UAW-GM pact puts automaker in better shape
By James R. Healey and Sharon Silke Carty
USA Today
| |||
 |
|
||
Battered Detroit automakers have a chance to compete better against foreign-brand rivals under a four-year contract between General Motors and the United Auto Workers that got a tentative OK yesterday.
The agreement, which ended a 41-hour strike against GM, shifts $51 billion in potential healthcare liability off GM's balance sheet, puts new workers on a lower pay scale, freezes wages but guarantees bonuses, promises to keep investing in U.S. production and limits how long-idled workers get nearly full pay in a so-called jobs bank.
"A landmark deal," says David Cole, chairman of the Center for Automotive Research. "It represents a new business model between labor and management."
Ford Motor and Chrysler said they were reviewing the settlement and wouldn't comment on how hard it would be to meet the same terms. Both said they were happy to see the strike settled. It was the first nationwide UAW strike since a 1976 action against Ford.
Union members have acknowledged they must make concessions to ensure the survival of Detroit automakers, who reported combined losses of $16.1 billion last year. Instead of taking their usual combative approach, UAW leaders "truly recognize that they have a dog in this fight, and that's historic," says Van Conway, auto consultant at Conway MacKenzie & Dunleavy.
UAW President Ron Gettelfinger says the union will use the customary pattern bargaining, meaning it will ask Ford and Chrysler to accept substantially the same deal.
They'll agree, says Tom Mobley, professor at Farmer School of Business at Miami University in Ohio. "All three of them have been involved in buyouts and trying to get (retiree) healthcare off the books."
Ford and Chrysler have relatively fewer retirees than GM, so they won't benefit as much from shifting responsibility for retiree healthcare to an independent entity partly directed by the UAW. But both benefit from cuts in the jobs bank and a two-tier system that has a lower pay scale for new workers than current employees.
"GM succeeded in closing a good portion of the employment-cost gap against the Japanese Three building cars in the U.S.," says David Healy, analyst at Burnham Securities, referring to Toyota, Honda and Nissan.
• • •
|
The highlights
Highlights of the four-year contract agreement reached by General Motors and the United Auto Workers, pending UAW member approval. Retiree healthcare. The UAW agreed to allow GM to create a trust — called a Voluntary Employees Beneficiary Association, or VEBA — to pay for retiree healthcare. Although specific financial details weren't immediately available, UAW President Ron Gettelfinger said the fund should have enough money in it to last 80 years. Two-tier wages. GM would be able to pay nonproduction workers, such as janitors, lower wages than production workers. Nonproduction workers make nearly the same, which has led to outsourcing. Workers in those jobs would be offered buyouts in the near future, and the automaker would then fill those spots — plus add some jobs that had been previously outsourced — with lower-waged workers. The move would let the UAW add more members to its ranks. It would be different from other two-tier agreements that have allowed lower pay for newer workers doing the same job as higher-paid workers. Job security. GM said it would continue investing in the United States, although it did not make specific plant or production promises to the UAW. Jobs bank. The jobs bank, which pays idled workers even when there are no jobs available, continues. But there would be time limits on how long workers could remain in the bank, and workers might be given the option of taking a job in another part of the country or leaving the jobs bank. Profit-sharing. While the automaker already has profit-sharing with union members, the formula would change to roughly include profits earned outside the United States. |
