GM Reaches Tentative Deal with Striking U.S. Workers

Independent trust to cover retiree health; job security guarantees

General Motors Corp. has reached a tentative deal with striking workers who shut down 80 plants across the U.S., union and company officials said Sept. 26. GM hopes to resume production by Sept. 26's afternoon shift, GM spokesman Tom Wickham said.

GM said the new national contract, which is subject to union ratification and court approval, includes a historic agreement to establish an independent trust to cover the costs of retiree health care. Union officials praised the contract, which also includes job security guarantees.

"We feel very good about this agreement," UAW president Ron Gettelfinger said at a press conference shortly after the deal was reached. "I think this strike helped our side." Gettelfinger predicted GM's employment level should remain constant over the four-year term of the contract.

More than 73,000 United Auto Workers members walked off the job on Sept. 24 morning after contract talks broke down over issues of job security and health care. Pickets were withdrawn from GM worksites about an hour after the agreement was reached at 3:05 am (8:05 GMT) and union officials were notifying members that they should return to work on Sept. 26.

The automaker said the deal "paves the way for GM to significantly improve its manufacturing competitiveness, providing the basis for maintaining and strengthening its core manufacturing base in the United States."

"This agreement helps us close the fundamental competitive gaps that exist in our business," GM Chairman and CEO Rick Wagoner. "The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the U.S. along with significant future investments."

GM would not disclose how much production was lost by the brief strike, which also forced the closure of three Canadian plants.

GM and union officials offered few details of the settlement but GM is expected to transfer enough cash into the new trust to cover about 70% of the current health-care liabilities, which are estimated to exceed $50 billion, sources said.

Theses "legacy" costs are responsible for a huge piece of GM current labor costs of $73.26 per hour, GM officials said. The cost is nearly $30 per hour more than the labor costs of Asian rivals such as Toyota and Honda that have plants in the United States. The actual hourly wage of GM workers is roughly $28 per hour, a GM spokeswoman said.

Copyright Agence France-Presse, 2007

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