GM, workers make headway on contract

A tentative four-year contract with striking General Motors gives workers a mix of pay raises, lump sum payments and an US$11,000 signing bonus.

In return, the contract allows GM to proceed with factory closures in Lordstown, Ohio; Warren, Michigan; and near Baltimore.

Details were posted Thursday on the United Auto Workers website as factory-level union officials met to decide if they’ll approve the deal. Workers went on strike September 16, crippling the company’s US production and costing it an estimated US$2 billion.

The Detroit Hamtramck plant, which GM wanted to close, will stay open and a new electric pickup truck will be built there. Meanwhile, the Lordstown area will get a new battery factory that is expected to employ 1,000 workers. In addition, a company called Lordstown Motors could also set up a factory that would initially employ 400 workers. But neither of those would come close to the shuttered Lordstown assembly plant, which two years ago employed 4,500 people making the Chevrolet Cruze compact car.

The deal shortens the eight years it takes for new hires to reach full wages and gives temporary workers a full-time job after three years of continuous work. Workers hired after 2007 who are paid a lower wage rate will hit the top wage of US$32.32 per hour in four years or less. The deal also provides a US$60,000 early retirement incentive for up to 2,000 eligible workers.

Template for Ford talks

The tentative agreement between GM and the UAW now will be used as a template for talks with GM’s crosstown rivals, Ford and Fiat Chrysler. Normally, the major provisions carry over to the other two companies and cover about 140,000 autoworkers nationwide. It wasn’t clear which company the union would bargain with next, or whether there would be another strike.

The strike at GM immediately brought the company’s United States-based factories to a halt, and within a week, started to hamper production in Mexico and Canada. Analysts at KeyBanc investment services estimated the stoppage cut GM vehicle production by 250,000 to 300,000 vehicles. That’s too much for the company to make up with overtime or increased assembly-line speeds.

GM and the union have been negotiating at a time of troubling uncertainty for the US auto industry. Driven up by the longest economic expansion in American history, auto sales appear to have peaked and are now heading in the other direction. GM and other carmakers are also struggling to make the transition to electric and autonomous vehicles.

Meanwhile, President Donald Trump’s trade war with China and his tariffs on imported steel and aluminuim have raised costs for auto companies. A revamped North American free trade deal is stalled in Congress, raising doubts about the future of America’s trade in autos and auto parts with Canada and Mexico, which last year came to US$257 billion.

Amid that uncertainty, GM workers wanted to lock in as much as they can before things get ugly. They argue that they had given up pay raises and made other concessions to keep GM afloat during its 2009 trip through bankruptcy protection. Now that GM has been nursed back to health – earning US$2.42 billion in its latest quarter – they wanted a bigger share.

The union’s bargainers have voted to recommend the deal to the UAW International Executive Board, which, in turn, was due to vote on the agreement.

– AP