- The Washington Times - Saturday, September 29, 2007

DETROIT (AP) — Local union leaders yesterday endorsed a tentative agreement between General Motors Corp. and United Auto Workers that requires GM to pay at least $35 billion for retiree health care and offers an unprecedented number of promises for future work at U.S. plants, according to a summary of the agreement provided by the UAW.

The agreement still is subject to a vote of GM’s 74,000 UAW members, which should be completed by Oct. 10.

UAW President Ron Gettelfinger said he is confident members will support the agreement and that Ford Motor Co. and Chrysler LLC will match many of its terms.

“We’re happy with this stuff,” he said.

GM spokesman Dan Flores said both UAW workers and the company benefit from the agreement. GM didn’t release any specifics of the contract yesterday; the company typically waits until the contract is ratified to make detailed comments.

“Not only does this new agreement enhance the security for employees and retirees, it enables GM to close competitive gaps in our business, and the projected competitive improvements will allow us to maintain a strong manufacturing presence in the U.S. with significant future investments,” Mr. Flores said.

Mr. Gettelfinger said he had not decided whether the union would negotiate with Ford or Chrysler next, but expects to make that call next week. Both automakers have extended their contracts with the union indefinitely.

The linchpin of the deal is a trust fund for retiree health care, known as a Voluntary Employees Beneficiary Association, or VEBA.

GM, which has about 340,000 retirees and spouses, wanted to form the VEBA to get $51 billion in retiree health care debt off its books. The VEBA will be run by an independent board overseen by the UAW.

In a two-page letter sent to retirees yesterday, the UAW sought to calm retirees’ fears about the VEBA, saying the union supports the fund because it protects retirees’ benefits in the event of a downturn or bankruptcy. Retirees don’t get to vote on the contract.

The UAW was seeking to protect jobs and slow its falling membership in the contract, and Mr. Gettelfinger said GM responded with “unprecedented product guarantees.” GM committed to building current or existing products at 16 of its 18 U.S. assembly plants, according to the UAW’s summary. GM has already announced the closure of a plant in Doraville, Ga., in 2008.

The 16 factories will continue building their current products or, in most cases, the next generation of those products. A plant in the Detroit area is scheduled to begin producing the electric Chevrolet Volt, one of GM’s most anticipated products, in 2010, while a plant in Lordstown, Ohio, is set to get a new subcompact.

“The whole thing looks fantastic,” said Dave Green, president of one of two local unions in Lordstown. The agreement, he said, preserves wages and health care for active workers “and we’ve done creative stuff that’s going to make the company profitable in North America.”

The union said assembly line workers will get economic gains totaling $13,056 over the life of the four-year contract. They will receive bonuses in each year of the contract, including a $3,000 bonus when the contract is ratified, as well as cost-of-living increases.

But some workers will be making less than before.

New hires who are doing what are considered noncore functions — combining parts from suppliers to prepare them for the assembly line, managing parts and chemicals and driving finished vehicles — will make between $14 and $16.23 an hour, or about half the starting wage of $28.12 that assembly workers would make under the new contract.

There are more than 16,000 people doing noncore work in U.S. plants right now, the UAW said in its summary.

Under the tentative contract, 3,000 temporary workers also will get permanent jobs at the full-time wage rate, according to the union’s summary.

If the company’s UAW members ratify the deal, its provisions will likely save the company about $3 billion per year, which it can pump into the development of new products, according to several industry analysts.

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