Oct 17, 2019

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

Go deeper

GM workers will remain on strike during vote at union halls

Workers from United Auto Workers Local 440 picket at an entrance of General Motors' Bedford Powertrain factory during national labor strike against GM. Photo: SOPA Images/Contributor/Getty Images

The United Auto Workers strike against General Motors will continue for at least another week as union members vote on whether to ratify a tentative contract agreement.

Why it matters: The unusual decision by some 200 local union leaders from GM plants around the country means the economic pain for the company, its employees and suppliers will continue to mount at least through Oct. 25, when voting at local union halls is scheduled to conclude.

Go deeperArrowOct 17, 2019

GM labor deal could mean higher costs for all

UAW picket signs outside a GM plant in Detroit. Photo: Jeff Kowalsky/AFP via Getty Images

A tentative 4-year labor contract with the United Auto Workers lets GM shutter underutilized factories as it wanted, but could also lock in higher labor costs across the domestic auto industry.

Why it matters: Detroit typically follows "pattern" bargaining — the economic terms struck at one company are generally matched by other UAW-represented automakers, setting a uniform standard of living for all unionized auto workers.

Go deeperArrowOct 18, 2019

Detroit's gamble on the future

Illustration: Eniola Odetunde/Axios

The deal between one of Detroit's biggest automakers and striking workers is a calculated bet on a vision for the auto industry that's far from certain.

The big picture: GM can afford the rich contract terms negotiated with the United Auto Workers — as long as nothing goes wrong. Higher gas prices, an economic downturn or a new president with different priorities could throw off the entire equation and put GM and other domestic automakers in a financial bind.

Go deeperArrowOct 25, 2019