The United Auto Workers Union announced Wednesday that its workers ratified its negotiated labor contract with General Motors by a 2-to-1 margin, making it the first of Detroit’s three automakers to settle in ongoing talks.

The union said 65 percent of production workers were in favor, and 63 percent of its skilled workers who voted approved the new deal, which went into immediate effect.

"The UAW and GM entered into this set of bargaining as America struggles with record levels of unemployment and an economy that shows little sign of improvement," said UAW President Bob King. “Because of President Obama's and the American taxpayers' backing of our jobs and our companies, we were determined to work together with GM management to grow jobs in the U.S. and to get more Americans back to work and we are doing just that.

"With the continued support and solidarity of our members at GM, we stood strong and not only stopped these proposed givebacks, but we made important gains for our members in this contract," King added.


GM Chairman and CEO Dan Akerson (left) shakes hands with UAW President Bob King, marking the ceremonial start of labor negotiations between GM and the UAW Wednesday, July 27, 2011 at the Detroit-Hamtramck Assembly Plant.

The new contract essentially trades the promise of generous pay and benefits for GM’s 48,000 hourly workers in exchange for job security and pay gains tied more closely to GM’s financial health, profits and advances in quality.

In a statement, the UAW said the contract will create 6,400 new jobs in the U.S, bring laid-off workers back, and bring back some GM jobs to the U.S. which had been sent to Mexico as well as other parts of the world.

The UAW evidently sees its value to the U.S. economy at a factor of 9-to-1, as that is the ratio of new jobs for each job it says it has fostered (6,400 X 9 = 57,600).

“The 6,400 GM jobs mean another 57,600 jobs will be created in suppliers and other businesses related to the auto industry, since auto manufacturing jobs create and support so many other jobs,” the UAW said.

Under the new deal, entry-level workers will receive “significant gains” in pay, with wages coming to $19.28 per hour over the term of the agreement.

All GM/UAW employees will also get a $5,000 signing bonus, up to $4,000 in “Inflation Protection,” and lump sum payments for “Quality” over the term of the agreement.

The UAW said profit sharing is now improved as well, as the new plan is simpler and more “transparent,” while promising higher payouts.

GM Chairman and CEO Dan Akerson said on a conference call to media and analysts yesterday that he viewed the UAW/GM deal as “win-win.”

The new contract does not significantly increase fixed labor costs, and will help GM “maintain the fortress balance sheet we’ve been working on for the past two years,” Akerson said.

Akerson concurred with the UAW that the new “more transparent” profit-sharing plan will be lucrative for workers, more equitable, and he noted that hourly workers now enjoy a similar deal salaried workers receive.

“When the company does well, the employees ought to share in the success,” Akerson said.

In digging deeper into the contract’s provisions, Edmunds noted the elimination of the “Job Bank” that guaranteed nearly full pay to laid-off workers, as well as an incentive program encouraging some of the 10,000 GM skilled trades workers who are now under-utilized to retire.

Starting wages for new hires increases about $3 per hour from approximately $14 previously. No cost-of-living adjustments are provided for during the contract’s term, and experienced workers get no base wage increases.

As for profit sharing, Edmunds found that if this year GM earns the $4.7 billion it did in 2010, each worker will receive a check for around $4,000.

GM’s overall increase in labor costs under the new terms is about 1 percent. The company said this will enable it to keep it’s breakeven point at an annual U.S. Seasonally Adjusted Annual Rate of sales of about 10.5 million units.


General Motors Detroit-Hamtramck Assembly Plant employee Elizabeth Adams on the line, working on a Volt.

Edmunds however noted its 2011 SAAR forecast for GM is about 12.6 million units.

Attrition by older employees, high wage earners, and skilled trades workers will help offset the bump in payouts, Edmunds reported, and some of these could receive retirement packages of as much as $75,000.

As for some of those 6,400 new jobs, a large number of them will come from GM’s commitment to reopen a shuttered assembly plant in Spring Hill, TN. New workers will also be added by an extra shift in Wentzville, MO for assembly of a new midsized pickup, and by adding workers at two more Michigan powertrain assembly plants.

Ford and Chrysler

The GM contract was originally hoped by the UAW to be a template for the other two Detroit automakers, which as of yet have not reached agreement, but it has not turned out that way.

Ford reportedly has higher labor costs, and its workers – not forbidden to strike as are the New GM’s workers – are seeking a better profit sharing package, and higher signing bonuses. It is believed Ford may add from 7,000 up to 10,000 new UAW jobs in whatever contract it settles on, which will run through 2015.

Chrysler’s ongoing talks have been tainted by a somewhat contentious air, as its CEO Sergio Marchionne said Chrysler cannot afford to be as generous in making concessions as GM was. Marchionne also publicly censured UAW president Bob King in an open letter not long ago for failing to show up to a meeting. The extended deadline now for Chrysler to come to an agreement with the UAW is Oct. 19.

Win-win

As for GM’s contract, it was not without detractors, but the heads of both GM and UAW are putting on smiles, and saying all is well.

We’ll close with the closing comments King offered in the UAW’s statement:

"Two years ago, GM and Chrysler were hanging by a thread when President Obama stepped in and invested federal funds to help turn the companies and the U.S. auto industry around, protecting the auto supplier base and keeping good-paying jobs in America," King said. "When GM was struggling, UAW members shared deeply in the sacrifice. The UAW has shown that we are totally committed to helping the U.S. auto companies succeed. GM is prosperous today because of its workers. It's the workers and the quality of the work they do, along with the sacrifices they made, that have helped returned this company to profitability. Now that GM is posting profits again, our members are sharing in the success, while ensuring GM's continued profitability."

UAW , AutoObserver , Automotive News .