GM Labor Deal May Change U.S. Auto Industry

In Depth: The Man Leading the UAW

Right now, Ron Gettelfinger may have the hardest job in American labor. He runs the United Auto Workers.
Read a profile of the man who leads the union as it tries to play a weak hand in dangerous times.

At a Glance: GM's Deal with the UAW

The United Auto Workers and General Motors tentatively agreed Wednesday to a contract that ends a two-day strike — the first nationwide walkout against the automaker in 37 years. Both sides said they are pleased with the new contract, which has yet to be approved by the union. Here are a few of the highlights:

Legacy Costs: The new contract transfers responsibility for retiree health benefits from GM to the union. Under the agreement, the UAW will hire a financial company to manage the health care trust. That allows GM to clear a $50 billion liability from its books — which the company says has hindered its ability to raise funds and compete against foreign rivals. Still, GM will have to pay about 70 percent of that obligation — some $35 billion — to fund the new health-care trust.

New Workers: New unionized workers in certain non-production jobs would be hired at lower wages. That could be a big help for a company that spends upwards of $70 an hour on wages and benefits for janitors. In exchange, the UAW gets a commitment from GM to keep union employment at the current level of 70,000.

Signing Bonuses: GM workers will receive a signing bonus worth thousands of dollars to accept the deal. But those workers give up their cost-of-living adjustments, and the company gains more control over setting future salaries.
Job Security: The new contract "will absolutely protect their jobs and keep jobs from being reduced," said UAW President Ron Gettelfinger. He offered few specifics, but said the number of jobs at GM would be "pretty much the same, if not higher" when the contract concludes in 2011. But job protection provisions don't go into effect until after GM completes a planned restructuring— which includes cutting 30,000 jobs and closing all or part of a dozen plants by next year.

The United Auto Workers and General Motors Corp. agreed to a tentative contract early Wednesday that ends a two-day national strike — the first against the automaker in 37 years.

The union and automaker confirmed that the deal creates a GM-funded, UAW-run trust fund to administer retiree health care, but the two sides gave few details.

GM said in a statement that the deal will make it significantly more competitive and provides "the basis for maintaining and strengthening its core manufacturing base in the United States."

The company went into the negotiations seeking to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors.

"This agreement helps us close the fundamental competitive gaps that exist in our business," Chairman and Chief Executive Rick Wagoner said.

The union said the agreement with the nation's largest automaker was reached shortly after 3 a.m. and the strike was called off about an hour later. The deal means UAW workers will head back to their jobs at around 80 GM facilities across the nation. The union went on strike Monday when talks broke down, ending GM's production and causing layoffs and shutdowns at parts factories.

The contract must be reviewed by local UAW presidents and will then be subject to a vote of GM's 74,000 rank-and-file members, including more than 2,000 at GM's assembly plant in Arlington, Texas. The agreement is expected to set a pattern for contracts at Ford Motor Co. and Chrysler LLC.

The strike was the first such nationwide action strike against GM during auto contract negotiations since 1970. The UAW last struck GM in 1998, when a 54-day work stoppage at two plants shut down production across the country.

Remaining Competitive with Japan

GM went into the negotiations seeking to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors.

The tentative deal includes GM's top priority in the negotiations — shifting most of its $51 billion unfunded retiree health care obligation to a UAW-run trust. GM would pay about 70 percent of that obligation, or $36 billion, into the trust fund, called a Voluntary Employees Beneficiary Association, the person briefed on the talks said.

The union would then invest the money and take over the health care responsibility for about 340,000 GM hourly retirees and spouses.

"I'm pleased to say that we have a VEBA in place that will secure the benefits of our retirees," UAW President Ron Gettelfinger said at an early morning news conference inside the union's Detroit headquarters.

Deal Needs Union, Government Approval

Gettelfinger said he's confident of ratification and that voting could begin this weekend.

The UAW's national negotiating committee and executive board for GM both have unanimously recommended ratification, Gettelfinger said.

"We're very comfortable with this agreement, and we're happy to be able to recommend it to our membership," Gettelfinger said. Union leaders will be briefed on details Thursday and Friday, he said.

