DETROIT – Local union leaders on Friday endorsed a tentative agreement between General Motors Corp. 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 Motor Co. and Chrysler LLC will match many of its terms.
GM spokesman Dan Flores said UAW workers and the company benefit from the agreement. GM didn’t release any specifics Friday; the company typically waits until ratification.
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 about 340,000 retirees and spouses, wanted to form the VEBA in order 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.
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.
The UAW was seeking to protect jobs and slow its falling membership in this contract, and Gettelfinger said GM responded with “unprecedented product guarantees.” GM committed to building 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.
The 16 factories either will continue building their current products or, in most cases, the next generation of those products. A plant in the Detroit area is scheduled to begin producing the electric Chevrolet Volt, one of GM’s most anticipated products, in 2010, while a plant in Lordstown, Ohio, is set to get a new subcompact.
But the future of some plants may be in jeopardy.
GM’s Orion Township plant, which will make the mid-sized Pontiac G6 until 2013, and the Wilmington, Del., plant, which makes the Pontiac Solstice and Saturn Sky roadsters until 2012, do not have new vehicles listed on the UAW’s summary.
Eldon Renaud, head of UAW Local 2164 in Bowling Green, Ky., said production of the Solstice, Sky and Opel roadsters will move from Wilmington to his plant.
The union said assembly line workers will get economic gains totaling $13,056 over the life of the four-year contract. They will get bonuses in each year of the contract, including $3,000 when the contract is ratified, as well as cost-of-living increases.
But some workers will be making less than before.
New hires who are doing what are considered noncore functions, such as combining parts from suppliers to prepare them for the assembly line, managing parts and chemicals and driving finished vehicles, will make between $14 and $16.23 an hour, or about half the starting wage of $28.12 that assembly workers would make under the new contract. Those workers also would get a 401(k)-style retirement plan instead of a fixed pension, according to the summary.
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