UAW-GM deal richer than FCA; $1.9B in new investments

Melissa Burden, Michael Wayland and Michael Martinez
The Detroit News

The United Auto Workers' tentative agreement with a resurgent General Motors Co. is a more profitable deal for workers than the 2011 pact and includes the first hourly wage increase in nearly a decade for some; an $8,000 signing bonus for all workers and $2,000 for temporary workers; and gradual elimination of the pay gap between veteran workers and newer hires.

It also would move entry-level workers to the same health care plan as veteran workers in January, award each worker an annual $1,000 performance bonus and an additional $500 bonus when quality targets are met and offer 4,000 eligible employees a $60,000 early retirement bonus.

The four-year deal approved Wednesday by the UAW National GM Council must now be ratified by 52,600 rank-and-file members over the next week or so.

The deal includes GM’s promise to invest $1.9 billion in its U.S. facilities, creating or retaining 3,300 jobs at 12 plants through 2018.

The pact includes many sweeteners on top of what the union reached with Fiat Chrysler and follows patterns set by Fiat Chrysler in a contract ratified last week. UAW President Dennis Williams had said previously he would push for a richer deal with GM and Ford, because both are much more profitable than Fiat Chrysler. Ford has yet to ink a deal with the UAW.

“We believe this agreement gives UAW members significant raises and stronger benefits and will strengthen members and their families, in our communities and our union,” Williams told reporters Wednesday night.

“By standing strong and united together, the bargaining committee secured better pay, a clear path to the traditional wages for all current members and commitments to keeping jobs and products here.”

Workers have been hammering to recoup concessions taken during the recession and bankruptcy days, especially as GM has turned record profits since emerging as a new company in 2009.

“There were multiple things we were able to do because of GM’s wealth,” Williams said.

GM’s deal, as Fiat Chrysler’s does, includes an eight-year progression to top wages for entry-level workers — so-called Tier 2 employees — to reach a top wage of about $29 an hour; two 3 percent wage increases and two 4 percent percent lump-sum payments for veteran production workers.

Tier-two workers will move to the health care plan that traditional veteran hourly workers receive, including full dental and vision coverage. Dan Reyes, president of UAW Local 599, which represents about 465 members at GM’s Flint Engine Plant, called the move “huge.”

“It makes it easier to survive,” he said. “It’s just like getting a pay raise; you’re not pouring extra money into health care costs.”

The pact also will allow hundreds of GM workers who shifted to other plants during the downturn and around the time of bankruptcy to transfer back to their home plants if there are openings, regardless of the tier-structure, UAW Vice President Cindy Estrada said.

“Considering the times we’re in, it’s a great lucrative agreement,” said Rich LeTourneau, shop chairman with UAW Local 2209, which represents workers at Fort Wayne Assembly in Indiana and thinks members will support it. “I think they did a pretty good job.”

The union and GM approved the tentative agreement late Sunday, averting a possible strike.

Regional informational meetings are set for Thursday and Friday. UAW locals will then hold information meetings and GM ratification votes will happen after that. Williams did not answer a question from reporters about whether voting would be wrapped up in a week.

John Rice, a GM worker for nearly 31 years, said Wednesday he likes the deal but was hoping for additional base wage increases for veteran workers, many of whom haven’t had an increase in 10 years.

“I think we should have at least gotten a 3 percent raise across the board instead of the bonuses in the second and fourth years,” said the 51-year-old Bowling Green Assembly worker. “A raise is always better than a bonus, and they’ve been doing bonuses for the past two contracts.”

Temporary workers also will receive wage hikes and a health care plan. Retirees will get a $500 gift card. As part of the deal, GM will officially close its Janesville Assembly Plant in Wisconsin. The plant stopped producing vehicles at the end of 2008 and has been on standby since.

Many UAW workers in Lansing earlier this week told The Detroit News that they would be satisfied with a deal similar to Fiat Chrysler’s.

“Chrysler got a good deal, so I guess I’m happy because we’ll probably get a little better than them,” said Gail Henigan, 56, an entry-level worker. “I’m excited. It’s definitely bringing the tier twos up to tier ones … if it’s the same.”

Arthur R. Schwartz, president of Ann Arbor-based consultancy firm Labor and Economics Associates, expects the deal with GM to be ratified.

“This is a better deal at GM than Fiat Chrysler,” he said. “I will be shocked if this doesn’t get ratified.”

Schwartz, a longtime GM negotiator, called the pact an “expensive” deal for the company. He added many of the gains outside of the wage hikes don’t add to GM’s fixed costs.

“It’s cash, and right now the company has cash,” he said. “We’re at the top of the cycle and the company is doing well. And the union feels it needs to be awarded for past behavior, and they will.”

The signing bonus will cost GM an estimated $420 million.

GM declined to comment Wednesday. In a statement issued when the tentative agreement was reached, it said the deal was good for employees and the company. The company had been seeking ways to help lower its overall hourly labor cost during the contract.

“Working with our UAW partners, we developed constructive solutions that benefit employees and provide flexibility for the company to respond to the needs of the marketplace,” said Cathy Clegg, GM North America manufacturing and labor relations vice president, in a statement.

The 2011 contract between the UAW and GM included a $5,000 signing bonus. GM hourly workers under the 2011 agreement received bonuses and profit sharing totaling $39,250 each. The company’s profit-sharing formula, which pays hourly workers $1 for every $1 million in pre-tax North America profits, will stay the same. Through September, GM North America has posted pre-tax profits of nearly $8.3 billion.

The Detroit-based automaker this year announced investments of $5.4 billion over three years at U.S. facilities, creating 650 new jobs. It also announced a $1 billion investment at the Warren Tech Center. Last week, the carmaker announced it would add a second shift and more than 1,200 jobs early next year at its Detroit-Hamtramck Assembly Plant, and that it plans in January to cut a shift at the Orion Assembly Plant because of slow sales of the Chevrolet Sonic and Buick Verano.

During the 2011 UAW-GM agreement, the automaker announced U.S. plant investments of $12.4 billion. Those investments added about 6,250 jobs and secured positions for 20,700 employees.

Williams said he would meet with UAW-Ford Vice President Jimmy Settles on Thursday to discuss the best way to approach Ford’s deal. The union’s contracts with all three automakers expired Sept. 14.

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