GM skilled-trade workers hold up ratification of new UAW contract

GM agreed to pay $60,000 to as many as 4,000 workers who elect to retire between Feb. 1 and May 1, one of many examples in its tentative UAW contract in which GM opted to make lump-sum payments up front in exchange for keeping a lid on its fixed labor costs. Photo credit: GM
UPDATED: 11/7/15 8:03 am ET - adds detail

A majority of UAW workers at General Motors approved a new four-year contract with the automaker, but the union's skilled trades workers voted the pact down, holding up ratification, the UAW said. 

A ratification would have secured the union's first wage increases in a decade and established a fresh path to full wages for entry-level workers.

The final count was 55 percent in favor, the UAW said in a statement released Friday. Production workers OK’d the pact with 58 percent in favor, but 59 percent of skilled-trades workers voted against it. 

The UAW said it would not deem the contract as ratified.

"The UAW will hold meetings with its UAW-GM Skilled Trades membership at each worksite over the next several days in order to determine what reason(s) they had for rejection of the tentative agreement," the statement said.

"Once that inquiry has concluded, the UAW's International Executive Board shall meet to determine what appropriate steps shall be taken. The results of this process cannot change aspects of the agreement which are common to all members."

UAW rules require approval by both production and skilled trade for ratification. However, union leadership can overrule the skilled-trade rejection if it determines that those workers voted against the deal based on its economics or other reasons beyond ones unique to skilled trade workers. In 2011, the UAW overrode a rejection by Chrysler’s skilled trade workers for that reason.

There was no immediate comment from GM. 

The voting results came on the same day that the union announced a tentative agreement with Ford Motor Co., the last of the Detroit 3 yet to ink a new contract. Local UAW leaders will meet in Detroit on Monday to vet the proposed deal with Ford and vote on whether to present it to rank-and-file members for a ratification vote.

Analysts expect the Ford contract will closely follow the pattern set by the GM agreement, which was similar to the pact ratified last month by Fiat-Chrysler Automobiles workers but included a more-generous signing bonus and other lump-sum payments.

“I think the Ford workers may have this expectation that their contract is going to be richer, but I’m not sure there’s justification for that,” said Art Schwartz, a labor consultant and former GM negotiator.

Still, Ford negotiators would have been hard-pressed to offer anything less than GM, Schwartz said.

“For Ford to say ‘We can’t afford the GM contract’ would be tough,” he said.

The GM agreement would establish an eight-year grow-in period for so-called Tier 2 workers, who were hired in recent years and are paid an hourly wage of about $16-$19, slightly more than half that of their Tier 1 counterparts. About 20 percent of GM’s 52,600 hourly UAW workers are in the lower-paid Tier 2 category.

Unratified terms

Under the unratified contract, new hires would start at $17 an hour and see wage increases each year through the eighth year of employment, when their wage will reach nearly $30. That would match Tier 1 workers, who also are getting their first wage increases in more than a decade: 3 percent raises in the first and third years of the contract, with lump-sum bonuses in the second and fourth years.

GM also committed to spend about $8 billion across 12 U.S. facilities over the life of the contract, the union said. That spending should “create and/or retain” more than 3,300 jobs, the UAW said last week.

The deal, which would have taken effect immediately, also included an $8,000 signing bonus, to be paid in the second pay period after ratification. Workers also would be eligible for lump-sum performance bonuses of $1,000, in addition to an annual $500 bonus if GM hits vehicle-quality targets.

Under the pact, GM also agreed to pay $60,000 to as many as 4,000 workers who elect to retire between Feb. 1 and May 1, one of many examples in the contract in which GM opted to make lump-sum payments up front in exchange for keeping a lid on its fixed labor costs.

“The GM contract does include a lot of cash,” Schwartz said, although minimizing additional fixed labor costs will give the automaker more flexibility down the road.

GM is better positioned to sustain an increase in its U.S. labor costs than in the past because its labor bill has been reduced dramatically with the size of its work force over the last 15 years.

The company spent $7 billion on its U.S. union labor last year, down from $18 billion in 1999, according to the Center for Automotive Research. The UAW labor bill equaled less than 5 percent of GM’s revenue in North America last year, down from nearly 16 percent in 1999 and 11 percent in 2007, CAR’s research shows.

You can reach Mike Colias at autonews@crain.com

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