General Motors and UAW Reach Tentative Agreement, Ending Strike and Guaranteeing Wage Hikes Until 2028

General Motors and the United Auto Workers have come to a tentative agreement, just under 48 hours after the union workers stopped working at GM’s Spring Hill Assembly plant in Tennessee, as reported by the Detroit Free Press.

Someone familiar with the agreement mentioned that the parties resolved their concerns about GM’s joint-venture battery plants and reached a deal early Monday morning. This person wishes to remain anonymous, as they are not allowed to discuss the deal publicly.

UAW had already made a similar tentative agreement with Ford Motor Co. last Wednesday. They also reached an agreement with Stellantis on Saturday, which closely mirrors the one they made with Ford.

After extensive bargaining sessions with GM, lasting into the early hours of the morning in the past few days, the negotiations had reached a standstill. This led the union to call for a walkout at Spring Hill late Saturday, putting pressure on GM to reach a tentative agreement.

In the afternoon, GM released a statement from CEO Mary Barra, stating, “GM is happy to have reached a tentative agreement with the UAW that recognizes the team’s efforts and allows us to invest in our future and provide good jobs in the U.S. We are excited to welcome everyone back to work in all our operations, creating excellent products for our customers, and winning together as a team.”

The UAW also confirmed the agreement in a statement, saying, “Similar to the agreements with Ford and Stellantis, the GM agreement has transformed significant profits into an outstanding contract. This deal brings gains valued at more than four times those from the union’s 2019 contract. It offers higher base wage increases than GM workers have seen in the last 22 years.”

The breakthrough in battery manufacturing Plant

Someone who knows about the deal mentioned that the main problem delaying the agreement was how to include Ultium Cells LLC battery plants in a big labor contract between the UAW and GM. Ultium Cells is a partnership between GM and LG Energy Solution, so the legal wording for a master contract was complex.

In the end, the agreement with GM is significant because it will allow the joint-venture workers to vote on joining unions for future plants. They can then choose to have their own contract or be part of the main contract. GM already runs an Ultium Cell plant in northeast Ohio, and it is constructing two more Ultium Cell plants: one in Spring Hill, Tennessee, and another in Lansing. Both are expected to start operating within the next two years. GM will also begin building a fourth battery plant in northern Indiana with South Korean-based Samsung SDI next year, set to open in 2026.

“This is a major win for UAW and all workers,” said Art Wheaton, director of labor studies at Cornell University. “They can form new unions or get better deals to prevent the need for new unions. It also boosts the economy in communities with UAW facilities because the money stays local. UAW President Shawn Fain and his team achieved more than I expected.”

On Wall Street, GM’s stock price went up and down during the day as investors absorbed the news of increased labor costs, but there was relief that the strike was coming to an end.

“For GM, this resolves the issue and finalizes the deal, putting this difficult situation behind them,” said Dan Ives, managing director at Wedbush Securities. “Fain’s actions created a lot of problems for GM and others. CEO Barra had to end this so GM could focus on its EV plans. In the end, the deal is not as burdensome as initially feared.”

What we know

There’s a new deal between GM and the UAW, similar to the one Ford agreed upon. Here’s the scoop: over the next 4.5 years until April 30, 2028, employees can expect a 25% increase in their wages. This means more money in their pockets. The agreement also reintroduces a cost-of-living adjustment formula from 2009, just like Ford, and a step-by-step increase in wages until they reach the top tier. Plus, tiered wage scales will be phased out by the end of the contract.

For those working at the Ultium Cells plant in Ohio, near GM’s old Lordstown Assembly plant, there’s good news too. In the first year of the contract, their pay will go up by 11%, reaching $35 an hour. And by the end of the contract, GM workers will be earning almost $42 an hour.

The UAW confirmed this news, stating that base wages will increase by 25% until April 2028. This hike, combined with adjustments for the cost of living, will lead to a 33% increase in the top wage, totaling over $42 an hour. Even starting wages will go up by 70%, reaching over $30 an hour.

Additionally, employees at specific plants will have the chance to switch to battery or electric vehicle plants as GM moves towards an all-electric future. Parts distribution workers and those at GM Brownstown will now be part of the main production rate. Interestingly, GM salaried workers will also receive a wage increase for the first time since the 1990s, aligning with the hourly workers.

Surprisingly, GM has agreed to make payments to retirees and surviving spouses, something they haven’t done in over 15 years. Each of them will receive five payments of $500.

The agreement isn’t final yet; there will be a vote by the UAW National GM Council later this week. If it gets the green light, local leaders will discuss it with members, who will then vote to approve or reject the deal. For more details, check out www.uaw.org/ford2023.

