Auto/Economy
8:47 am
Sat September 17, 2011

GM, UAW agree to new contract

General Motors Co. and the United Auto Workers, sobered by the government bailout and bankruptcy at the automaker just two years ago, reached a tentative agreement on a new four-year contract without the public acrimony or strikes that have plagued the talks in the past.

Details weren't immediately released, but the union said the agreement includes some of its major goals, including assurances of new products for U.S. plants, improved health care benefits and a profit-sharing plan. The union said the plan will put laid-off members back to work.

"When GM was struggling, our members shared in the sacrifice. Now that the company is posting profits again, our members want to share in the success," UAW Vice President Joe Ashton, the chief negotiator with GM, said in a statement. "The wages and benefits we negotiated in this tentative agreement reflect the fact that it was UAW members who helped turn this company around."

UAW President Bob King, who was reached by phone Friday night, said he wouldn't comment on the agreement until after he has met with local union leaders.

The contract covers 48,500 GM workers in the U.S. GM was the first of the Detroit Three to reach an agreement with the UAW. Chrysler Group and Ford Motor Co. are still negotiating.

The UAW announced the agreement just after 11 p.m. EDT Friday (0300 GMT Saturday), after a little more than seven weeks of closed-door bargaining.

The UAW's contract with GM expired Wednesday, but the union had extended it indefinitely while negotiators continued to talk. In the past, workers might have gone on strike when the deadline passed. But this year, GM and Chrysler workers had limited ability to strike under the terms of the companies' government bailouts two years ago. These talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.

Workers must vote on the plan before it will take effect. Union leaders from around the country have been asked to come to Detroit Tuesday to learn the details so they can explain them to their members. GM says a vote is expected in the next week to 10 days.

"We used a creative problem solving approach to reach an agreement that addresses the needs of employees and positions our business for long-term success," said Cathy Clegg, GM's vice president of labor relations. "We worked hard for a contract that recognizes the realities of today's marketplace."

Talks between GM, Ford and Chrysler determine the wages for 112,500 factory workers at all three companies. They also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands of people.

The White House also will be watching the outcome of the talks. GM received $49.5 billion in government bailout funds two years ago and is still part-owned by the U.S. Treasury. An agreement that is favorable to GM could help the company's stock rise, which would get the Treasury closer to making back the money it is owed when it sells its remaining shares.

GM began the talks paying its workers an estimated $56 per hour in wages and benefits, which is about the same amount that Ford and Toyota Motor Co. pay their U.S. workers but higher than Chrysler and Hyundai Motor Co.

After its wrenching trip through bankruptcy protection, GM is making money again. The company made $4.7 billion last year, its first annual profit since 2004. But it isn't eager to add costs after years of layoffs and plant closings.

The UAW has shown a willingness to work with GM to cut labor costs. Last fall, the union agreed to lower the wages of 40 percent of its workers at a Michigan plant so it can profitably build the subcompact Chevrolet Sonic there. In turn, GM has promised to invest in its U.S. workers and facilities. Earlier this summer, GM pledged to put $2 billion into 17 U.S. facilities over the next 18 months. The company says the investment will create or retain 4,000 jobs.

The UAW hopes to show that it can work cooperatively with auto companies as it tries to unionize U.S. factories owned by Nissan Motor Co., Honda Motor Co., Volkswagen AG and other foreign automakers. King said the union remains committed to organizing those plants.

"As long as unionized workers are being forced to compete with nonunion workers who in most cases receive lower pay and benefits — many in temporary jobs — there will continue to be a downward pressure on the wages and benefits of all auto workers," he said.

The union's focus on GM slowed the Chrysler negotiations and drew an angry response earlier in the week from CEO Sergio Marchionne.

Marchionne accused King of failing to show up at Chrysler's Auburn Hills, Michigan, headquarters to finalize a deal on Wednesday night. Marchionne then left the country, so it's unlikely a deal will be finalized until he returns next week.

Talks with Ford have made little progress while negotiations continue with the other two companies.

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