GM Reaches Tentative Agreement With UAW to Add Union Jobs

General Motors Co. (GM) and the United Auto Workers reached a tentative agreement on a four-year labor contract that improves profit sharing and will create jobs, the company and the union said in separate statements.

The accord goes to 48,500 GM hourly workers for a ratification vote in the next seven to 10 days, GM said. The union typically uses the first accord to set a pattern for pay and benefits for the other two U.S. automakers. UAW negotiators will seek a deal with Chrysler Group LLC next and then go to Ford Motor Co. (F), three people familiar with the talks have said.

The UAW, while declining to provide details, said the agreement includes improved health care and enhanced profit sharing with “far greater transparency.” GM will also invest in its plants, hire back laid-off members and return work to the U.S. from overseas, UAW President Bob King said in a statement.

“This is a contract negotiated in tough times, when the economy is uncertain and a battered industry is still in recovery,” said Harley Shaiken, labor professor at the University of California at Berkeley. “The union is saying, ‘Look, we’ve addressed job security when that is vital to our members and to the whole economy.’”

The union said it rebuffed efforts to weaken health-care coverage and won “significant improvements.”

‘New Strategies’

“The UAW approached these negotiations with new strategies and fought for and achieved some of our major goals for our members, including significant investments and products for our plants,” King said. “This contract will get our members who have been laid off back to work and will create new jobs in our communities.”

The agreement positions GM for long-term success, Cathy Clegg, GM vice president for labor relations, said in a statement.

“We worked hard for a contract that recognizes the realities of today’s marketplace, enabling GM to continue to invest in U.S. manufacturing and provide good jobs to thousands of Americans,” she said.

The UAW will probably turn its attention next to Chrysler, majority-owned by Fiat SpA (F), said Shaiken. The GM accord, he said “defines competitiveness for Detroit going forward.”

“The details will be critical because the union’s goals of job security and sharing in the success of the company can be in conflict,” he said in a telephone interview, noting that he hasn’t been briefed on those details. “The results will not make everyone happy.”

Non-Union Competition

King, 65, has pledged to organize a foreign automaker this year to expand the UAW’s bargaining power beyond GM, Ford and Chrysler. He said the union has “recommitted to that goal.”

“As long as unionized workers are being forced to compete with nonunion workers who in most cases receive lower pay and benefits -- many in temporary jobs -- there will continue to be a downward pressure on the wages and benefits of all autoworkers,” he said in the statement.

Contracts covering 113,000 workers at GM, Ford and Fiat SpA-controlled Chrysler were set to expire Sept. 14 and have been extended while negotiations continued.

The UAW proposed a signing bonus of $8,000 to $10,000 for each member, five people familiar with discussions said last week. A large bonus may help sell the deal to union members looking to be repaid for what King has estimated as $7,000 to $30,000 in concessions they each gave since 2005.

Workers at Detroit-based GM, Ford and Chrysler received signing bonuses of $3,000 after they ratified the current contract in 2007. Prior to that, signing bonuses had been around $1,000, Shaiken said last week.

Past Concessions

Previous concessions included surrendering raises, bonuses and cost-of-living adjustments as well as agreeing to a two-tier wage system, where new hires are paid about half as much as senior employees. With GM and Dearborn, Michigan-based Ford profitable, workers have said they want to recover what they gave up.

Workers at Ford have filed an “equality of sacrifice” grievance against the automaker for restoring raises and bonuses to salaried workers last year. An arbitration hearing on that dispute started Sept. 15.

UAW members agreed to a no-strike pledge at GM and Auburn Hills, Michigan-based Chrysler as part of their U.S.-backed bankruptcies in 2009. Unsettled disputes at the automakers are to be decided through binding arbitration. Ford didn’t receive a U.S. bailout and UAW members there went against the wishes of union leaders and rejected a strike ban and arbitration.

To contact the reporters on this story: David Welch in Southfield, Michigan, at dwelch12@bloomberg.net; Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net; Keith Naughton in Southfield, Michigan, at knaughton3@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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