GM and UAW reach first labor deal since bankruptcy 17 Sep 11

General Motors Chairman and CEO Dan Akerson (L) and United Auto Workers Union President Bob King shake hands during opening ceremonies of the GM-UAW Contract Negotiations on the factory floor of the Detroit-Hamtramck assembly plant in Hamtramck, Michigan, in this July 27, 2011

By Bernie Woodall and Kevin Krolicki

DETROIT | Sat Sep 17, 2011 6:41am EDT

(Reuters) – General Motors Co and the United Auto Workers union reached a proposed contract for about 48,500 production workers that would create new U.S. factory jobs and include profit-sharing bonuses.

The proposed contract, which must be ratified by rank-and-file workers, represents the first since U.S. taxpayers bailed out GM and Chrysler Group LLC in 2009.

Details of the tentative deal reached late on Friday were being withheld until it could be reviewed by UAW officials from around the country at a meeting set for Tuesday in Detroit.

The proposed contract would recall about 570 GM workers currently on layoff, revive a now-idled assembly plant in Tennessee and pay signing bonuses of about $5,000 for each worker, a person with knowledge of the terms said.

The UAW chose to complete negotiations with GM first, before reaching a deal with Chrysler and finally turning to Ford Motor Co, people close to the talks said.

The contract talks in Detroit have played out at a time of increasing uncertainty about the strength of U.S. auto sales for the remainder of this year and in 2012, as well as concern about the risk of another recession.

The union had surrendered the right to strike GM or Chrysler as part of the bankruptcies for the automakers brokered and funded by the Obama administration.

“As America struggles with record levels of unemployment, we aimed to protect the jobs of our members — to guarantee good American jobs at a good American company. And we have done that,” UAW President Bob King said in a statement.

GM said it expected the union would complete ratification votes within a week to 10 days.

The timing is key because King and other union officials are expected to remain focused on winning approval for the GM contract before turning their attention to the negotiations with Chrysler, which is controlled by Fiat SpA.

At stake in the Detroit contract talks are wages and benefits for about 112,500 unionized U.S. auto workers who have gone without a base pay increase since 2003.

The contract terms will also set a key benchmark for wages at auto parts suppliers and at non-union plants operated by Asian and German automakers in the southern United States.

Harley Shaiken, a University of California at Berkeley professor and confidant of King, said the GM contract was significant in part because of the weak U.S. economy.

“This isn’t just a contract between a company and a union. It is a company and a union amidst the worst economic downturn we’ve had since the 1930s,” he said.

SIGNING BONUSES, NEW JOBS

The UAW’s four-year contracts with all three Detroit automakers expired late Wednesday. The automakers and the union extended contract terms indefinitely as negotiations continued.

The deal with GM was reached at about 11 p.m. EDT on Friday (0300 GMT on Saturday) after seven weeks of negotiations.

The proposed GM deal would move production of a new vehicle to the automaker’s now-idled assembly plant in Spring Hill, Tennessee, a person with knowledge of the deal said.

The contract would also pay signing bonuses of around $5,000 for each worker, equivalent to a total cost of about $245 million for GM, the source said.

GM and the other two Detroit automakers offered one-time contract-signing bonuses and profit-sharing rather than traditional wage increases in an effort to avoid the kinds of fixed costs that contributed to the industry’s near collapse two years ago.

A signing bonus of about $5,000 would be above the $3,500 proposal GM made early in the talks and far short of the bonus of $7,000 or more that the UAW had sought.

The former Saturn plant in Tennessee had been the site of GM’s experiment with a more collaborative relationship with workers based in part on the model of Japanese automakers led by Toyota Motor Corp.

GM scrapped the Saturn brand as part of its 2009 bankruptcy and the assembly portion of the plant has been shut. An engine plant at the site remains open.

It was not clear how many of the new jobs would be at the entry-level wage of about $15 per hour, roughly half of the wages paid to veteran production workers. The automakers have looked to use more workers at that lower wage rate to bring down overall labor costs.

The Detroit Free Press said the proposed contract also included new investment by GM to create jobs at powertrain plants in Romulus and Warren, Michigan and in Wentzville, Missouri, where GM has a stamping and an assembly plant.

In his statement, King said the GM contract would shift production jobs “back to the United from other countries,” a major goal for the union in the talks.

King also said the union had held the line against proposals from GM to shift more healthcare costs to workers.

The UAW has hoped to use new labor agreements with the Detroit automakers as a springboard to winning first-ever contracts to represent workers at U.S. factories operated by Japanese, South Korean and German automakers.