President Biden Shows Support for GM Workers

President Joe Biden recently visited GM’s parts plant in Belleville to show support for the United Auto Workers (UAW). When asked about the UAW’s deal with GM on Air Force One, he expressed his approval with a thumbs up, promising more details later.

Later, the White House released a statement from Biden, praising the UAW and General Motors for reaching a historic agreement after sincere negotiations. The deal ensures fair pay, benefits, and respect for workers. Biden commended both parties for immediately bringing back GM workers who had been on strike, highlighting the strength of unions and collective bargaining in creating middle-class jobs and supporting iconic American companies.

While some GM strikers hesitated to react, UAW Local 174’s shop chairman, Michael Martin, refrained from commenting until he reviewed the deal. Another employee, Mike Yakim from Lansing Delta Township, expressed interest in understanding transfer options to battery plants and retirement packages, especially concerning his family’s situation in the Lordstown area.

The pressure on GM was immense due to rising strike actions at Spring Hill Assembly. GM faced significant financial losses, with the targeted stand-up strike costing approximately $200 million per week in lost production revenues. Harley Shaiken, a labor expert, emphasized the urgency for GM to reach an agreement, considering the ongoing losses.

The agreement marks a crucial victory for the UAW. The Ultium Cells plant in Ohio, the sole UAW battery factory, serves as a model for future contracts and organizing efforts at other Detroit Three battery plants. This achievement is pivotal for organizing nonunion battery plants as well.

Experts like Shaiken believe that organizing battery plants could be crucial for other car companies too. This task won’t be simple, but it opens up new opportunities. Thanks to this excellent deal, the UAW can now showcase a stark contrast in wages and benefits compared to nonunion carmakers. They don’t just make promises; they prove their actions.

Pressure on UAW Leaders

On the UAW side, there was pressure to conclude the negotiations swiftly. Peter Berg, a business professor at Michigan State University, pointed out that union leaders understood that some members faced more challenges than others. Some had been on picket lines since September 15, when the strike began at GM’s Wentzville Assembly plant in Missouri, Ford’s Michigan Assembly plant, and Stellantis’ Toledo North Assembly Complex. Fain gradually expanded the strike to other Detroit Three facilities, with around 45,000 of the 150,000 autoworkers participating at its peak.

“It becomes exhausting,” Berg noted, especially for those living on the $500-a-week strike pay. “At a certain point, the unity of the union weakens, which is crucial to maintain because everyone has to vote on the agreement. Division is something to avoid.”

Additionally, auto parts suppliers closely monitored the situation. Many had to lay off hundreds of workers when the plants they supplied parts to became idle due to the strike.

Consequences for All Parties Involved

Now that all three automakers have reached a tentative agreement, they have to deal with the aftermath. According to Erik Gordon, a labor expert and business professor at the Ross School of Business at the University of Michigan, the companies might or might not experience four years of labor peace, especially considering the tension from UAW leadership. However, they will undoubtedly face significantly higher labor costs and reduced strategic flexibility during the challenging transition to electric vehicles (EVs). UAW workers gained substantial compensation and benefit increases under these agreements, but the younger ones might face limited job opportunities in the long run.

FAQs about General Motors and UAW Reach Agreement

Q1: What was the main issue that delayed the agreement between GM and the UAW?

A1: The main problem delaying the agreement was how to include Ultium Cells LLC battery plants in a big labor contract between the UAW and GM due to complex legal wording for a master contract.

Q2: What is the duration of the new agreement between GM and the UAW, and what percentage increase in wages can employees expect?

A2: The agreement spans 4.5 years until April 30, 2028, and employees can expect a 25% increase in their wages over this period.

Q3: Are there specific provisions in the agreement for workers at the Ultium Cells plant in Ohio?

A3: Yes, in the first year of the contract, workers at the Ultium Cells plant in Ohio will see their pay increase by 11%, reaching $35 an hour, and by the end of the contract, GM workers will be earning almost $42 an hour.

Q4: What is the significance of the agreement regarding GM’s battery plants for future unionization efforts?

A4: The agreement allows joint-venture workers to vote on joining unions for future plants, enabling them to choose their own contract or be part of the main contract. This is a major win for UAW and all workers, creating opportunities for new unions and better deals.

Q5: What is President Biden’s stance on the UAW’s deal with GM?

A5: President Biden expressed his approval and support for the UAW’s deal with GM, praising both parties for reaching a historic agreement that ensures fair pay, benefits, and respect for workers.

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