GM Comes to Agreement on Contract with UAW

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It hasn’t been long since General Motors reclaimed their crown as the largest automaker in the world, not to mention making their first profit in seven years. And it appears they’re more than willing to kick a significant portion of their profit back towards their UAW workforce.

That’s not to say GM has to make a profit for UAW workers to increase their pay, because the company is offering to increase starting pay for new workers by two to three dollars an hour, and many workers could see wages increase to almost twenty dollars an hour. Those aren’t the wages of yesteryear, but they’re jobs, which seem stuck in a never-ending short supply.

Speaking of jobs, GM will be hiring, agreeing to reopen the former Saturn assembly plant  in Spring Hill, Tennessee. GM ceased car assembly operations there nearly two years ago, although they continued to produce engines, stamp out steel parts and painting operations on site. The Saturn brand was shuttered after it failed to sell as GM got rid of nameplates.

There’s more to this proposed agreement than just better pay and more jobs. The deal also offers workers plenty of potential for profit sharing, with significant improvement over the deal it replaces. If GM hits $1 billion in profit from their North American operations, they’ll pay bonuses – $1,000 for every one billion in profit.

While those bonuses are going to be based on GM’s financials, there’s one bonus that isn’t. The company will pay every UAW worker a “signing bonus” of $5,000 if the contract is approved. With more than 48 thousand production workers, the one time checks will cost GM $242 million.

Cathy Clegg, GM’s vice president for labor relations, said “we worked hard for a contract that recognizes the realities of today’s marketplace, enabling GM to continue to invest in U.S. manufacturing and provide good jobs to thousands of Americans.”

We’ll know if the UAW approves the contract within 10 days. If they do, we think the UAW will then pursue a new agreement with Chrysler. If workers reject the deal, the two sides will move on to binding arbitration. UAW workers can’t go on strike, having given up that right as part of the federal government bailout.

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