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GM promises additional US investment to secure 3,300 jobs

Thursday, October 29, 2015 - 07:20
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General Motors Co. headquarters is seen in Detroit, Michigan, Sept 17, 2015.

[DETROIT] General Motors Co has promised the United Auto Workers union it will invest an additional US$1.9 billion in its US factories to secure 3,300 union jobs, and pay higher wages and bonuses under a proposed four-year contract.

GM will also pay bonuses of up to US$8,000 to nearly 53,000 UAW workers once they ratify the agreement, according to details of the GM-UAW contract released Wednesday. The deal also provides for 4,000 UAW workers to get US$60,000 early retirement packages.

The contract will give raises to both veteran and recently hired union workers at the automaker's US operations. Veteran UAW workers at GM have not had an hourly pay increase in a decade, but should get 3 per cent base wage hikes in two of the four years of the new pact, if it is ratified. Veterans will get lump sum payments the other two years.

Workers hired since 2007 will for the first time have a clear pathway to earning the top wage for veterans provided they remain with the company for eight years.

Profit sharing formulas could pay handsomely for UAW members at GM. Union workers at GM will get US$1,000 for every US$1 billion in North American profit. GM North America has reported US$8.3 billion in profit for the first nine months of 2015.

The GM contract and the contract agreed with Fiat Chrysler Automobiles NV's US operations are "very rich agreements," UAW President Dennis Williams said Wednesday at a press conference.

The UAW made significant concessions to help the Detroit automakers survive the Great Recession. GM and its rivals are now generating robust profits from US operations, and UAW members have pressed for a bigger share.

GM's additional US investment puts pressure on rival Ford Motor Co when the Dearborn, Michigan automaker's turn to bargain comes. UAW leaders fear Ford plans to move production of its Ford Focus small car to Mexico from a plant in Wayne, Michigan.

Rank and file UAW members at GM will start voting on the contract within the next few days, Williams said. The UAW needed two tries to win ratification for a new contract at Fiat Chrysler.

Under the GM and Fiat Chrysler agreements, workers who are hired at US$17 an hour will earn progressively more until reaching a top hourly wage of US$30 an hour after eight years. The new agreements eliminate a two-tier wage system established in 2007.

REUTERS