GM Offers UAW Bigger Bonuses, Health-Care Gains for Second Tier

  • Second-tier assembly line workers to get top medical benefits
  • Ratification payouts at least double those of Fiat Chrysler

The United Auto Workers union won a sweeter deal with General Motors Co. than the one with Fiat Chrysler Automobiles NV that members approved last week. The tentative agreement offers lower-paid entry-level workers the pay and medical benefits that long-time factory hands receive.

GM’s ratification payment of $8,000 for all members is at least double what those at Fiat Chrysler received. And the profit-sharing formula will remain the same as in the previous contract -- not the revised Fiat Chrysler formula -- which should provide bigger payouts at a company the size of GM. The tentative agreement, reached late Sunday, will give the so-called Tier 2 workers the same health-care benefits and eventually the same wage as senior workers. It goes to rank-and-file members for a vote.

The UAW has pushed for a better deal with GM because the automaker is larger and more profitable than Fiat Chrysler. GM last week reported a record $3.1 billion adjusted profit for the third quarter. With strong earnings, UAW leaders probably need better terms from GM and from Ford Motor Co. to win ratification votes. Fiat Chrysler workers voted down one tentative agreement that would’ve raised the hourly wage of newer workers to as much as $25 from $19 before approving one that would let them eventually earn more than $29 -- the same as senior workers. 

“The council was very happy with this agreement,” UAW President Dennis Williams said Wednesday at a news conference at the union’s headquarters in Detroit. “We don’t see any drama with this.”

After granting concessions in 2007 to try to help U.S. automakers stem losses and again during the 2009 bankruptcies of GM and Chrysler, union members are eager to regain some ground. Back then, the UAW agreed to a lower wage for entry-level workers, who also had a weaker health-care benefits. Those differences have mostly been eliminated for active employees; in retirement the newer employees won’t get a pension or company-paid medical care.

‘Transformational Agreement’

The Fiat Chrysler contract, which adds almost $2 billion in costs over four years, was the first in a decade to significantly increase automakers’ spending. UAW Vice President Cindy Estrada called the GM deal a “transformational agreement” because it helps bring Tier 2 workers closer to what traditional autoworkers make.

“In the eyes of workers, they saved General Motors with concessions and now they want to be rewarded for it,” said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts. “A bigger signing bonus is very attractive to workers and it’s a good settlement.”

Wage increases will be the same as what Fiat Chrysler agreed to, the UAW said. GM would give veteran workers two 3 percent raises and two lump-sum payments of 4 percent of annual pay during the proposed contract’s four-year term, as Fiat Chrysler did, the union said. GM workers probably wanted more, especially bigger lump sums, said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan.

The second-tier workers will get the same health care under this agreement as the senior workers, giving them full dental and vision coverage with no deductible or co-insurance. GM also agreed to commit an additional $1.9 billion of investments on top of $6.4 billion in previously pledged money.

On profit-sharing, GM workers keep the same formula they have now. It pays $1,000 per $1 billion in North American profit. Fiat Chrysler has switched to paying $800 for each 1 percent of North American profit margin, which should be better for workers at that company. It paid out an average of $9,000 per UAW member over the past four years, while GM paid $9,000 in 2015 alone, according to the Center for Automotive Research.

The GM deal also offers $60,000 to certain members who retire between Feb. 1 and May 1, the union said.

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