By Paul Ingrassia
The views expressed are his own.
That’s the bottom line from the new four-year contract with the company ratified by the United Auto Workers union yesterday.
GM retained the two-tier wage system that allows it to start new hires at $16 to $19 an hour, above the current starting wage but far below the $32 an hour for UAW veterans. Premium-paid skilled-trades workers, such as electricians, can be offered buyouts and be replaced by standard production workers at new-hire wages.
And GM got clearance to offer pension-buyout plans to UAW retirees, providing “maximum optionality,” its chief financial officer declared. That’s atrocious English, but it’s good business.
After 65% of GM’s U.S. workers voted for the new contract yesterday, GM declared that its break-even point in North America wouldn’t increase and that the profit impact of the new contract would be “minimal.” The union hung its hat on 6,000 factory jobs “added or saved” during the four-year agreement, and bonuses of at least $11,500 per worker.
If that sounds like a great trade-off for GM, which it is, the outcome is about as much as a surprise as Vladimir Putin returning as Russia’s president or euro zone leaders continuing to grapple with Greece. The negotiating odds were stacked in the company’s favor. The UAW gave up the right to strike at GM and Chrysler until 2016, as a condition of the government bailout of both companies. And the union was chastened by Detroit’s near-death experience in 2009, finally realizing that “job security” measures such as paying workers indefinitely not to work actually destroyed job security. Numbers don’t lie: the UAW’s GM ranks have shrunk by nearly 90% over the past 40 years. There are 48,500 GM workers covered by the new contract, compared to the 400,000 workers who waged a 67-day strike in 1970, forcing GM to grant them a 30% wage hike over three years.