Membership to vote this week

The UAW announced on 28 October that the union's National GM Council has "overwhelmingly" approved a contract proposal covering 52,000 employees at General Motor's (GM) US plants for the next four years. "We believe this agreement gives UAW-GM members significant raises and stronger benefits that protect income security and job security," said UAW president Dennis Williams in a statement.

According to a 24-page UAW summary document, the contract language refers to tier-1 employees as "Traditional" and tier-2 employees as "In-Progression" staff. Traditional employees will receive a 3% wage increase for the first year, a 4% lump sum in the second year, a 3% wage increase in the third year, and a 4% lump sum for the final contract year, as well as a USD8,000 signing bonus at ratification of the agreement. In-Progression employees will now have a clear path to reach traditional wages, over an eight-year period. These employees also gain healthcare benefits on par with traditional employees, as well as the USD8,000 signing bonus. In addition, temporary employees who have worked at least 90 days prior to the effective date will receive a lump-sum payment of USD2,000, as well as wage increases and a healthcare plan. Employees will also receive a USD1,000 lump-sum performance bonus annually, as well as a USD500 annual bonus when quality targets are met. Additionally, the contract provides for a USD60,000 bonus for up to 4,000 eligible production employees who retire will between 1 February and 1 May 2016, as determined under normal and early retirement provisions of the national agreement.

The UAW also said that the contract includes a GM commitment to invest USD1.9 billion in its US plants over the course of the contract, in addition to the USD6.4 billion previously announced. In May, GM announced that it would invest USD5.4 billion in US manufacturing, later announcing an additional USD1-billion investment in its Warren Technical Center, Michigan.

The specific details of the planned USD1.9 billion investment were not disclosed, but the affected plants and number of jobs to be created or retained were. With the exception of added stamping capacity at Spring Hill, these investments affect powertrain and engine manufacturing. According to the UAW statement, the 12 plants to receive investment are: Bay City, Michigan, powertrain components (133 jobs); Bedford, Indiana, powertrain and structural components (192 jobs); Bowling Green, Kentucky, engine build programme (36 jobs); Defiance, Ohio, powertrain components (315 jobs); Flint Engine South, Michigan, engine build programme (489 jobs); GM Components Holdings (GMCH) Grand Rapids, Michigan, powertrain components (45 jobs); GMCH Lockport, New York, powertrain cooling components (182 jobs); GMCH Rochester, New York, powertrain components (20 jobs); Saginaw Metal Casting Operations, Michigan, driveline components (84 jobs); Spring Hill, Tennessee, engine build programme, added stamping capacity (699 jobs); Toledo, Ohio, transmission build module (421 jobs); and Tonawanda, New York, engine build programme (702 jobs).

Along with the plant investments and improvements in benefits and pay, the new contract spells out a role for the UAW in "involvement and ongoing implementation" of GM's Global Manufacturing System (GMS). The two sides have agreed to create a UAW-GM GMS Steering Committee, which will report to the UAW-GM Leadership Council and will work to support "ongoing implementation and execution of GMS in all our UAW-represented locations". The programme overall should bring responsibility and involvement in maintaining quality in manufacturing through the UAW membership.

Outlook and implications

The contract includes an USD8,000 bonus for employees and commits GM to another USD1.3 billion in US plant investment. The UAW leadership has negotiated a generous contract that addresses workers' expected concerns. However, GM's proportion of tier-2 employees is 20%, compared with 40% at FCA, which has also recently agreed a new US labour contract with the UAW that contains a similar clause on moving tier-2 staff on to tier-1 pay. GM is in stronger financial health than its rival and has less exposure in getting the two employee groups' compensation more closely aligned. Moving the tier-2 employees up will increase GM's labour costs, but with less impact than on FCA. The commitment by GM of an additional USD1.9 billion in US manufacturing will be largely in engine and powertrain facilities, and GM has been pre-emptive and largely transparent in announcing investments in US assembly plants throughout 2015.

The earlier FCA contract did largely prove a template for the GM contract, in that the GM contract includes a similar eight-year path for moving tier-2 employees to tier-1 pay. However, the GM contract offers a more generous signing bonus available to all employees, compared with the FCA contract offering a two-tier structure for the signing bonus, and gets its tier-2 employees on a par with their longer-standing counterparts in terms of available healthcare coverage immediately.

Among the reasons that the UAW seems to be behaving in a more transparent manner related to the terms of this contract than previously is the perception that, during the FCA negotiations, the first contract offered was rejected by the union membership in part because of a lack of full contract details. The GM contract also includes more detail in terms of investment and improvements in pay and benefits than the initial FCA contract did, as neither the national UAW leadership nor GM seems interested in letting the agreement fail and the situation move to a possibly disruptive strike.

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