Just last Sunday, General Motors Company reached a new tentative agreement with the United Auto Workers for its hourly manufacturing workers. The agreement, which lasts for the next four years, was reached just 16 minutes before a strike deadline.
The union is said to have pushed for a better deal with GM than it did with Fiat Chrysler Automobiles (FCA) NV thanks to GM’s bigger size and higher profitability compared to FCA, especially in North America.
“In the eyes of workers, they saved General Motors with concessions and now they want to be rewarded for it,” Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts, told Bloomberg. “A bigger signing bonus is very attractive to workers and it’s a good settlement.”
Last week, GM reported $3.1 billion in adjusted profit and an EBIT-adjusted margin of 8.0 percent for the third quarter of 2015, setting records for any quarter.
Official details of the agreement haven’t been officially released, but here’s what we’ve we’ve been able to scavenge from various sources:
- To be ratified, a majority of 52,700 workers in the U.S. must vote yes on the deal, with voting coming to an end today (Friday, November 6th, 2015).
- Workers hired before 2007 would receive 3 percent raises in the first and third years of the contract and 4 percent lump-sum bonuses in the second and fourth years of the agreement.
- Lump-sum payments would be four percent of annual pay, the same as FCA. It’s likely that GM workers wanted this number to be greater given GM’s larger size and profitably.
- All hourly employees get a signing bonus of as much as $8,000, higher than rival FCA, whose hourly workers get a $4,000 signing bonus.
- GM workers would keep the outgoing contract’s profit sharing structure of $1,000 per $1 billion in GM North American profit. Some outlets have reported the bonus structure as being of “$1,000 and an additional $500 bonus when quality metrics are reached”.
- To note, GM paid an average of $9,000 to the average UAW member in profit sharing in 2015 alone, according to the Center for Automotive Research.
- Up to 4,000 eligible employees would be offered a $60,000 early retirement incentive.
- The pay gap between veteran workers and new hires will gradually be eliminated, thereby allowing entry-level, or two-tier workers to reach a top wage of about $29 an hour in eight years. For instance, entry level production workers currently paid between $15.78 and $19.28 per hour would see their wages increase to between $17 and $22.50 per hour and would eventually earn about $29 per hour.
- One of the most controversial aspects of the proposed agreement is to pay workers at GM Components Holdings a lower pay rate than other workers. A group of about 3,400 hourly workers at several GM parts plants with one to four years of seniority would be paid $16.25 to $19.86.
- GM will invest $1.9 billion in U.S. facilities, creating or retaining 3,300 jobs at 12 plants.
Local union leaders at GM voted on the proposed contract terms earlier this week, sending the agreement to rank-and-file members for approval. To be ratified, a majority of 52,700 workers in the U.S. must vote yes on the deal, with voting coming to an end Friday, November 6th, 2015.