The UAW may also decide Thursday whether to begin talks first with Ford or Chrysler. Those talks can begin before the GM contract is ratified, Gettelfinger said.

After ratification, the VEBA memorandum would have to be approved by the courts and would be reviewed by the U.S. Securities and Exchange Commission, GM said.

"There's no question this was one of the most complex and difficult bargaining sessions in the history of the GM-UAW relationship," Wagoner said. He thanked the UAW bargaining team for its work in reaching the agreement.

From NPR reports and The Associated Press

Time Warp: The GM Strike, Then and Now

Workers wave picket signs outside a Detroit GM plant after the UAW strike in 1970 i i

Workers wave picket signs outside a Detroit GM plant after the United Auto Workers struck against the auto giant, Sept. 14, 1970. That strike against GM last 67 days; the most recent, just two days. Corbis hide caption

itoggle caption Corbis
Workers wave picket signs outside a Detroit GM plant after the UAW strike in 1970

Workers wave picket signs outside a Detroit GM plant after the United Auto Workers struck against the auto giant, Sept. 14, 1970. That strike against GM last 67 days; the most recent, just two days.

Corbis
Work Stoppages,  1947-2006 i i

National strikes have become rare, largely because of the waning influence of labor unions. There were just 20 strikes and lockouts involving more than 1,000 people last year. That compares with 470 a little more than a half-century ago, according to the Bureau of Labor Statistics. Lindsay Mangum, NPR hide caption

itoggle caption Lindsay Mangum, NPR
Work Stoppages,  1947-2006

National strikes have become rare, largely because of the waning influence of labor unions. There were just 20 strikes and lockouts involving more than 1,000 people last year. That compares with 470 a little more than a half-century ago, according to the Bureau of Labor Statistics.

Lindsay Mangum, NPR

What a difference 37 years makes.

The last time the United Auto Workers called a nationwide strike against General Motors was in 1970. That strike lasted 67 days, triggering layoffs at parts suppliers and steel companies and dominating headlines.

This week's strike lasted just two days — hardly making a dent in the economy and competing with other stories for the nation's attention.

Why the difference? The answer lies in the dwindling fortunes of GM and the UAW.

The 1970 strike was a "titanic clash between two massive permanent entities," says Jefferson Cowie, a professor or labor history at Cornell University. "They were both the backbone of America at the time."

In 1970, General Motors was the biggest automaker and the largest employer in the world. The 1973 oil crisis was years away, as was the threat from low-cost Japanese automakers. GM, along with Ford and Chrysler, could barely keep up with demand.

The UAW, meanwhile, was enjoying a Golden Age. Its membership was growing, with 400,000 workers at GM alone, as was its political clout. It was big labor at its most muscular, and strikes were common. That same year, more than 2 million American workers in various industries walked off the job.

GM had deep enough coffers to weather a two-month strike and the UAW turned to the powerful Teamsters Union for financial support. In the end, the union prevailed, winning a 13 percent pay raise and other concessions.

Flash forward 37 years and the picture could hardly be more different. GM faces an increasingly globalized auto industry and, in particular, threats from Japanese automakers. GM has lost $12.3 billion in the last two years and seen its share of the U.S. auto market shrink to 24 percent, compared with 46 percent in 1978.

The UAW, meanwhile, has seen its membership — and its clout — shrivel. None of the so-called transplants — Japanese and European automakers with factories in the U.S. — is unionized. Rather than a struggle for supremacy, this short-lived strike represented a struggle for survival.

Ron Gettelfinger. the head of the UAW, said the union's No. 1 issue was not working conditions or wages. It was job security.

Neither side could afford a messy, protracted strike, so the tentative agreement reached early this morning comes as little surprise. Both sides have bought some more time. Ironically, those generous pension benefits that the UAW won back in 1970 "have come home to roost," says labor historian Cowie. So-called "legacy costs" were another major issues in the recent strike.

The UAW walks away with "a mixed-bag," says Cowie. "But a mixed bag is better than being crushed."

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