UAW's New Contract With GM Scores Wins on Wages, Health Care and Temporary Workers

By Nora Naughton and Mike Colias 

The United Auto Workers scored major wins on wages, health care and temporary workers in its new tentative labor pact with General Motors Co., after calling a costly nationwide strike that has halted work at the company's U.S. factories.

The strike will continue for now, pending a vote by a council of UAW labor leaders gathered in Detroit. These UAW officials will decide whether to end the strike immediately or continue it until the proposed contract is ratified by rank-and-file members. A decision is expected Thursday afternoon.

The strike, which is in its fifth week, is already the company's longest nationwide walkout since 1970.

The agreement struck by union and company bargainers Wednesday will move newer workers to the top wage in four years rather than the eight years now, provide wage increases and lump-sum bonuses of 3% to 4% in each year of the contract and give temporary workers full-time status after three years, according to details made public Thursday.

The proposed contract also includes a $11,000 bonus for full-time workers if the deal is ratified, as well as a $4,500 signing bonus for temporary workers, more than double their bonus in 2015.

The UAW also succeeded in holding the line on health care, with the 3% contribution workers pay for their benefits unchanged. GM had entered into talks looking to increase the cost-share to help defray fast-rising medical costs that totaled roughly $900 million last year for its union-represented workforce.

While analysts say the deal is likely to increase GM's labor costs, the contract would also let GM trim excess factory capacity in the U.S., long a drag on its bottom line.

The company won the formal go-ahead from the UAW to close three underused plants, including a major assembly factory in Lordstown, Ohio, that had weighed on profits. Affected workers get special assistance under the new contract, including buyouts of up to $75,000 for the most senior workers.

During contract talks, UAW leaders had pressed GM to move more factory production from Mexico to the U.S. -- even criticizing the company publicly for not supporting American workers -- but the agreement summary makes no such commitments.

The factory cuts are central to a restructuring plan GM laid out last year aimed at boosting cash flow by $6 billion annually. A fourth plant that GM had slated for closure will remain open, eventually to build an electric pickup truck, people close to the talks said.

"We see the agreement to close three out of the four plants initially targeted as a 'win' for GM, keeping their restructuring plan on track," said Jefferies analyst Philippe Houchois in an investor note Thursday.

Still, any increase in labor costs for GM will likely be replicated at Ford Motor Co. and Fiat Chrysler Automobiles NV, with the UAW bargainers seeking to use the GM contract as a template to reach similar agreements.

Write to Mike Colias at [e-mail]

(END) Dow Jones Newswires

October 17, 2019 13:45 ET (17:45 GMT)

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