
in July with all three car mak-
ers. In late August, federal
agents searched the homes of
Mr. Jones and his predecessor
Dennis Williams. Neither man
has been charged with a crime.
The union has said it is cooper-
ating with the investigation and
the search warrants weren’t
necessary.
Shortly after Labor Day, the
UAW picked GM to take the leadin negotiations. The week the
UAW’s contract with GM was
set to expire, agents arrested
another union leader.
GM executives asked the
UAW to extend talks, figuring
the union’s bargainers would
want to push back the deadline,
say people close to the discus-
sions.
Around 10 p.m. Saturday, two
hours before the existing con-
tract was to expire, GM added
elements to its offer to avert a
strike. Its proposal included
wage increases, new jobs and a
plan to salvage the Detroit fac-
tory, according to a person close
to the negotiations.
UAW leaders weren’t con-
vinced, telling members later in
a letter that GM waited too long
to make what they considered
to be the company’s first seri-
ous offer.
Rather than return to the ta-
ble the next day, more than 100
union officials gathered in a
windowless ballroom at GM’s
headquarters, where negotiators
had been bargaining with the
company, according to people
close to the talks.
UAW Vice President Terry
Dittes told them that the two
sides “were miles apart and GM
isn’t negotiating in good faith,”
one attendee said.
They held a vote on whether
to strike. The proposal received
a resounding “yay,” said people
who were in the meeting. The
“nay” vote was met with silence.THE WALL STREET JOURNAL
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LOS ANGELESDemocratic Donor
Held in Drug DeathA prominent Los Angeles do-
nor to the Democratic Party is
facing charges related to one of
two fatal drug overdoses in his
apartment since 2017, the U.S.
attorney’s office for the Central
District of California said Thurs-
day.
Federal prosecutors have
charged Ed Buck with providing
methamphetamine to 26-year-
old Gemmel Moore, who died af-
ter receiving the drug intrave-
nously in July 2017.
The criminal complaint filed
Wednesday night said Mr. Buck
paid Mr. Moore money and
drugs to engage in sexual activi-
ties with him. In addition, it al-
leges that Mr. Buck gave drugs
to others in exchange for sex
and that another man fatally
overdosed in his apartment in
January of this year.
Mr. Buck is a longtime donor
to the Democratic Party who
has given money to Barack
Obama’s and Hillary Clinton’s
presidential campaigns, accord-
ing to OpenSecrets.org.
Mr. Buck’s attorney Seymour
Amster didn’t respond to a re-
quest to comment. Mr. Amster
has previously denied that Mr.
Buck had any role in the deaths
of men in his apartment, NBC
News has reported.
The charges come two days
after state authorities arrested
Mr. Buck in connection with a
nonfatal methamphetamine over-
dose that occurred in his West
Hollywood apartment last week.
If convicted on the federal
charges, Mr. Buck faces a mini-
mum of 20 years in prison and a
maximum of a life sentence
without parole. The state charges
carry a maximum sentence of
five years and eight months.
—Ethan MillmanEPAAgency Acts to Ease
Emissions RulesThe Trump administration
took a step toward loosening
emissions rules for vehicles sold
in the U.S. by moving to strip
California’s ability to set its own
tougher requirements, which of-
ficials said will give drivers ac-
cess to cheaper, safer cars.
Officials from the Environ-
mental Protection Agency and
the Transportation Department
said Thursday they issued a fi-
nal action on a rule that will
unify the country’s fuel-econ-
omy and greenhouse-gas-emis-
sions standards.
The announcement, which
had been previewed by Presi-
dent Trump and other officials
earlier in the week, marks an-
other step in easing require-
ments set under the Obama ad-
ministration in 2012.
Critics say the administra-
tion’s moves will hurt air quality
and the fight against climate
change.
—Katy Stech FerekFEMAWhite House Pulls
Pick After QuestionsThe White House withdrew
its nomination of Jeffrey Byard
to head the Federal Emergency
Management Agency, a week af-
ter Mr. Byard asked to pull his
nomination amid senators’ con-
cerns about personal matters in
his background.
