Strike Ends GM-UAW reach tentative deal
By Sharon Silke Carty, USA TODAY
DETROIT — At United Auto Workers union halls across the nation, local officials are scrambling to get workers back in the saddle in an attempt to have production lines back up and running today, just hours after the UAW and General Motors (GM) agreed to a tentative contract ending a two-day national strike.
The contract puts the fate of retiree health care into the union's hands and off GM's books, lowering the automaker's overall debt. Neither side gave details of the trust, called a Voluntary Employee Beneficiary Association, or VEBA.
STATEMENTS: From GM and the UAW
The contract gives workers a lump-sum bonus in exchange for pay increases. It also enables the automaker to hire new workers at lower rates and different benefits packages.
The union will brief local union leaders on the deal at the end of the week, and a ratification vote by GM's 74,000 UAW-represented workers is expected over the weekend.
"We're happy that it's settled, and we're happy that it was resolved in such a short notice,"says Mark Hawkins, shop chairman at Local 598 in Flint, Mich., where workers are hoping to have a truck assembly plant back working by 5 p.m. today.
The deal was struck at 3 a.m. Wednesday morning, less than 48 hours after workers went on strike. It was the first nationwide strike against GM since 1970, and the first nationwide UAW strike since 1976.
"There's no question this was one of the most complex and difficult bargaining sessions in the history of the GM/UAW relationship," said GM CEO Rick Wagoner.
The company went into the negotiations seeking to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors. The costs are said to put U.S. manufacturers at a $1,500 to $2,000 disadvantage to the foreign automakers.
Pickets came down around 5 a.m. at the GM Parma plant outside Cleveland as word of the tentative settlement spread. The company told employees to report back to work on the mid-afternoon second shift, but some, with the union's approval, chose to return immediately.
"We feel confident that our leadership in Detroit has negotiated a good agreement for us," said Dick Kistemaker, financial secretary of Ohio's UAW Local 1005, which has about 1,700 members.
He said the short duration of the strike prevented good labor-management relations from deteriorating.
"We have worked with management on a lot of community events," Kistemaker said. "We preserved that partnership."
The union had three people handling phone calls Wednesday morning from members wanting to know about the arrangements for returning to work.
A sticking point had been the creation of the VEBA, which GM needs to fund at 60% to 70% of projected costs to make it cost effective. The union would then invest the money and take over the health care responsibility for about 340,000 GM hourly retirees and spouses. On Tuesday, UAW President Ron Gettelfinger said in a radio interview that the VEBA was not on the table.
"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.
Gettelfinger said the union will not manage the fund.
The company had sought a VEBA to help lower its fixed costs and make it more competitive with Toyota Motor (TM) and other foreign rivals.
Neither the UAW nor GM would say how much the automaker will pay into the health trust or disclose other details of the agreement, but Gettelfinger said projections showed that it would be solvent for at least 80 years.
GM has pushed for the trust to relieve itself of the responsibility for more than $50 billion in retiree health care cost liability. People familiar with GM's position have said they believe the automaker will pay less than $35 billion into the trust
Gettelfinger said he's confident of ratification.
The UAW's national negotiating committee and executive board for GM both have unanimously recommended ratification, Gettelfinger said.
"We're very comfortable with this agreement, and we're happy to be able to recommend it to our membership," Gettelfinger said.
The UAW may also decide Thursday whether to begin talks next with Ford or Chrysler. Those talks can begin before the GM contract is ratified, Gettelfinger said.
Gettelfinger indicated in a radio interview this morning that the union may conduct simultaneous talks with Ford or Chrysler next.
After ratification, the VEBA memorandum would have to be approved by the courts and would be reviewed by the U.S. Securities and Exchange Commission, GM said.
The person briefed on the talks said that because GM's pension fund has more money than its expected obligations, both sides agreed to tap into it to fund the health care trust.
Retirees would get a pension increase, but it would be offset by an equal increase in health care contributions, the person said.
Wages would stay the same for the length of the four-year deal, but workers would be given a bonus or lump sum payments every year, the person said. The size of the payments was not immediately available.
GM made no commitments to build cars and trucks at U.S. factories, but generally agreed that with the reduced costs from the new contract, investment in the plants would work, the person said.
The pact also includes a lower wage structure for newly hired workers in certain non-manufacturing jobs, the person said, adding that in order to make way for new hires, GM would offer early retirement and buyout packages to veteran workers.
The deal also includes language that mitigates the impact of the jobs bank, in which the company pays laid-off workers most of their salary and benefits, said the person.
Lloyd Coleman, 64, of the Detroit suburb of Taylor, was working his first picket line shift when he got word early Wednesday of the tentative agreement. He said he was withholding judgment until details were released.
"I'm just wondering what we are giving up," said Coleman, a 31-year GM employee who for about the past year has worked as an electrician at a plant in Hamtramck. He said his biggest concerns include health care and bringing new products to existing GM plants.
Coleman said the VEBA holds promise.
"It's a big burden off the company," he said. "If it's managed right, it will be OK."
Negotiations between GM and the UAW officially began in July. Talks broke down Sunday night and workers walked off their jobs Monday when the strike deadline came and went.
Gettelfinger said the strike broke a logjam in the talks.
"I think the strike probably helped our side more than theirs," he said.
Industry analysts had predicted a short strike, saying the two sides had too much to lose from a prolonged work stoppage.
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Print | posted on Wednesday, September 26, 2007 11:37 AM