AFSCME 3357-HOF'S BLOG

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GM and the UAW announced that they have come to a tentative agreement on a contract. The contract will be voted on by the UAW members this weekend.

The biggest feature of the contract is a VEBA trust fund for retiree medical care. Approximately $50 billion in benefits will be funded at the 70% level, or $37.5 billion. According to Bloomberg.com, GM has $18.5 billion set aside for retiree healthcare. Where the rest of the money will come from has not been announced. Ron Getelfinger states that the VEBA will be financially sound for at least 80 years.

GM will get the two-tier labor rates that they sought. Current hands will continue at their current pay rate. New hires will be paid approximately half as much, or $14.00 per hour. More than 4,000 "temporary" workers will become full-time UAW workers.

There is actually another tier for employees who are not actively engaged in the assembly of vehicles. No details were released about the wage rates for these workers.

"Uncle" Ron Getelfinger announced that he was happy with the job security provisions in the contract; however the specifics weren't released. Apparently there is a modified version of the infamous "jobs bank".

There is no news about whether legal services coverage was kept or dropped. Reading between the lines, it looks like its probable that the legal insurance was kept in the new deal. The theme of the contract is now COLA payraise for current workers in exchange for no increase in medical copayments, lower wages for new hires to help competitiveness, and a VEBA for balance sheet relief for GM and long-term security for the retirees.

Fret not for the workers who are not getting a pay raise. The contract includes a $4,000 signing bonus, and annual bonuses of either 3% or 4% for the other years of the contract.

It appears this contract has gone a long way towards closing the wage gap with the captive imports. There's some indication though that weakness at the Detroit 3 may result in a "race to the bottom" regarding wages. Honda just announced its wage scale at its new plant in Greensburg, Indiana. Workers there will start at $14.84 and go up to $18.55 within a two-year period. At the starting wage, a worker would make about $30,000 per year with a 40 hour week. Nissan and Toyota's current US plant pay base wages close to or even higher than the UAW base wage, but the fringe benefits are less. Hyundai's wage rates are apparently similar to what Honda is offering.

Sources:

Bloomberg
Detroit Free Press
Detroit News