Workers get back to jobs
DETROIT – The UAW and General Motors Corp. this morning reached a tentative agreement on a new, landmark contract for 74,000 autoworkers, ending the union’s first nationwide strike against the automaker in 37 years.
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UAW President Ron Gettelfinger announced the agreement at a 4 a.m. news conference at the union’s national headquarters in Detroit. He and Vice President Cal Rapson sent an e-mail announcing the agreement to local union leaders immediately before the news conference, reports the Detroit Free Press.
Gettelfinger said the tentative deal included a plan to shift oversight of retiree health-care benefits to an independent health-care trust – known as a voluntary employee beneficiary association, or VEBA. Gettelfinger said later in the morning that the union will not manage the fund. The trust is expected to remove more than $50 billion in long-term obligations from GM’s books.
‘I’m pleased to say we have a VEBA in place that will secure the benefits of our retirees and every seniority employee who is on the roles as of Sept. 14, and that stretches out in our projections for the next 80 years,’ Gettelfinger said. ‘I think our retirees will be exceptionally pleased with this contract.’
The company had sought such a trust – called a voluntary employee beneficiary association, or VEBA – to help lower its fixed costs and make it more competitive with Toyota Motor Corp. and other foreign rivals. Analysts estimate that foreign automakers with U.S. manufacturing operations pay an average of $20 less to $30 less per hour than GM. The costs are said to put U.S. manufacturers at a $1,500 to $2,000 disadvantage to the foreign automakers.
Neither the UAW nor GM would say how much the automaker will pay into the health trust, nor would disclose other details of the agreement. Gettelfinger said projections showed that a VEBA would be solvent for at least 80 years.
It wasn’t known how much money GM would put into the VEBA up front, but Gettelfinger said projections showed that it would be solvent for at least 80 years.
However, a person briefed on the deal said that besides the VEBA, the tentative agreement is expected to include:
• No wage increases.
• A $3,000 signing bonus for workers.
• A two-tier wage and benefits scale for new hires.
• A second-tier of compensation for jobs that GM and the UAW agreed are ‘non-core’ production jobs. This is expected to include many positions in which workers do not have their hands on a vehicle in the assembly process.
• A targeted special attrition program that the automaker expects to offer to relieve the pain of wage reductions for workers currently assigned to jobs defined as ‘non-core’ in the tentative deal.
• The possibility of the automaker maintaining the same level of its U.S. manufacturing workforce.
GM Chief Executive Rick Wagoner, in a statement, said this negotiation was ‘one of the most complex and difficult’ in the history of the GM-UAW relationship, but said the deal paves the way for the automaker to significantly improve its competitiveness.
“This agreement helps us close the fundamental competitive gaps that exist in our business,” Wagoner said. “The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments.”
Gettelfinger said the tentative agreement accomplished the union’s job security goals and should prevent the company and union from needing to make the same types of changes in the next contract, depending on the success of GM’s products.
The UAW struck GM plants across the United States at 11 a.m. Monday after nine days of talks following the previous contract’s expiration on Sept. 14. Gettelfinger said workers would return to production lines this morning.
Outside the Romulus engine plant, about 10 workers picketing at one gate were happy to hear the news on the radio.
‘It sounds good that this might be over with. We’re happy with that,’ said Matt Cauley, 46, of Saline, a 28-year GM employee.
The workers said they believe the strike worked in their favor and showed the company how much they valued their jobs. Retirement benefits and job security were issues they hoped to learn more about in the new contract.
The impact of the strike, which involves 73,000 GM workers, began to ripple across the auto industry Tuesday with some Canadian GM plants idling, auto dealers missing service parts and suppliers laying off workers.
The workers said they believe the strike worked in their favor and showed the company how much they valued their jobs. Retirement benefits and job security were issues they hoped to learn more about in the new contract.
‘I want to see the details,’ said Steven Cichone, who had just finished a shift picketing at GM’s Hamtramck assembly plant when the deal was announced. The 10-year GM employee said he would be pretty happy as long as there’s no pay cut.
People familiar with the talks said the two sides Tuesday discussed health care for active workers; a two-tier wage system in which those who do non-production work would be compensated at a lower level, and tapping into GM’s overfunded pension fund, an idea analysts have said might make UAW members more receptive to the creation of a health care trust fund.
The UAW began talks in July with GM, Ford Motor Co. and Chrysler LLC. The union on Sept. 13 designated GM as the lead company for talks — or the strike target — and extended contracts with Ford and Chrysler indefinitely.
The deal with GM is expected to set a pattern for the other two companies. Gettelfinger said the union had not decided whether to negotiate with Ford or Chrysler next.
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