General Motors, UAW Reach Tentative Deal On Labor Contract, Avert Strike

The United Auto Workers (UAW) union and General Motors Co. reached a tentative agreement on a new contract just minutes before the union’s deadline of 11:59 p.m. EDT Sunday. In a short statement released early Monday, the union said it had secured “significant gains and job security protections” for the U.S. auto workers affected by the contract, without providing further details.

GM and the UAW had been in talks since July over the union’s demand to shorten the service time required for workers to reach top pay and the elimination of a two-tier wage structure. The union -- which secured a new four-year agreement with Fiat Chrysler Automobiles NV last week -- had said that nearly 53,000 U.S. auto workers were prepared to go on strike if a deal was not finalized by the Sunday deadline.

“We believe that this agreement will present stable long-term significant wage gains and job security commitments to UAW members now and in the future,” UAW President Dennis Williams said. “We look forward to presenting the details of these gains to local union leaders and the membership.”

According to the Detroit Free Press, the agreement is likely to be similar to the union’s new contract with Fiat Chrysler, which was overwhelmingly ratified by worker vote. Details of the UAW-GM deal, however, have not been released “to allow the International UAW to inform their membership about the agreement and conduct a ratification vote,” GM said, in a statement.

UAW said local union leaders will meet Wednesday to discuss and vote on the agreement. If the deal is approved, workers at GM’s U.S. plants will then vote on it.

“The new UAW-GM national agreement is good for employees and the business,” Cathy Clegg, GM’s North America manufacturing and labor relations vice president, said in the statement. “Working with our UAW partners, we developed constructive solutions that benefit employees and provide flexibility for the company to respond to the needs of the marketplace.”

The finalization of the agreement is likely to provide a boost to production of GM vehicles in the U.S. In April, ahead of the tense labor negotiations, the company announced that it will invest $5.4 billion over the next three years on its U.S. manufacturing plants. In recent months, GM's profits have been helped by a rise in U.S. auto sales. Last week, the company reported earnings of $1.36 billion in the third quarter, including a record $3.3 billion pretax profit in North America, on strong sales of trucks and SUVs.

According to Reuters, which cited unnamed sources, the deal will allow GM to sustain its newly achieved 10 percent pretax profit margins in North America.