UAW, GM reach tentative agreement ending first strike in 37 years

The United Auto Workers and General Motors Corp. tentatively agreed Wednesday to a contract that ends a two-day strike -- the first nationwide walkout against the automaker in 37 years -- and puts responsibility for retirees' health care into the union's hands.

Union members were told to begin reporting to work Wednesday. UAW officials said they hoped to begin talks with Ford and Chrysler even before GM workers vote on ratifying the pact.

News of the settlement sent GM shares more than 4 percent higher in morning trading Wednesday as Wall Street interpreted the deal as a win for the automaker.

GM and the UAW confirmed that the deal creates a GM-funded, UAW-run trust to administer retiree health care. The two sides gave no other details, but two people briefed on the contract told The Associated Press that it also would give workers bonuses and lump-sum payments and would pay some newly hired workers at lower rates.

The people requested anonymity because the details of the contract haven't been released publicly, including whatever concessions GM may have made over job security, which was the reason the UAW gave for walking off the job.

The union said the agreement with the nation's largest automaker was reached shortly after 3 a.m. The UAW canceled the strike about an hour later.

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. The agreement is expected to set a pattern for contracts that now will be negotiated at Ford Motor Co. and Chrysler LLC.

GM shares rose $1.39 to $35.81 in morning trading after rising as high as $36.98 earlier in the session.

The deal means UAW workers will head back to their jobs at around 80 GM facilities across the nation. Some were to return as early as Wednesday afternoon; shift times varied by plant and time zone. The union went on strike at 11 a.m. Monday when talks broke down, ending GM's production and causing layoffs and shutdowns at parts factories.

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

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 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, called a Voluntary Employees Beneficiary Association, or VEBA, 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.

Gettelfinger said he's confident of ratification and that voting could start as soon as this weekend. If workers vote against the contract, they could go back on strike.

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 Thursday and Friday, he said.

The UAW also expects to decide Thursday which automaker will go next in the negotiations. Talks with Ford and Chrysler can proceed before the GM contract is ratified, Gettelfinger said. The UAW may even conduct negotiations with Ford and Chrysler simultaneously, Gettelfinger said later Wednesday during an interview on "The Paul W. Smith Show" on WJR-AM.

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.

A person briefed on the talks said that because GM's pension fund has more money than its expected obligations, both sides agreed to tap into it to fund the trust.

Retirees would get a pension increase, but it would be offset by an equal increase in health care contributions, the person said.

Wages would stay the same for the length of the four-year deal, but workers would be given a bonus of $3,000 once the contract is ratified and then bonuses of 3 percent, 4 percent and 3 percent of their annual pay each year for the last three years of the contract, said one person briefed on the contract details.

Under the tentative agreement, GM would hire most of the temporary autoworkers now at the company at full company wages and benefits, one person said. That person said the company has approximately 6,000 temporary workers. Temporary workers who have worked for the company for less than 90 days would be hired at a lower wage, the person said.

The pact also includes a lower wage structure for newly hired workers in certain non-manufacturing jobs such as sanitation workers, one person said, adding that in order to make way for the new hires, GM would offer early retirement and buyout packages of $35,000 to workers now in the positions.

GM made no specific commitments to build cars and trucks at U.S. factories, but generally agreed that with the reduced costs from the new contract, investment in the plants would make good business sense, the person said. Gettelfinger wouldn't release any details of job security agreements, including promises for future production at certain factories.

The deal also includes language that mitigates the impact of the jobs bank, in which the company pays laid-off workers most of their salary and benefits, said the person, who did not know the specifics.

Lloyd Coleman, 64, of the Detroit suburb of Taylor, was working his first picket line shift when he got word early Wednesday of the tentative agreement. He said he was glad to hear that an agreement had been reached, but was withholding judgment until further details were released.

"I'm just wondering what we are giving up," said Coleman, a 31-year GM employee who for about the past year has worked as an electrician at a plant in Hamtramck. He said his biggest concerns include health care and bringing new products to existing GM plants.

Coleman said the VEBA holds promise.

"It's a big burden off the company," he said. "If it's managed right, it will be OK."

Negotiations between GM and the UAW officially began in July. The UAW's original deadline to reach an agreement with GM was Sept. 14, but the union decided to extend that contract on an hour-by-hour basis and keep talking. Talks broke down Sunday night and the union set a strike deadline for Monday. When a deal wasn't reached by then, workers walked off their jobs.

Gettelfinger said the strike broke a logjam in the talks.

"I think the strike probably helped our side more than theirs," he said.

Industry analysts had predicted a short strike, saying the two sides had too much to lose from a prolonged work stoppage.