President Trump on Wednes-
day suggested he would nomi-
nate Peter Gaynor, the agency’s
acting administrator, to serve in
that role in a permanent capacity.
Mr. Byard is associate admin-
istrator for FEMA’s Office of Re-
sponse and Recovery. In a letter
to acting Homeland Security
Secretary Kevin McAleenan ask-
ing to withdraw his nomination,
Mr. Byard said he would con-
tinue to serve in that role.
Lawmakers had acknowl-
edged problems with Mr. Byard’s
nomination, without providing
details about their concerns.
—Rebecca BallhausThe last name of John
Cadeddu, managing director at
DAG Ventures, was incorrectly
given as Caddedu in a Page
One article Thursday about
We Co. Chief Executive Adam
Neumann.CORRECTIONS
AMPLIFICATIONS
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing [email protected] or
by calling 888-410-2667.familiar with her role. With Ms.
Barra’s leadership team, she
sought to tackle a problem that
had long dragged on GM’s fi-
nances: too many North Ameri-
can factories operating on
barely one shift.
The week after Thanksgiving,
GM sought to roll out a restruc-
turing plan: Four U.S. plants and
one in Canada were set to be
“unallocated,” meaning no vehi-
cles would be built there in the
near future. The move put more
than 6,000 factory workers atrisk of losing their jobs.
On a conference call with
Wall Street analysts just after
Thanksgiving, Ms. Barra and Ms.
Suryadevara explained that the
cuts would boost annual cash
flow by $6 billion by 2020, help-
ing GM to fund technology for
electric and self-driving vehi-
cles, and to protect its bottom
line in a downturn.
The UAW’s membership,
which last peaked at 1.5 million
in the late 1970s, tumbled to
roughly 400,000 last year, the
result of years of corporate
downsizing and layoffs by the‘We are preparing
for a conflict,’ the
union’s leader said
last spring.U.S. NEWS
tors—Ford Motor Co. and Fiat
Chrysler Automobiles NV—have
much riding on the outcome of
this stalemate. The UAW will
use the contract agreed to at
GM as a template for talks with
the other two U.S. car makers.
It’s a confrontation that has
been building for years, with the
two big institutions, both under
acute pressures, driven by di-
verging goals. Negotiations con-
tinue this week. Even after a
contract is eventually reached,
the relationship may have per-
manently shifted.
On one side is GM’s Chief Ex-
ecutive Mary Barra, who is try-
ing to shed the auto maker’s
long-held reputation for ignor-
ing problems. She is aiming to
show Wall Street that today’s
GM is leaner and more assertive
than the one that collapsed into
bankruptcy a decade ago.
On the other side is the UAW,
an organization that once ruled
the auto industry but is now
confronting declines and dissent
from within—fueled in part by
the popularity of President
Trump among its members.
As U.S. auto industry sales
slow, following a historic run,
both sides are trying to lock in a
new labor agreement that will
protect their respective liveli-
hoods in the years ahead.
UAW leaders say they called
the strike after bargaining for a
new four-year labor agreement
hit a standstill, with the two
sides far apart on issues ranging
from wages and health care to
the use of temporary workers.
The tone had been set
months before contract talks of-
ficially started. UAW leaders
met at an Atlantic City casino in
May to discuss tactics, and an
air of anger permeated the
meeting, say people who at-
tended.
Two months earlier, GM had
shuttered a major assembly
plant in Lordstown, Ohio, letting
hundreds of people go, and the
nation’s largest auto maker by
sales was planning to close
three more U.S. factories.
Gary Jones, the UAW’s presi-
dent, told the Atlantic City gath-
ering that GM’s decision had
fundamentally changed the
union’s relationship with the
company and would cast a
shadow over negotiations.
