DETROIT (AP) The United Auto Workers and General Motors Corp. agreed today to a tentative contract that ends a two-day national strike the first against the automaker in 37 years and puts responsibility for retirees’ health care into the union’s hands.
GM and the UAW confirmed that the deal creates a GM-funded, UAW-run trust to administer retiree health care. The two sides gave no other details, but a person briefed on the contract told The Associated Press that it also would give workers bonuses and lump-sum payments and would pay newly hired workers at lower rates. The person requested anonymity because the contract talks are private.
The union said the agreement with the nation’s largest automaker was reached shortly after 3 a.m. The UAW canceled the strike about an hour later and some workers could return as early as this afternoon.
The contract must be reviewed by local UAW presidents and will then be subject to a vote of GM’s 74,000 rank-and-file members. The agreement is expected to set a pattern for contracts at Ford Motor Co. and Chrysler LLC.
The deal means UAW workers will head back to their jobs at around 80 GM facilities across the nation. The union went on strike at 11 a.m. Monday when talks broke down, ending GM’s production and causing layoffs and shutdowns at parts factories.
It was the first nationwide strike against GM during auto contract negotiations since 1970. The UAW last struck GM in 1998, when a 54-day strike at two plants shut down production across the country.
GM said in a statement that the deal will make it significantly more competitive and provides “the basis for maintaining and strengthening its core manufacturing base in the United States.”
The company went into the negotiations seeking to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors.
“This agreement helps us close the fundamental competitive gaps that exist in our business,” Chairman and Chief Executive Rick Wagoner said.
The deal includes GM’s top priority in the negotiations shifting most of its $51 billion unfunded retiree health care obligation to a UAW-run trust. GM would pay about 70 percent of that obligation, or $36 billion, into the trust, called a Voluntary Employees Beneficiary Association, the person briefed on the talks said.
The union would then invest the money and take over the health care responsibility for about 340,000 GM hourly retirees and spouses.
“I’m pleased to say that we have a VEBA in place that will secure the benefits of our retirees,” UAW President Ron Gettelfinger said at an early morning news conference inside the union’s Detroit headquarters.
Gettelfinger said he’s confident of ratification and that voting could start begin this weekend.
The UAW’s national negotiating committee and executive board for GM both have unanimously recommended ratification, Gettelfinger said.
“We’re very comfortable with this agreement, and we’re happy to be able to recommend it to our membership,” Gettelfinger said.
Union leaders will be briefed on details Thursday and Friday, he said.
The UAW may also decide Thursday whether to begin talks first with Ford or Chrysler. Those talks can begin before the GM contract is ratified, Gettelfinger said.
After ratification, the VEBA memorandum would have to be approved by the courts and would be reviewed by the U.S. Securities and Exchange Commission, GM said.
“There’s no question this was one of the most complex and difficult bargaining sessions in the history of the GM-UAW relationship,” Wagoner said. He thanked the UAW bargaining team for its work in reaching the agreement.
The person briefed on the talks said that because GM’s pension fund has more money than its expected obligations, both sides agreed to tap into it to fund the trust.
Retirees would get a pension increase, but it would be offset by an equal increase in health care contributions, the person said.
Wages would stay the same for the length of the four-year deal, but workers would be given a bonus or lump sum payments every year, the person said. The size of the payments was not immediately available.
GM made no specific commitments to build cars and trucks at U.S. factories, but generally agreed that with the reduced costs from the new contract, investment in the plants would work, the person said.
The pact also includes a lower wage structure for newly hired workers in certain non-manufacturing jobs, the person said, adding that in order to make way for new hires, GM would offer early retirement and buyout packages to veteran workers.
The deal also includes language that mitigates the impact of the jobs bank, in which the company pays laid-off workers most of their salary and benefits, said the person.
Lloyd Coleman, 64, of the Detroit suburb of Taylor, was working his first picket line shift when he got word early today of the tentative agreement. He said he was withholding judgment until further details were released.
“I’m just wondering what we are giving up,” said Coleman, a 31-year GM employee who for about the past year has worked as an electrician at a plant in Hamtramck. He said his biggest concerns include health care and bringing new products to existing GM plants.
Coleman said the VEBA holds promise.
“It’s a big burden off the company,” he said. “If it’s managed right, it will be OK.”
Negotiations between GM and the UAW officially began in July. Talks broke down Sunday night and workers walked off their jobs Monday when the strike deadline came and went.
Gettelfinger said the strike broke a logjam in the talks.
“I think the strike probably helped our side more than theirs,” he said.
Industry analysts had predicted a short strike, saying the two sides had too much to lose from a prolonged work stoppage.
Associated Press Writer David Runk in Hamtramck contributed to this report.