Deal Ends GM Strike

(Guardian Unlimited)

General Motors resumed production in the US today after round-the-clock negotiations led to a pre-dawn deal ending a two-day strike by 73,000 workers.

In Detroit, the United Auto Workers’ Union emerged from talks at 3.05am to declare that it had secured sufficient concessions for its members to return to their jobs.

Key to the agreement is the establishment of an independent trust that will shoulder the burden of more than $50bn in healthcare liabilities for retired workers. The trust will cover medical costs for 80 years and GM will contribute 70 cents for every dollar of funding.

Although details were held back, the UAW also said it had secured “job security guarantees” - a major sticking point in an industry that has shed more than 268,000 jobs in six years. Industry commentators suggested that GM may have pledged that production of certain new vehicles would be in US plants.

If the deal is approved in a ballot this weekend, every worker will receive a $3,000 bonus.

“It’s an agreement we’re proud to recommend to our membership,” the UAW’s president, Ron Gettelfinger, told a hastily convened press conference in the early hours. “This contract will be better in some ways; it will be different in some ways. Our retirees will be exceptionally pleased with this contract.”

Among the declarations of support for the US’s biggest strike in seven years was a message of solidarity from Britain’s Unite union, which represents some of the 5,500 people employed at GM’s Vauxhall factories in Luton and Ellesmere Port.

Neither GM nor the union made an all-out declaration of victory after a stoppage that added to the financial problems of an already cash-strapped industry. GM made a $2.2bn (£1.1bn) loss last year and this week Mr Gettelfinger admitted that the strike was a sign that “both sides have failed at the bargaining table”.

GM has been anxious to close a chasm between its costs and those of Asian rivals such as Toyota, which recently overtook GM to become the world’s biggest carmaker.

Rebecca Lindland, an analyst at Global Insight, estimated that the creation of a healthcare trust would close about half of a $25-an-hour production disparity with Toyota. She said Wall Street would expect GM to show the benefits.

“This means GM doesn’t have a lot of excuses any more,” she said. “They can’t point to spiralling healthcare costs or a disparity in retirement benefits. They have to perform.”

The strike was costing GM an estimated $100m a day and knock-on effects were already causing the closure of plants in Canada that rely on US supplies. Independent companies supplying parts to GM were also feeling the pinch.

Some labour experts suggested that the UAW never anticipated a long strike and was engaging in “theatre” to win a final few concessions. The nationwide stoppage was eating into the union’s strike fund at a rate of $14.6m a week and experts suggested that if the leadership anticipated digging in they would have chosen to strike at only certain targeted factories.

GM’s chief executive, Rick Wagoner, said the deal would close “fundamental competitive gaps”. “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.”