DETROIT — General Motors Chairman Rick Wagoner says the new contract with the UAW is transformational for the automaker.
"Just the agreement on the health care trust alone is huge," he told Automotive News. "While it's a tremendous financial commitment on our part, it also does a lot to take out overhang and risk off our balance sheet and, obviously, when implemented generates a huge cash savings to us."
Analysts have estimated that if GM gets approval from the Securities and Exchange Commission for the Voluntary Employees Beneficiary Association, or VEBA, GM would start to see savings of about $3.3 billion starting in 2010. Details will come next year, Wagoner said.
GM is contributing $26.5 billion into the UAW-controlled trust. This sheds GM's $47 billion obligation for UAW retiree health care when the trust takes effect in 2010.
The contract will allow GM to pay new nonproduction workers about $26 an hour in wages and benefits vs. the nearly $78 it pays current workers. Wagoner says those savings will come as many of GM's older hourly employees retire over the next four years.
GM will bring some outsourced work, such as parts sequencing, in-house. Wagoner said it was unlikely GM would make parts in-house.
In the past year and a half, GM has bought out roughly 34,000 hourly workers. Buyouts could expand.
"The UAW mentioned interest in a buyout program," Wagoner said. "We haven't had a chance to explore that with them because they've been busy doing other stuff. But those kinds of things could accelerate savings in some upfront cost. We're open to that."