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ALEX COHEN, host:

From NPR News, it's DAY TO DAY.

As we heard earlier in the program, General Motors and the United Auto Workers union reached a tentative agreement today. The union still needs to ratify it. This deal is considered to be just a first step in what will be a long journey for both sides. Think this has nothing to do with you, think again. The agreement has significance well beyond the auto industry.

Here to fill us in is Marketplace's Steve Tripoli. So Steve, we had no idea how long the strike was going to last, then, boom, 48 hours later, it's all over. What does that tell us?

STEVE TRIPOLI: Well, Alex, it tells us that both sides really need each other. And here's the essence of what both sides acknowledged in today's agreement according to UC Berkeley labor expert Harley Shaiken.

Dr. HARLEY SHAIKEN (Professor of Education and Geography; Chair of the Center for Latin American Studies, University of California, Berkeley): The key to this was a commitment for the union, to make some painful choices, to reduce labor cost, a commitment for the company, to provide investment and future plants in the U.S. And based on that bargain, there are still a lot to be done in the future, but it is the next step for the future of the Detroit industry.

COHEN: A lot to be done. Steve, what exactly does that mean?

TRIPOLI: Well, you know, Harley Shaiken told me that both sides and a third party need to act for this deal to work. Let's talk about the principal parties first. I think it's fair to say that labor has done the most moving already. They took a giant amount of future costs and risk off of GM's shoulders by agreeing to that health care trust. It'll be funded by a one-shot contribution from the company but then GM's health care worries are done.

Now, both sides have to make this company more competitive. They have got to start building cars more people want to buy. And GM managers have to stop relying on shortsighted business models like an emphasis on profitable trucks and SUVs when the - excuse me - when the rest of the world is investing in high-mileage future.

COHEN: And who's this mysterious third party you mentioned?

TRIPOLI: No mystery, Alex, and it's funny, but in its own way, this agreement really says as much about health care as it does about the future of American manufacturing. The fact that health care costs were killing GM because foreign competitors can rely on national health care systems and the fact that workers felt compelled to swallow this big risk of future costs speaks to two problems in the American system, how we pay for and how we deliver health care. Now, that's hardly a new thought, an original thought, but it is where that third party comes in and that's the government.

COHEN: Now this health care plan that they've been talking about at GM, it's called the Voluntary Employees Beneficiary Association or VEBA. It's really complex - let's not get into that here. But can you help explain how this might affect health care for the rest of us?

TRIPOLI: Well, the GM health care story ties into the larger issue of American competitiveness. You know, the workers, in this case, agreed to assume a risk that can blow up on them if things don't work out with health care cost. And let me close by talking about this larger issue, we always say we have to change health care in this country but we never do. I don't know where the health care debate is heading this time, but something big is different, and that something is health care's emergence as a competitiveness issue. We now see clearly that this worry is enough to way down General Motors, one of the crown jewels of American industry. So this time, the interest of workers and lots of American businesses are coming into alignment and that's what may make the health care debate different this time.

COHEN: Thank you so much, Steve. That's Steve Tripoli of public radio's daily business show Marketplace. It's produced by American Public Media.

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