DETROIT, Sept. 26 — The United Automobile Workers union and General Motors reached a landmark agreement early today, ending a two-day strike. The key provision of the new contract is a health care trust that would get G.M.’s massive liability off its books.þþThe deal was announced by the company and the union in separate statements. The U.A.W. had walked out on G.M. on Monday morning, but production will resume this afternoon.þþG.M. said the tentative agreement was reached at 3:05 a.m. Eastern. The U.A.W. recessed the strike and said if the contract was not ratified, workers could return to picket lines. The agreement included a memorandum of understanding to establish an independent health care trust, as well as other changes to the national agreement. þþG.M. said implementation of the trust would be subject to court approval, as well as a review by G.M.’s accounting for the trust by the Securities and Exchange Commission. þþThe memorandum apparently establishes the principle of the trust, and allows the two sides to complete its details later. Analysts had predicted the union and the company might have to take that step, because of the complexity of such a trust.þþ“There’s no question this was one of the most complex and difficult bargaining sessions in the history of the G.M./U.A.W. relationship,” Rick Wagoner, G.M.’s chief executive, said in a statement.þþU.A.W. leaders are likely to meet on Friday to consider the contract. If approved, it would go to workers for a vote.þþThe union’s president, Ron Gettelfinger, said the new contract “will absolutely protect their jobs and keep jobs from being reduced.” He said, while not offering specifics, that the number of jobs at G.M. would be “pretty much the same if not higher” when the contract concludes in 2011.þþLater, Mr. Gettelfinger confirmed in a radio interview that there was a signing bonus for workers, but declined to state its size. He also declined comment on reports that the contract contained a two-tier wage program, with sharply lower rates for any new workers hired by G.M.þþThe U.A.W.’s old agreement with G.M. expired at midnight on Sept. 14. þþRather than strike immediately, however, the union extended the contract on an hour-by-hour basis. But on Monday, the U.A.W. struck G.M. when it failed to reach agreement by an 11 a.m. Eastern strike deadline.þþThe union had not staged a national strike since 1970; its last major walkout, at two plants in Flint, Mich., was in 1998.þþThe strike was the sufficient push the two sides needed to reach an agreement in the talks, which G.M. called the most important in a generation.þþG.M.’s key demand was the trust, called a voluntary employee benefit association, or VEBA. The VEBA, which would include the union’s participation, would be the first among the Detroit companies to take full responsibility for coverage for active and retired workers and their families. G.M. estimates that liability at $55 billion.þþSimilar trusts could soon follow at the Ford Motor Company and Chrysler LLC. They have pushed hard in contract negotiations for the union to agree to form such trusts, maintaining that their so-called legacy costs hinder their ability to compete with Japanese auto companies, whose costs are lower.þþAll told, the three companies have health care liabilities totaling nearly $100 billion.þþSpecifics of the funding for the trust were not available, but Mr. Gettelfinger said it would “secure the benefits of our retirees” and every G.M. hourly worker now at the company. He said the fund, which would last for 80 years, “would be solvent” throughout that time. þþA primary concern for U.A.W. leaders, who have seen such funds at other companies run dry, forcing the union to grab concessions so that they could be replenished. Mr. Gettelfinger hinted that if this fund runs low, G.M. would make new investments in it. Asked if there was a “backstop” for it, Mr. Gettelfinger said, “I’m not going into details, but I like that word.”þþThe U.A.W., in turn, was pushing for job security for the workers who remain at G.M. after it completes a restructuring plan. G.M. plans to cut 30,000 jobs and close all or part of a dozen plants by next year. þþBut G.M., in its statement said the deal paved the way for it “to significantly improve its manufacturing competitiveness, providing the basis for maintaining and strengthening its core manufacturing base in the United States.”þþ“This agreement helps us close the fundamental competitive gaps that exist in our business,” Mr. Wagoner said.þþ“The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments.”þþOnce the voting ends, the union will move on to the other car companies, where it traditionally tries to get similar agreements.þþNegotiations at Ford and Chrysler have continued, though at a snail’s pace, while the G.M. discussions dragged on. With negotiations there complete, the union expected to shift its attention to one of the two remaining companies. þþAlthough union leaders agreed to the trust, which Mr. Gettelfinger said was in workers’ best interest, the U.A.W. could face an uphill fight in winning workers’ support for the new contract.þþEven before the tentative settlement was reached today, some dissidents have challenged the idea as a further deterioration of benefits that the union has enjoyed for generations.þþUnder it the trust, G.M. will invest cash and stock in a fund, which would have independent administers. But the union would supervise benefits for workers, families and retirees. It has agreed to smaller such trusts at G.M. and Ford, and has similar deals at Caterpillar as well as Dana Corporation, which is operating in bankruptcy.þþVEBAs, which reduce a company’s debt, are an increasingly common choice by unions at troubled companies such as Bethlehem Steel and Goodyear Tire and Rubber, which established a trust with the United Steelworkers union last year.þþMr. Gettelfinger said the U.A.W. worked closely with G.M.’s chief financial officer, Frederick Henderson, to be sure that the VEBA plan would be ÿsecure.ÿ The union also received advice from Lazard Limited as well as actuaries who specialize in such plans.þþIn the interview this morning on WJR-AM radio, Mr. Gettelfinger acknowledged the debate that is already taking place within the union over shifting health care obligations from G.M. to the trust, which would be independently administered.þþÿThere will be those who will mount opposition to that,ÿ Mr. Gettelfinger said. ÿI’ll be glad to stand up in front of anybody and defend that VEBA and show that they’re going to be secure with their retirement benefits. I’m not afraid of that battle at all.ÿþþHe went on, ÿI’m looking forward to the debate about the VEBA and I think our retirees will be especially pleased.ÿþþ
Source: NY Times
