Coverage: GM and UAW strike tentative agreement

Christina Rogers and Gautham Nagesh of The Wall Street Journal had the day’s news:

The United Auto Workers has struck a tentative labor deal with General Motors Co., avoiding a strike that would have dented the company’s U.S. production and clearing the path for members to vote on the proposal, which sets pay and benefits for the next four years.

Union officials didn’t disclose details of the agreement, which was announced minutes before midnight Sunday and covers 52,600 union-represented members at GM. UAW officials, in a statement, said the deal presents “significant” wage gains and job commitments, and provides a road map for entry-level workers to grow into the more senior hourly wage.

UAW officials will brief local union leaders this week, and those leaders will vote Wednesday. Members at GM’s dozens of unionized U.S. factories and facilities will vote shortly after on whether to ratify the deal.

“The new UAW-GM national agreement is good for employees and the business,” said GM’s labor and manufacturing chief Cathy Clegg in a statement. “We developed constructive solutions that benefit employees and provide flexibility for the company to respond to the needs of the marketplace.”

Alisa Priddle and Greg Gardner of Detroit Free Press detailed what each side was saying about the deal:

Few details were released but the union statement said they “secured significant gains and job security protections.”

“Your UAW-GM Bargaining Committee has secured significant gains and job security protections in a proposed Tentative Agreement with GM,” the union announced.

The company was also pleased. “The new UAW-GM national agreement is good for employees and the business,” said Cathy Clegg, GM North America Manufacturing and Labor Relations vice president. “Working with our UAW partners, we developed constructive solutions that benefit employees and provide flexibility for the company to respond to the needs of the marketplace.”

“Terms of the four-year agreement are not being shared publicly to allow the International UAW to inform their membership about the agreement and conduct a ratification vote,” the company said. “If ratified, the agreement would cover about 52,600 GM employees in the United States who are represented by the UAW.”

UAW Vice President Cindy Estrada called the agreement transformative. “The significant gains in this agreement are structured in a way that will provide certainty to our members and create a clear path for all GM employees now and in the future. The agreement not only rewards UAW-GM members for their accomplishments, but it protects them with significant job security commitments.”

This contract negotiation represented the first opportunity for GM workers to strike since the automaker filed for bankruptcy in 2009 and the union gave up the right to strike until 2015 as a condition of government aid which was integral to restructuring the company,

UAW locals were making strike preparations in advance of the Sunday night deadline and workers were also being told to stay on the job unless told otherwise. The union could have chosen a U.S.-wide strike or a targeted one where select plants go down.

Mary Chapman of The New York Times explained that a two-tier wage system, which took center stage during Fiat Chrysler’s contract talks, was once again a hot topic:

Last Thursday, the union and Fiat Chrysler sealed a four-year deal that, over time, brings wages of entry-level workers into line with those of veteran employees. The two-tier wage system was not expected to be as big an issue at General Motors. More than 45 percent of Fiat Chrysler workers are entry-level, compared with about 20 percent at G.M.

Traditionally, national labor agreements between the U.A.W. and automakers follow the basic template set by the company that the union chooses for opening talks. G.M. and Ford had each agreed to extend their U.A.W. contracts while Fiat Chrysler bargained with the union.

But because each automaker is somewhat different, the union usually tailors demands accordingly. G.M., for example, is in a better financial position than Fiat Chrysler. G.M. reported last week that it had made a pretax profit of $8.3 billion in North America in the first nine months of the year. The union had said it would seek compensation for concessions it made that helped the automaker survive bankruptcy in a government-backed bailout.

For John Ryan Bishop, an entry-level employee at G.M.’s Flint Truck Assembly plant, only a single pay scale is acceptable. “I cannot endorse anything that still has tiers in it,” Mr. Bishop said, adding that it would take several years for his pay to match that of veteran workers. “I’m a third-generation autoworker, and my grandfather and dad aren’t jealous of what we’ve had to go through to provide for our families, especially when G.M. is as profitable as ever.”

Bernie Woodall of Reuters laid out why the two-tier wage system might not be as effective at GM:

The Fiat Chrysler deal set an eight-year path from hiring to top pay, which goes from $17 per hour to nearly $30 per hour. Fiat Chrysler workers hired after 2007 won a ratification bonus of $3,000, and those hired before 2007 got $4,000 bonuses.

GM has fewer so-called “second-tier” workers in a two-tier pay structure created in 2007. GM has about 20 percent second-tier workers, compared with 45 percent at Fiat Chrysler and 28 percent at Ford.

In the talks, GM’s negotiators also wanted to reduce a labor cost disadvantage compared with Fiat Chrysler, since GM has fewer second-tier workers. GM executives have said any labor accord could not come at the price of threatening the company’s newly achieved 10 percent North American operating profit margins.

GM’s labor costs going into this year’s talks were higher than Fiat Chrysler’s, the Center for Automotive Research said. It put GM U.S. labor costs at $55 per hour, compared with $47 per hour at Fiat Chrysler.

Ford has per-hour U.S. labor costs of $57, the Center for Automotive Research says.