UAW Reach Tentative Agreement
Framework Gives Company More Hiring Flexibility, Creates
By Joseph B. White, John D. Stoll and Jeffrey McCracken, Staff
The Wall Street Journal
Wednesday, September 26, 2007
DETROIT -- General Motors Corp. and the United Auto Workers
early Wednesday morning announced a tentative agreement on a new
national contract for about 74,000 U.S. auto workers that
includes a historic restructuring of GM's obligations for UAW
retiree health care. The deal was announced at about 4 a.m. in
Detroit after a two day national strike by the UAW against GM.
Details of the contract weren't disclosed. GM said the
tentative contract "paves the way for GM to significantly
improve its manufacturing competitiveness, providing the basis
for maintaining and strengthening its core manufacturing base in
the United States."
Under the framework taking shape late Tuesday, it was expected
that GM would give the UAW commitments for substantial
investment in plants in the U.S. -- many of those tied to new
cars, trucks, engines and transmissions the company has on the
drawing board, according to people familiar with the process.
"This agreement helps us close the fundamental competitive gaps
that exist in our business," Mr. Wagoner said in a statement.
"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."
The creation of an independent trust to take over some $50
billion owed to GM-UAW retirees for health care would represent
a significant boost for GM, which has had its credit ratings
knocked down to junk ratings in part because of concerns about
the huge debt, which is more than double GM's current market
GM has an estimated $51 billion retiree health-care obligation
to UAW members and retirees. At 70 cents on the dollar, the
fund would be worth in excess of $35 billion.
Among the other key elements of the new deal that took shape
late Tuesday were substantial changes to the much-maligned Jobs
Bank, a job-security provision that allowed unemployed UAW
members to receive full pay for years without working. The
provision will still exist, but changed to make it much less
likely there will be many people in the Jobs Bank for any length
of time, according to people familiar with the process.
Other elements, as of late Tuesday night, included: a new-hire
rates for new UAW members brought into GM. The rate would
probably be far less -- maybe even half -- the current
wage-and-compensation package given to UAW-GM members, said
However, 4000-5000 temporary workers at GM would be hired in as
full-time workers and paid at the full, tier-one
wage-and-compensation rate that is estimated at $70-$75 an hour
once wages, benefits and pensions are included. To make room
for new hires, GM would again offer substantial early-retirement
buyouts for workers.
Getting these temp workers hired as full-time GM employees at
the compensation rate was a top priority for the UAW, which has
added few members at the Big Three and was seen as a graying
GM would be able to negotiate a diversion on cost-of-living
adjustments and increased cost-sharing on health care for active
workers. Another potentially big gain for GM if the deal is
approved: no wage increases during the life of the contract.
There will likely be a signing bonus for workers, plus lump-sum
bonuses of 3 percent, 4% and 3% of annual pay over the last
three years of the deal, people familiar with the process said
late Tuesday. It wasn't clear early Wednesday if any of these
provisions had been altered in last minute bargaining.
Earlier Tuesday, Mr. Gettelfinger stepped up public pressure on
GM to improve its offers on job security and profit sharing with
union workers. Meanwhile, people familiar with the matter said
the issues remaining to be resolved included what UAW's members
can expect to get if GM regains financial success thanks to UAW
Despite the strike's disruption, the auto maker's shares
weakened only slightly. In 4 p.m. New York Stock Exchange
composite trading, GM's shares were down 0.9% to $34.42.
Investors and analysts were betting that more than 73,000
striking auto workers will shortly return to the assembly lines.
The two sides have been holding marathon sessions since Sept.
13. But the strike, and a series of public statements by Mr.
Gettelfinger, have made it clear that for much of that time GM
and UAW leaders were miscalculating the resolve of their
A GM spokeswoman said the auto maker is not giving details about
the tentative agreement at this time, instead allowing the UAW
to take the lead on communicating with its members.
"I'm pleased to say that we have a VEBA in place that will
secure the benefits of our retirees," UAW President Ron
Gettelfinger said at an early morning news conference inside the
union's Detroit headquarters.
Mr. Gettelfinger said he's confident of ratification and that
voting likely will start as soon as this weekend. Union leaders
will be briefed on Thursday and Friday, he said.
The UAW also expects to decide Thursday what auto maker it will
negotiate with next.
--The Associated Press contributed to this article.
Write to Joseph B. White at
firstname.lastname@example.org, John D. Stoll at
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