“They were saying there was
a different feeling—a shift from
upper GM management,” said
Dennis Earl, a union leader from
Toledo, Ohio, who attended the
meeting.
GM executives have defended
the plant closures as the type of
bold move that the old GM
would have shied from. The two
largest of the factories set to
close—the one in Lordstown
and another in Detroit—were
sputtering along at less than
half their capacity, building cars
that a dwindling number of peo-
ple want to buy.
Wall Street analysts ap-
ContinuedfromPageOne
Behind the
UAW-GM
Battle
August was the strongest
month for sales of U.S. homes
in nearly a year and a half,
sparking fresh hope that a
protracted slump in the hous-
ing market may finally be
starting to reverse.
Sales of previously owned
U.S. homes rose 1.3% in August
from July to a seasonally ad-
justed annual rate of 5.49 mil-
lion, the National Association
of Realtors said Thursday.
Economists surveyed by The
Wall Street Journal expected
sales to fall 1.1% last month.
The August gain, which
came after July marked the
first year-over-year uptick in
17 months, strengthened the
case that some of the lowest
mortgage rates of the past 50
years may at last be luring
more buyers back into the
market, economists said. For
months, they have grappled
with why ultralow borrowing
rates, strong employment and
rising wages have failed to
spark more home buying.
“Just perhaps we may have
turned a corner for good in
terms of home sales, which
had been underperforming in
relation to jobs, mortgage
rates and other factors,” said
Lawrence Yun, NAR’s chief
economist.
Annually, sales in August
were up 2.6%, the second
month of growth following 16
straight months of declines.
Purchases of previously owned
homes account for most of
U.S. home buying.
Average fixed mortgage
rates for 30-year loans were
3.73% in the latest week, down
from close to 5% in November,
according to Freddie Mac.
Mortgage applications for
home purchases have risen forthree straight weeks, accord-
ing to the Mortgage Bankers
Association, and housing
starts were up more than 12%
in August. That marked the
biggest monthly gain for new-
home construction since 2007.
Significant headwinds re-
main. For one, the price of
homes available for sale con-
tinues to rise. The median sales
price in August was $278,200,
up 4.7% from a year ago, mark-
ing the 90th consecutivemonth of price increases on an
annual basis. The number of
homes available for sale, mean-
while, fell in August. The short-
age also has been propping up
prices, Mr. Yun said.
“Given the other constraints
that buyers face—tight inven-
tory and strained affordabil-
ity—their enthusiasm for low
rates is bound to be muffled,
which explains why August ex-
isting sales gained only mod-
estly,” said Matthew Speak-man, economist at Zillow.
“Even stronger sales volumes
may be around the corner
given that mortgage rates
plummeted in August.”
Concerns that the U.S.
economy might be headed for
a recession and uncertainty
about how trade disputes with
China will affect the economy
also are deterring some buy-
ers, economists and real-estate
agents have said for several
months now.
Yet for those who can af-
ford it, risings rents that con-
tinue to break price records
nationwide are starting to
nudge some renters to con-
sider homeownership more se-
riously.
Home sales in Southern
states increased 3.6% on the
year ended in August, making
it the region with the largest
annual growth in sales vol-
ume. Prices there rose 5.4%
over the same period. In the
West, where sales prices are
highest, the number of sales
rose 1.8% over the past year
and the median home price
rose 5.7% to $415,900.
News Corp, owner of The
Wall Street Journal, also oper-
ates Realtor.com under license
from the National Association
of Realtors.
—Laura Kusisto and
Likhitha Butchireddygari
contributed to this article.BYWILLPARKER
ANDDAVIDHARRISON
Home Sales Raise Hopes for Recovery
Real-estate agent John Howmiller, center, talks to people at an open house in Saratoga, Calif.Both the UAW and GM came into contract negotiations desperate for a win. Above, UAW strikers at a GM plant in Flint, Mich.NICK HAGEN FOR THE WALL STREET JOURNALNICK GONZALES FOR THE WALL STREET JOURNAL