Unionized workers at General Motors approved a new contract aimed at helping the struggling US auto giant better compete with its Asian rivals, the United Auto Workers said Wednesday.
The UAW said 66 percent of its production workers and 64 percent of its skilled trade workers voted to ratify the new contract with General Motors based on a September 26 collective bargaining agreement.
“We entered these negotiations with a clear mandate from our membership,” UAW president Ron Gettelfinger said in a statement.
“With their help and solidarity, we were able to achieve our goals. We protected jobs, wages and benefits for both active and retired General Motors workers — and we helped protect middle class manufacturing jobs in communities throughout the United States.”
The GM ratification came as Chrysler LLC workers went on strike but hours later ended the walkout with a tentative agreement.
The UAW generally seeks similar deals with the Big Three automakers, and Ford is up next.
A key aspect of the GM accord is an agreement to transfer the administration of retiree health care to the union in exchange for job security guarantees.
This system is likely to save GM billions of dollars in costs over the long-term but will require a big initial cash infusion. The details of this plan were not publicly announced ahead of the ratification vote.
The UAW said GM will contribute more than 35 billion dollars to the effort including a 24.1-billion-dollar contribution to a new Voluntary Employee Beneficiary Association (VEBA), which will establish an independent trust fund to pay retiree health benefits.
GM has also pledged up to 1.6 billion dollars in additional contributions if needed to maintain the solvency of the trust fund, as well as a 4.37 billion-dollar convertible note issued by GM, and an estimated 5.4 billion dollars in direct payments for retiree health care through January 1, 2010, before the new VEBA is operational.
The new contract through September 2011 covers more than 73,000 active workers at GM and more than 269,000 GM retirees and 69,000 surviving spouses.
The UAW said the deal includes a 3,000-dollar signing bonus for employees and other salary gains. A typical GM assembler would get an extra 13,000 dollars over the life of the agreement.
“The contract also brings unprecedented job security with company commitments to invest in new products for its existing US facilities, as well as a moratorium on plant closings and outsourcing of work over the life of the agreement,” the union said.
“The UAW also was able to secure a commitment to hire 3,000 temporary workers into full time, traditional employment.”
The new deal takes a more than 50 billion-dollar liability off GM's books and allows it to dramatically reduce its labor costs, analysts said.
The deal is also said to give GM the right to pay significantly lower wages to some new hires and to offer early retirement bonuses to older workers, so as to clear the way for new hires.
GM has been seeking concessions from labor as it undergoes a massive restructuring in the face of a steady loss of market share to Asian competitors. GM commands just 24 percent of the critical US market, down from more than 40 percent in the mid-1980s.
GM's current labor costs of 73.26 dollars per hour is nearly 30 dollars per hour more than what Asian rivals such as Toyota and Honda pay workers in their non-unionized US plants.
