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GM Labor Deal May Change U.S. Auto Industry

Hear NPR's Jason Beaubien on Reaction from Union Workers

The United Auto Workers and General Motors Corp. agreed to a tentative contract early Wednesday that ends a two-day national strike — the first against the automaker in 37 years.

The union and automaker confirmed that the deal creates a GM-funded, UAW-run trust fund to administer retiree health care, but the two sides gave few details.

GM said in a statement that the deal will make it significantly more competitive and provides "the basis for maintaining and strengthening its core manufacturing base in the United States."

The company went into the negotiations seeking to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors.

"This agreement helps us close the fundamental competitive gaps that exist in our business," Chairman and Chief Executive Rick Wagoner said.

The union said the agreement with the nation's largest automaker was reached shortly after 3 a.m. and the strike was called off about an hour later. The deal means UAW workers will head back to their jobs at around 80 GM facilities across the nation. The union went on strike Monday when talks broke down, ending GM's production and causing layoffs and shutdowns at parts factories.

The contract must be reviewed by local UAW presidents and will then be subject to a vote of GM's 74,000 rank-and-file members, including more than 2,000 at GM's assembly plant in Arlington, Texas. The agreement is expected to set a pattern for contracts at Ford Motor Co. and Chrysler LLC.

The strike was the first such nationwide action strike against GM during auto contract negotiations since 1970. The UAW last struck GM in 1998, when a 54-day work stoppage at two plants shut down production across the country.

Remaining Competitive with Japan

GM went into the negotiations seeking to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors.

The tentative deal includes GM's top priority in the negotiations — shifting most of its $51 billion unfunded retiree health care obligation to a UAW-run trust. GM would pay about 70 percent of that obligation, or $36 billion, into the trust fund, called a Voluntary Employees Beneficiary Association, the person briefed on the talks said.

The union would then invest the money and take over the health care responsibility for about 340,000 GM hourly retirees and spouses.

"I'm pleased to say that we have a VEBA in place that will secure the benefits of our retirees," UAW President Ron Gettelfinger said at an early morning news conference inside the union's Detroit headquarters.

Deal Needs Union, Government Approval

Gettelfinger said he's confident of ratification and that voting could begin this weekend.

The UAW's national negotiating committee and executive board for GM both have unanimously recommended ratification, Gettelfinger said.

"We're very comfortable with this agreement, and we're happy to be able to recommend it to our membership," Gettelfinger said. Union leaders will be briefed on details Thursday and Friday, he said.

The UAW may also decide Thursday whether to begin talks first with Ford or Chrysler. Those talks can begin before the GM contract is ratified, Gettelfinger said.

After ratification, the VEBA memorandum would have to be approved by the courts and would be reviewed by the U.S. Securities and Exchange Commission, GM said.

"There's no question this was one of the most complex and difficult bargaining sessions in the history of the GM-UAW relationship," Wagoner said. He thanked the UAW bargaining team for its work in reaching the agreement.

From NPR reports and The Associated Press

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