UAW members approve GM concessions
DETROIT – The United Auto Workers union has ratified a package of concessions designed to reduce labour costs at General Motors Corp.
UAW President Ron Gettelfinger said at a news conference today that 74 per cent of GM’s 54,000 U.S. production and skilled-trade workers voted in favour of the deal.
The vote comes before an expected Chapter 11 bankruptcy protection filing by GM (NYSE: GM) on Monday. Bankruptcy experts say having the labour agreement in place will help move the process through court more quickly.
The UAW says the cuts will save GM $1.2 billion to $1.3 billion a year.
"We very much appreciate the support of our employees and retirees," Diana Tremblay, GM vice-president for labour relations, said in a statement. "Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks."
UAW leaders agreed to the revised contract last week that freezes wages, ends bonuses, eliminates noncompetitive work rules and ends the possibility of a strike until the next contract expires in 2015.
It also gives a union-run retiree health care trust 17.5 per cent ownership of a post-bankruptcy protection GM, with a warrant to buy another 2.5 per cent. The trust will take on the company’s retiree health care costs starting next year. The stock will come in exchange for part of the company’s $20 billion obligation to the trust.
The remaining 10 per cent would go to GM bondholders to wipe out $27 billion in unsecured debt.
Bondholders have until 5 p.m. EDT Saturday to accept or reject the stock-for-debt offer, under which they would get a warrant for an additional 15 per cent of the new GM’s stock.
Existing GM shareholders would be left with little or nothing, and GM shares fell 32 cents, or 29 per cent, to 80 cents in afternoon trading. They fell as low as 75 cents earlier today, their lowest level since the Great Depression.
The UAW deal follows an agreement last week between the company’s Canadian subsidiary and the Canadian Auto Workers union cheap payday loans.
The CAW agreement freezes workers’ pension benefits until 2015 and slashes labour costs by C$15 to C$16 an hour through cuts to benefits. The union has also agreed to negotiate a health-care trust, which it will administer to cover retirees’ benefits.
Under the deal, GM Canada also agreed that it would give up its special status under Ontario law – a status that has allowed it to underfund its pension plan since the 1990s – and begin topping it up immediately.
GM has received $19.4 billion in loans from the U.S. government, which would get 72.5 per cent ownership of the new company, perhaps sharing with the Canadian government.
Federal officials said Thursday that Ottawa is budgeting about C$10 billion for its portion of bailouts at GM Canada and Chrysler Canada.
Plans are for GM to emerge from bankruptcy with lower labour costs, far less debt and with fewer factories, brands, models and dealerships.
Even workers at factories in Spring Hill, Tenn.; Pontiac, Mich.; and Orion Township, Mich., that are under discussion for possible closure approved the deal.
"I believe that our membership understands. They get it," said Ray Wood, president of a UAW local at a Toledo, Ohio, transmission factory that voted 78 per cent in favor of the deal.
On Monday, GM is to identify 14 assembly, parts stamping and engine and transmission factories that it plans to close as part of its restructuring plan, cutting 21,000 jobs.
GM announced earlier today that one of those 14 plants would be retooled to make subcompact cars starting in 2011.
Gettelfinger said four of GM’s plants slated to close will remain on "standby" with the hopes that vehicle sales will rise, creating greater demand.
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