GM and UAW Reach Tentative Agreement On New National Labor Contract

This just in:


DETROIT, Mich. – General Motors and the UAW have reached a tentative agreement on a new national labor contract, covering approximately 74,000 represented employees. The agreement is subject to UAW member ratification.

The tentative agreement includes a memorandum of understanding to establish an independent retiree health care trust, as well as other changes to the national agreement. Following ratification, implementation of the memorandum of understanding is subject to approval by the courts, and satisfactory review of accounting treatment with the Securities and Exchange Commission.

“There’s no question this was one of the most complex and difficult bargaining sessions in the history of the GM/UAW relationship,” said Rick Wagoner, GM Chairman and CEO. “I’d like to thank UAW President Ron Gettelfinger, UAW Vice President Cal Rapson and their bargaining team for their leadership and hard work in negotiating the agreement.”

The national agreement paves the way for GM to significantly improve its manufacturing competitiveness, providing the basis for maintaining and strengthening its core manufacturing base in the United States.

“This agreement helps us close the fundamental competitive gaps that exist in our business,” Wagoner said. “The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments.”


My first impression is….Robert Farago’s going to have a field day with this.

There’s no numbers mentioned and no talk of any wage reductions at all. The good news for GM is the creation of a health care trust, which will likely require a huge cash burn initially but a better margin per vehicle down the track. It’s been mentioned before that GM spend more on health per vehicle than they do on steel.

I get the feeling that the widespread perception will be that GM have caved to an extent. I think they’ll explain it away as being part of an ongoing process that’ll take place over a few contract negotiations. There’s little doubt that the healthcare issue’s a biggie, so providing GM can get through financing it OK, I think they’ll settle for that at this point.

More details will no doubt be forthcoming in the hours ahead.

You may also like


  1. “I get the feeling that the widespread perception will be that GM have caved to an extent.” Apparently the writer at Businessweek disagrees as their article is entitled “UAW Concedes to GM”.

    Jerry Flint of
    thinks the health care trust idea is a sham, and won’t save GM anything in the long run.

    There are wage reductions, of a sort. GM gets to pay newly hired non-production employees (like janitors or the cooks in the factory cafeteria) less than they do the production line workers.

    My take on the settlement is that it helps GM limp along for a few more years, not getting worse, but not getting much better either.

  2. I heard on NPR this morning some numbers: the trust fund is $50B and GM will throw-in $15B immediately, earning interest on that money to fund the rest of it or something like that. It’s a heck of a lot of money. I’m not sure what concessions the union had to make, if any.

    IMHO, they’re just putting themselves out of work. Why wouldn’t GM make their next car in Mexico or somewhere else where they don’t have to pay into these crazy benefits that nobody else gets?

Leave a Reply

Your email address will not be published. Required fields are marked *