GM-UAW STRIKE

Sides hammer out two-tier wage deal

Plan to pay new non-line workers less is part of strategy to cut costs, save jobs

Sharon Terlep And Bill Vlasic / The Detroit News

General Motors Corp. and the United Auto Workers dug in at the bargaining table Tuesday to craft a deal that slashes labor costs while safeguarding union jobs as thousands of autoworkers spent a second day on the picket line.

Sources told The Detroit News that GM and the UAW have essentially agreed on core economic aspects of a deal, including a two-tier wage structure for non-manufacturing jobs and cash bonuses over the next four years. The payments would be $3,000 to start followed by three years of lump-sum payments roughly equal to 3 percent of annual wages, the sources said.

A day after UAW President Ron Gettelfinger ordered 73,000 U.S. factory workers off the job in the first national strike against GM since 1970, sources familiar with the talks said negotiators are closing in on a deal. They warned, however, that many details of the increasingly complex agreement are still being worked out.

Meanwhile, the impact of the strike began to spread, forcing layoffs and shutdowns at parts suppliers nationwide and GM plants in Canada. Bankrupt parts maker Delphi Corp. said a prolonged strike could jeopardize its plan to exit from bankruptcy later this year.

Eleven days into overtime marathon bargaining, the union pushed GM to safeguard specific plants, sources close to the talks said.

With both sides in agreement over shifting retiree health costs to a company-funded, union-run trust, the focus of negotiations has turned to the core issue of cutting GM's labor costs without cannibalizing the union's ranks or wages.

"This is the time to hold the line on job security," said labor expert Harley Shaiken of the University of California, Berkeley. "At stake here is the future of UAW members and maybe of the union itself. At the end of the day, the issue for UAW members is, 'Am I going to have a job next year?' "

Bargainers were still at the table late Tuesday night. GM's goal is to wipe out what it says is a $25- to $30-per-hour gap in wages and benefits with foreign-based carmakers operating in the United States, especially rival Toyota Motor Corp. The automaker lost $12 billion over the past two years despite dramatic production cuts and marked improvements in its product lineup.

UAW ranks have thinned

The UAW is fighting to stem a nearly 30-year trend of declining membership amid drastic downsizing of the U.S. auto industry and growing production overseas. UAW membership has fallen to 576,000 active members from a 1979 high of 1.5 million.

A two-tier wage system would allow GM to save money on jobs not directly related to building an automobile, such as housekeeping, security and janitorial work. Those jobs could command wages as low as $12 to $15 an hour. The new wage structure would apply to new hires, not current workers.

GM would spend roughly the same amount on non-line labor as if it hired non-union contract workers for the jobs.

The union, in turn, wouldn't lose those jobs to outsourcing and could still claim the workers among their rank and file.

Historically, the UAW has shunned two-tiered wages, which it sees as counter to the long-held principle of equal pay for equal work. The union has agreed to two-tier systems in the past, but always in extraordinary circumstances, such as with bankrupt Delphi.

"The UAW is very hesitant to get itself involved in a two-tier wage settlement unless it's a unique type that doesn't appear to be a two-tiered system," said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass.

But the union, grappling with declining membership and difficulty organizing new members, is willing to consider options it wouldn't in past years, he said.

The signing bonuses will play a major role in getting members to sign off on those tough changes. While such payouts are a typical for the UAW, past bonuses have been much more modest.

Workers received payments of $1,350 in 1999 and $3,000 in 2003. The payments in this year's contract would amount to thousands of dollars more for the average worker over the agreement's four-year time frame.

Bonuses could be key

Sizable bonuses could be a victory that helps the union emerge from the strike with credibility among its members, Chaison said.

"There has to be some way for the UAW to say it did the best they could under difficult circumstances," he said. "And that they did better because they went on strike."

GM on Tuesday stayed silent on the strike issue. There's been no official word from the automaker on the strike since Monday's statement that it was "disappointed" with the union's decision to strike.

"We are discussing a lot of complex and difficult issues," GM spokesman Dan Flores said Tuesday, declining to discuss any specifics.

Gettelfinger has been more public, speaking out at a press conference on Monday hours after the strike and hitting the airwaves again Tuesday morning.

Gettelfinger told WJR Radio's Paul W. Smith in an interview Tuesday that the UAW reluctantly decided to call a strike over "job security and those type of issues." He reiterated a point he stressed on Monday -- that the union was not striking over the retiree trust, or voluntary employees' beneficiary association, which has been the center of attention since the talks began. While Gettelfinger broke his silence on the talks at the Monday press conference, GM Chairman Rick Wagoner has remained behind the scenes for the talks' duration. Gettelfinger said Wagoner has yet to make an appearance at the bargaining table -- even in the final hours before the strike.

"I saw Rick Wagoner on opening day. I have not talked to Rick Wagoner since," Gettelfinger said Monday. "He was there on opening day, but we have not had any discussions with him since."

But Wagoner has been actively plotting strategy for GM's bargaining team, according to people close to the talks. The GM chairman also briefed the firm's directors at a special board meeting Monday, said a source familiar with the meeting.

People with knowledge of GM's strategy said Wagoner would personally enter the negotiations if necessary.

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.