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GM, UAW reach tentative labor pact with 'significant' wage gains

UPDATED: 10/26/15 5:54 am ET - adds details

DETROIT -- The UAW and General Motors reached a tentative agreement late Sunday on a four-year labor contract just before a union-imposed midnight deadline, wrapping up a short but intense bargaining session and defusing for now any chance of a strike.

In a statement, the union said its bargaining committee “secured significant gains and job security protections” in the proposed pact, which still must be approved by local union officials. It didn’t disclose details.

“We believe that this agreement will present stable long-term significant wage gains and job security commitments to UAW members now and in the future,” UAW President Dennis Williams said in the statement. “We look forward to presenting the details of these gains to local union leaders and the membership.”

GM confirmed the tentative deal, calling it “good for employees and the business” in a statement issued by Cathy Clegg, vice president of labor relations.

“We developed constructive solutions that benefit employees and provide flexibility for the company to respond to the needs of the marketplace,” she said.

The UAW said its bargaining committee unanimously agreed to send the tentative deal to local union leaders, who will meet in Detroit on Wednesday to vote on whether it should go to the rank and file for ratification.  A vote would occur after that, probably over the course of several days, spilling into next week.

In the UAW’s statement, Cindy Estrada, the union vice president who led the GM negotiations, called the proposed pact “transformative” and said it would “provide certainty to our members and create a clear path for all GM employees now and in the future,” adding that it contains “significant job security commitments.”

The pact came after the UAW notified GM on Saturday that it would terminate the extended contract that it had been working under since Sept. 14, the initial deadline for an agreement to replace an expiring 2011 contract.

The union and GM said they won’t comment on the specifics of the deal until after Wednesday’s vote of local union leaders, known as the UAW National GM Council.

The union targeted GM second in its 2015 bargaining after establishing a pattern for new Detroit 3 contracts under an agreement with Fiat Chrysler Automobiles that was ratified last week.

The deal with FCA provides substantial wage increases for both entry level, so-called Tier 2 workers, as well as legacy Tier 1 employees. It secured one of the UAW’s top goals going into the talks -- the elimination of the two-tier wage scale -- that will see entry level workers reach the top wage of $30 per hour under an eight-year grow-in period.

Tier 1 workers also got their first pay increase in more than a decade. They’ll receive a 3 percent increase in the contract’s first and third years, with lump-sum bonuses of $2,400 and $2,500 in years two and four.

Although analysts expected the FCA deal to serve as a template for the union’s tentative accord with GM, and eventually Ford, it’s unclear for now whether those provisions made it in.

Tier 1 employees account for far more of GM’s UAW work force of 52,600 -- about 80 percent, vs. just less than 60 percent for FCA. Gaining the support of those legacy employees will be key to getting the GM pact ratified.

Analysts had expected the union to demand a sweeter deal from GM, which is larger and more profitable than FCA. Just last week GM posted a $3.1 billion pretax operating profit for the third quarter, its highest result since well before its 2009 bankruptcy.

But GM negotiators were likely to point out that its workers have been paid far more in profit-sharing checks over the life of the current contract -- about $30,000 total, vs. about $9,000 for FCA workers.

GM also emphasized plant investments and job creation and security in the talks. Over the spring and summer, executives traveled to several manufacturing plants throughout the country to announce a combined $5.4 billion in factory improvements planned over the next three years.

Had a deal not been reached and a strike called, it would have been the first time the UAW had struck a Detroit 3 automaker over wages and benefits during national negotiations since brief walkouts, first at General Motors, then at Chrysler, in the fall of 2007.

Under Chrysler and GM’s U.S. government bailouts in 2009, the union was prohibited from striking the two companies during the 2011 round of labor talks.

You can reach Mike Colias at autonews@crain.com

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