Oct 17, 2019 - Economy

Rich payouts and plant closures in GM labor deal

Photo: United Auto Workers General Motors Training Center in Detroit, Michigan. Photo: Jeff Kowalsky/Contributor/ Getty Images

Factory workers at General Motors will receive big bonuses and keep their lucrative health benefits under a proposed four-year labor contract, but union bargainers were unable to rescue three U.S. factories slated for closure.

Why it matters: The deal ends the longest nationwide strike at GM in a half-century. But relations remain raw as the automaker and its workforce struggle to adjust to disruptive technology changes roiling the industry.

Details: The economic benefits for workers are among the best in years, a reward for their sacrifices during GM's 2009 bankruptcy.

  • Workers will receive 3% raises in the second and fourth years of their contracts and 4% lump sums in the first and third years.
  • They'll also receive $11,000 each when the contract is ratified ($4,500 for temporary workers) and no limit to the amount of year-end profit-sharing they could receive, which hit a record $10,750 last year.
  • Workers will retain their current health care benefits, with no additional out-of-pocket costs.
  • The deal shortens the pathway for lower-paid temporary workers to achieve full-time status.
  • There is no immediate estimate on how the package will affect GM's fixed labor costs.

Yes, but: Three of the four plants GM targeted for closing last November will indeed close for good, and there was no agreement to bring work back from Mexico, a major point of contention for the UAW.

  • Workers who have not already moved to other plants will be offered buyouts and early retirement deals.
  • GM is offering early retirement bonuses of up to $60,000 for 2,000 hourly workers and 60 skilled-trades workers who agree to leave.
  • The Lordstown, Ohio, assembly plant and two transmission plants in Maryland and Michigan will close.
  • The fourth plant, in Detroit, will be retooled to manufacture a future electric pickup truck.
  • Contract highlights (below) shared with UAW leaders at a meeting Thursday did not mention future investment in U.S. factories, but earlier reports said GM planned to invest $7.7 billion in the U.S., plus another $1.3 billion for a new battery facility in Ohio.

The impact: The plant closures are no doubt a disappointment for President Trump, who campaigned on a promise to bring manufacturing jobs back to the U.S.

Go deeper: Buckle up: GM, Michigan and 2020

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