How tentative GM deal stacks up to previous UAW contract
United Auto Workers striking General Motors Co. for the past month demanded the return of production from Mexico and reversal of plans to close the sprawling Lordstown Assembly complex in northeast Ohio’s Mahoning Valley.
They got neither in the tentative agreement more than 48,000 members will consider this week. But they stand to get raises and bonuses that outpace current inflation, the elimination of the $12,000 cap on profit-sharing payouts and a record $11,000 ratification bonus — a markedly more lucrative contract compared with their deal four years ago.
"It’s a very rich contract," said Patrick Anderson, CEO of East Lansing-based Anderson Economic Group LLC. "Although it's very expensive for GM, it does allow them to close down three plants entirely. That was a major accomplishment for GM. They spent a lot of money on wages, on vacation time, on bonuses, on health care and they achieved the ability to close down plants."
The automaker plans to shut down operations at Lordstown Assembly Complex in northeast Ohio, Baltimore Operations in Maryland and Warren Transmission in Michigan. The moves, strongly opposed by the UAW leaders and members alike, are expected to save the company billions.
"If I were GM and I'm trying to spin this, I would say we protected our ability to move product wherever we want to, and that a lot of the increases we provided are not fixed into the base and are contingent on the performance of the (company)," said Marick Masters, business professor and former director of labor studies at Wayne State University.
The new contract is not likely to narrow the labor cost gap between GM and foreign automakers in the U.S., experts say. The Center for Automotive Research estimates that GM spends $13 more per hour than the average for foreign-owned automakers operating in the United States.
GM's decision to slim down operations was "essential" for the automaker to survive the next economic downturn, Anderson said.
"To their credit, GM management saw that in 2018 and they stuck through a very painful strike insisting that they should be able to reduce the costs of their production, reflecting the fact that auto sales are slowing and the next recession will come," Anderson said. "If you are in the auto industry, you have to know that winter is coming. Summer comes after that but you have to live through the winter."
Contracts vary every four years, influenced by corporate performance, vehicle sales, interest rates and the macro-economic environment — up to and including the global financial meltdown that spawned the Great Recession. Here' s how the current UAW-GM tentative agreement compares with the 2015 contract:
Wages and lump-sum payments
Four years ago, all traditional employees received a 3% wage increase for the first year, a 4% lump sum in the second year, a 3% wage increase in the third year and a 4% lump sum for the last year.
The proposed 2019 contract would give 3% base-wage increases in the second and fourth years of the contract and would pay 4% lump-sum bonuses in the first and third years, essentially reversing the order.
In the 2019 deal, eligible workers would receive annual $1,000 performance bonuses over the life of the four-year contract and four quality performance payments of $500, which is unchanged from the 2015 contract.
In 2019, there was no change to health care coverage over the 2015 contract. No additional costs were levied on members, who pay 3% of their health care. The automaker initially wanted to increase workers' share to 15% — a proposal it abandoned before the contract expired last month.
In 2015, UAW-GM employees received a ratification bonus of up to $8,000. Temporary employees received $2,000.
In the 2019 contract, employees will receive an $11,000 ratification bonus. Temporary employees will receive a $4,500 ratification bonus.
The current $12,000 cap on profit-sharing payouts is eliminated with the 2019 contract. Employees will earn $1,000 for every $1 billion made in North America with no limits.
Ford Motor Co. eliminated its profit-sharing cap in its 2015 contract, noted Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research.
In the 2019 contract, full-time temporary employees received a shortened path to permanent status. Starting in January 2020, all full-time temporary members with three or more years of continuous service will begin converting to permanent employees. And starting in January 2021, all full-time temporary employees with two or more years of continuous service can begin converting to permanent employees.
UAW bargainers persuaded GM to grant the union full approval authority and the ability to monitor the number of temporary employees. The agreement requires GM to seek union approval to supplement its workforce for straight time, overtime or weekend work in any plant covered by the pact. GM can use part-time temporary employees only with the union's approval.
In the 2019 contract, as base wages are increased, top production hourly pay for eligible permanent employees would rise to $32.32 by the end of the four-year contract. Meanwhile, all seniority employees hired prior to the effective date of the 2019 agreement would be eligible for top pay by the end of the contract, which cuts in half the current time window.
In 2015, all in-progression employees were moved to the traditional health care plan, where they remain in the proposed 2019 contract.
During the 2015 negotiations, GM pledged $1.9 billion of investment in its U.S. facilities, in addition to previously pledged investment of $6.4 billion. A total of 12 plants received the investments, creating or securing 3,300 jobs.
In the 2019 contract, GM committed to invest $5.7 billion into five plants and $2 billion into U.S. plant refurbishments during the four-year deal. The $7.7 billion commitment represents 9,000 new and retained jobs. One of those investments includes the Detroit-Hamtramck plant, which GM removed from the idled list and is now planning to use to build all-new electric trucks and vans.
In the 2015 contract, the union got 64 holidays over four years. In 2019, it got 66 holidays over four years.
Overall, the agreement is positive for the union, Wayne State's Masters said.
"I don't think they took a step backwards," he said. "I think they took a step forwards. These are pretty big achievements by the union's bargaining team. I think my sense is they pushed it as far as they could. They weren't going to get the assurances of plant allocations that they wanted."