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GM Union Is Poised to Ratify Contract, End Strike in Sixth Week

Oct. 25, 2019
The ratification will end the longest UAW strike of GM since 1970.

General Motors Co. employees are voting in favor of the tentative labor agreement reached with the United Auto Workers, ratifying a new contract and ending a strike that has cost the company about $2 billion.

United Auto Workers union locals at major plants across the country have reported voting results this week that suggested GM was well on its way to clinching a contract that will bring an end to the walkout in its sixth week. With 93% of votes counted ahead of a 4 p.m. Detroit time deadline Friday, the trade publication Automotive News reported it was mathematically impossible for the deal to fall through.

The agreement GM and the UAW reached last week awards workers pay raises, $11,000 ratification bonuses and a route for temporary employees to reach full-time status. The contract also preserves the automaker’s generous health-care plan.

The strike rippled through the U.S. economy, potentially shaving tens of thousands of workers from the October jobs report due out next week from the Labor Department. GM reports earnings on Oct. 29 and will detail the impact of the strike on earnings and likely address how much can be recouped. The automaker’s shares rose as much as 2.8% to $36.80 on Friday, on course for the highest close in almost a month.

The new contract is expected to raise GM’s labor costs by at least $100 million a year, though it allows the company to follow through with closing all but one of the four U.S. plants it announced plans to shutter almost a year ago.

While the deal likely won’t help reduce the $13-an-hour premium that the Center for Automotive Research estimates GM pays workers over foreign automakers’ wage rates, it’s unlikely to lead to an increase in vehicle prices. Labor expenses only account for about 5% of the cost of a car.

Electric Trucks

GM committed to investing $7.7 billion in U.S. plants and create or retain 9,000 jobs as part of the deal. The automaker will save a factory that sits on the border between Detroit and the town of Hamtramck, where it will build a new line of electric trucks and sport utility vehicles. Among the models under consideration are SUVs that would revive the Hummer brand.

The automaker also plans to build a new joint-venture facility in Lordstown, Ohio, that will make battery packs for electric vehicles. That’s still a setback for workers at a now-idled assembly plant in Lordstown that once made Chevrolet Cruze compact cars. GM has no new work for that facility or two former transmission plants in Baltimore and Warren, Michigan.

The contract -- which the UAW will use as a benchmark for its negotiations with Ford Motor Co. and Fiat Chrysler Automobiles NV -- included the following concessions to workers:

  • $60,000 early-retirement bonuses for up to 2,060 eligible employees who leave between Dec. 31 and Feb. 28
  • $11,000 ratification bonus for senior employees; $4,500 for temporary workers
  • Hourly pay raises from $18 to $32.32 for entry-level workers within four years or less
  • 3% wage increases in the second and fourth year of the contract, and 4% lump sums in first and third years
  • One-time company contribution of $1,000 to personal savings plan for members with defined pension plans

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