General Motors will pay total wages and benefits to new UAW hires that are less than the base hourly rate paid to current union workers, GM said in documents made public last week.
The payments will cut GM's annual hourly worker cost by more than $8 billion over four years, the automaker said.
Under GM's new contract with the UAW, new hires for nonproduction jobs will earn $15.30 in base pay after initially getting $14-an-hour training pay. Including health insurance and a 401(k)-style pension plan, the new hires will make $25.65 an hour, GM said.
Existing GM hourly employees earn base wages of $28.12 an hour. Including health insurance and UAW pensions, they earn $78.21 an hour, GM said in the report.
All told, GM's annual hourly worker cost is expected to fall from $18.4 billion in 2003 to $10.1 billion in 2007.
The agreement for lower-tier hourly wages covers a variety of noncore jobs such as material movement, kitting and sequencing. Ultimately, about 16,000 hourly jobs will be included in that designation, GM says.
General vehicle assembly, engine/ transmission assembly, productive maintenance and quality will be covered as core hourly positions under the new contract.
In the report, GM said 48,000 or 65 percent of its hourly work force will be eligible for retirement as of Dec. 31. By the end of 2011, that figure increases to 56,000 people or 75 percent of the current work force, GM said.
The GM report detailed a variety of other cost savings, such as switching annual raises to annual bonuses. And about two-thirds of cost-of-living adjustments will go toward active and retiree health care, GM said.
GM also won modifications in the current Jobs Bank program, which pays nearly full wages and benefits to workers on layoff. The company further negotiated changes in the attendance policy to reduce worker absenteeism, the report said.
GM also said it will shift $16 billion from an existing trust to a new trust that will pay for $47 billion in health care benefits for about 270,000 union-represented retirees.
In a presentation for financial analysts, GM said the funds will come from a trust established as part of a 2005 deal with the UAW. They will go to the Voluntary Employees Beneficiary Association trust that GM agreed to form with the UAW as part of the just-ratified contract.
Reuters contributed to this report