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UAW-GM Contract to Create or Retain 6,400 Jobs

September 21, 2011
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General Motors Co. has agreed to retain or create 6,400 jobs as part of $2.5 billion in planned product and plant investments under a new labor accord with the UAW.

In a move to encourage GM to add jobs, the union and automaker negotiated new buyout offers of $10,000 to $65,000 to encourage longtime workers to retire and be replaced with lower-paid, entry-level workers.

On Sept. 19, the union released details of the pact covering wages and benefits for 48,000 GM workers, as well as future plant investments.

The investments include two new midsize vehicles to be built at GM's Spring Hill, Tennessee, assembly plant, which will be reopened.

Additional product plans include a new transmission program at GM's Warren, Michigan, powertrain plant; a new engine program at a Romulus, Michigan, powertrain plant; a new casting operation at a plant in Saginaw, Michigan; and an additional production shift at GM's Wentzville, Missouri, assembly plant— where GM is expected to build a new compact pickup for Chevrolet and GMC.

According to the UAW, the investments in Spring Hill, Warren, Romulus and Saginaw originally were slated for GM's Mexico operations.

GM also plans to assemble a compact vehicle at a yet-to-be determined plant, the union said.

UAW members will vote on the contract between now and Sept. 28 and be eligible for a $5,000 signing bonus upon ratification.

The contract also provides what the union described as "inflation protection lump sum" payments of $1,000 in 2012, 2013 and 2014.

Under an enhanced profit-sharing plan, the union said a minimum payment of $3,500 will be paid in early 2012 based on GM's 2011 profits through June.

Workers will also be eligible for an annual award up to $250 when quality targets are met.

The union said the lump sum payments, profit-sharing and quality awards will provide eligible employees with at least $12,000 in economic gains during the contract.

UAW leaders said union bargainers decided to go with $1,000 annual inflation-protection payments rather than a restoration of cost-of -living adjustments because workers would likely receive more in lump sums given the low rate of inflation.

"When GM was down, our members sacrificed and saved GM," UAW president Bob King said in a letter to union members that provides highlights of the pact. "Now that GM is posting strong profits, our members, as a result of this tentative agreement, are going to share in the company's success."

King said the GM contract will serve as a general framework and pattern that the union will press Ford Motor Co. and Chrysler Group to match.

"I'm confident we can put together an agreement with both," he said.

Negotiations at Ford and Chrysler continue and may take several more days to complete. King indicated the union has not yet decided which company to focus on next. Analysts expect Chrysler to follow GM, and Ford to be completed last

Under the pact, GM will offer a $10,000 bonus for eligible employees who retire over the next two years and a $65,000 bonus for skilled trades workers who retire between Nov. 1 and March 31, 2012.

GM has 12,000 skilled trades workers, of whom 6,000 are retirement eligible, according to the Center for Automotive Research in Ann Arbor, Michigan. GM has the largest concentration of skilled trades workers: 25 percent. In contrast, the percentage of skilled trade workers at a transplant is about 15 percent, the center reports.

King said there are 14,000 to 17,000 GM hourly workers eligible to retire today.

The union—battered by membership losses at Detroit's three automakers—hopes GM will have 60,000 UAW members when the contract ends in 2016.

Joe Ashton, head of the union's bargaining at GM, said jobs were a top priority of the 2011 negotiations. "I think we met that objective," he said.

While veteran employees will see no wage hike, GM agreed to boost hourly wages for new workers to $15.78, from $14, and to a maximum of about $19.28, up from about $16, in the previous contract. GM has about 2,500 U.S. hourly workers classified as entry-level.

Entry-level workers will also receive improved health insurance and tuition assistance.

The maximum amount of annual profit sharing for a worker is capped at $12,000, according to the deal.

Ashton said the contract calls for 10 percent of employee profit-sharing payouts to be held back and allocated to the UAW's VEBA to fund future retiree health care needs. The holdback plan is still subject to a legal review to ensure it meets federal guidelines.

GM unloaded most of its annual health care obligations onto the Voluntary Employees' Beneficiary Association, or VEBA, which pays health care obligations for UAW retirees. It was established in 2007 and took effect last year.

Last year, GM spent $665 million on health care for its 48,000 active UAW workers and their dependents.

A GM spokesperson said Sept. 20 the company would not have additional comments until union members vote on the proposed pact.

On Sept. 16 when the deal was unveiled, Cathy Clegg, head of labor relations for GM, said the agreement "addresses the needs of employees and positions our business for long-term success.

"We worked hard for a contract that recognizes the realities of today's marketplace, enabling GM to continue to invest in U.S. manufacturing and provide good jobs to thousands of Americans," she said.

David Phillips and David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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