UAW-GM pact promises new products for U.S. plants
DETROIT -- Local union leaders on Friday endorsed a tentative agreement between General Motors and the United Auto Workers that requires GM to pay out at least $35 billion for retiree health care, establishes lower wages for thousands of new employees and offers an unprecedented number of promises for future work at U.S. plants, according to a summary of the agreement provided by the UAW.
The agreement still is subject to a vote of GM's 74,000 UAW members, which should be completed by Oct. 10. UAW President Ron Gettelfinger said he's confident members will support the agreement and that Ford and Chrysler will match many of its terms.
"We're happy with this stuff," he said.
GM spokesman Dan Flores said both UAW workers and the company benefit from the agreement. GM didn't release any specifics Friday; the company typically waits until the contract is ratified to make detailed comments.
Gettelfinger said he hadn't yet decided whether the union would negotiate with Ford or Chrysler next, but he expects to make that call next week. Both automakers have extended their contracts with the union indefinitely.
The linchpin of the deal is a trust fund for retiree health care, known as a Voluntary Employees Beneficiary Association, or VEBA. GM, which has around 340,000 retirees and spouses, wanted to form the VEBA to get $51 billion in retiree health care debt off its books. The VEBA will be run by an independent board overseen by the UAW.
GM will put $24.1 billion into the VEBA in January 2008 and will pay an additional $5.4 billion to cover retirees' health care costs until the VEBA takes over in January 2010. GM also will make up to 20 additional $165 million payments, to a maximum of $1.6 billion, to the VEBA anytime the fund's level is insufficient to provide benefits for at least 25 years.
GM also will be required to pay cash interest on a $4.37 billion convertible note for the benefit of the VEBA. The fund's trustees will be able to convert that note to GM stock. GM's active workers also will be required to contribute 4 cents per quarter to the VEBA.
In a two-page letter to retirees sent Friday, the UAW sought to calm retirees' fears about the VEBA, saying the union supports the fund because it protects retirees' benefits in the event of a downturn or bankruptcy. Retirees don't get to vote on the contract.
Under the contract, GM committed to building current or existing products at 16 of its 18 U.S. assembly plants, according to the UAW's summary. GM already has announced the closure of a plant in Doraville, Ga., in 2008. A midsize sport utility vehicle plant in Moraine, Ohio, wasn't listed because its workers are represented by the International Electronics Workers-Communications Workers of America.