A look at the most important terms of the new UAW/GM contract

The new contract between General Motors and the UAW is all but set in stone and while the Ford contract talks have been the main interest of the media due to their capacities to strike, GM has become the first American automaker to secure their future with the UAW – the major terms of which we will look at right now.

While the actual contract between General Motors and the UAW is likely longer than any sane person would want to sit down and read, we can pull out the key factors that caused the two parties to come to terms. General Motors wanted to avoid giving the workers mandatory annual raises because in years where the company struggles, being forced to hand out raises 50,000 workers can further complicate a bad situation. The automaker hoped to use massive bonuses in lieu of annual raises and with respect to that angle, GM got what they wanted. However, in getting the UAW to agree to a lack of required annual raises or cost of living raises, GM had to offer record signing bonuses, a minimum wage increase, lump sum cost of living bonuses from 2012-2014, a $3,500 profit sharing bonus in 2012, added non-cash benefits, and $2.5 billion worth of improvements to US plants – expected to create or preserve around 6,400 jobs.

Major terms of the new GM/UAW contract, effective immediately upon signing and expiring in 2016
The General Motors UAW workers will reportedly receive a $5,000 signing bonus when the new contract is finalized and approved by all plus a profit sharing bonus of no less than $3,500 in the first quarter of 2012. On top of that, the workers will receive an addition bonus of $250 if certainly quality goals are met at year’s end. Profit sharing is expected to be the big gain for workers and the new contract limits those annual bonuses to $12,000.

A minimum wage increase affects those new workers who will now hire in at $15.78 an hour as opposed to the previous rate of $14.00 per hour – an increase of 12.5% for new entry level worker. In addition to the pay hike, new employees with receive improved healthcare benefits and a new tuition assistance program. Also, where entry tier workers at GM were previously only able to reach $16.00 an hour, the new contract allows those workers to earn as much as $19.28/hour. This portion of the deal will affect roughly 2,500 current workers and thanks to GM making this adjustment of the entry level pay and benefits, the automaker has maintained their controversial two tier payment plan.

Rather than promising costly annual raises that can hit an automaker hard in bad years, General Motors will pay their workers $1,000 lump sum bonuses in 2012, 2013 and 2014 in place of annual cost of living raises. This way, GM knows exactly how much they will incur in these cost of living expenses as opposed to raises that can vary from year to year.

General Motors will invest $2.5 billion in a collection of assembly and production facilities around the US which will help to create or preserve around 6,400 jobs. According to the UAW, much of the $2.5 billion now earmarked for the plants listed below was originally intended to be invested in facilities in Mexico.

The plants investments included in the terms of the new UAW/GM contract are as follows:
-Reopening GM’s plant in Spring Hill Tennessee to build to new mid-sized vehicles
-A new transmission program at GM’s Warren, Michigan powertrain plant
-A new engine program at GM’s Romulus, Michigan powertrain plant
-A new casting program at GM’s Saginaw, Michigan plant
-Addition of a new shift at GM’s Wentzville, Missouri assembly plant to build a new compact pickup
-A new compact vehicle to be built at an American plant yet to be determined

Finally, in order to help create or preserve more than 6,400 jobs, General Motors needed to do more than just add a new shift or program at a handful of plants and that is where the hefty buyout deals come into play for the new GM/UAW contract. GM will pay any general union worker $10,000 if they agree to retire within the next two years and for any skilled trade workers who are willing to retire between November 1st 2011 and March 31st 2012 will receive a whopping $65,000 payout.

The UAW is expected to finish the voting process by September 28th so it shouldn’t be much longer before union workers at General Motors are heading to work with a brand new contract. In total, the UAW estimates the workers will see at least $12,000 in economic gains from this new contract between now and the end of the deal in 2016 although the possible profit sharing bonuses could push that number much higher if things continue to go smoothly for GM and the rest of the industry.

Other General Motors News:
The Cadillac ATS spotted testing on the Nürburgring
New Cadillac ATS teaser video shows a manual transmission
GM confirms the Cadillac XTS and ATS for 2012
GM expects most 2012 Camaro ZL1 buyers to pick auto trans
The 2012 Chevrolet Sonic configurator comes online
GM: No Buick Regal Wagon coming to the US