A new four-year contract between the United Auto Workers and General Motors Co. will add or keep 6,400 jobs in the United States but will keep GM's costs in check by offering buyouts to longtime workers and replacing them with lower-wage hires.
Most workers won't get annual pay raises, but they will get at least $12,500 in bonuses, profit-sharing and other payments over the life of the contract. GM is offering some older workers up to $65,000 if they retire or leave early.
Union leaders from around the country were briefed on the deal in Detroit, and they voted to recommend that GM's 48,500 factory workers ratify the contract. Workers are expected to finish voting on the deal by next Thursday.
The union will now use the GM contract as a template as it negotiates with Chrysler Group LLC and Ford Motor Co.
The deal creates more than 5,100 new assembly-line jobs and opens up 1,300 jobs for skilled workers like electricians and welders. The skilled work is now done by outside contractors, but UAW workers will be able to bid on it. The union said much of the work is being brought back from Mexico.
"The auto industry is back. General Motors and the UAW are working together to create jobs in America," UAW President Bob King said at a meeting of local union leaders in Detroit.
GM has agreed to invest $2.5 billion in its factories, including the reopening of a plant in Spring Hill, Tenn. Union-company teams also are identifying 760 more potential jobs and 1,400 more jobs for UAW-represented GM suppliers.
The agreement reached Friday includes a $5,000 signing bonus. Workers will get a minimum of $3,500 in profit-sharing next year and $250 per year for meeting quality targets. They'll also get three $1,000 bonuses.
The contract includes a new profit-sharing formula based on the company's North American profits. If GM earns less than $1.25 billion, workers won't get any payment. In 2010, GM earned just under $5.7 billion in North America, which would mean a $5,500 profit-sharing check under the new formula. Under the old formula, workers got $4,300.
Wages for GM's 1,940 entry-level workers, who now make about half the pay of longtime UAW workers, will go up 24 percent during the contract. Workers who now make $14.78 per hour will see their pay rise to $18.28. The company also has around 500 temporary workers who will get smaller wage increases.
The union also said GM is offering payments for workers to retire early or leave the company. Eligible workers can get up to $10,000 if they retire within the next two years. There's also a $65,000 bonus for skilled-trades workers if they retire or leave the company between Nov. 1 and March 31. GM is trying to clear out older workers so it can hire new workers at the entry-level wage.
Dave Green, president of a UAW local at GM's factory complex in Lordstown, Ohio, east of Cleveland, predicted after the briefing that workers would approve the contract.
Even though it has no pay raises for longtime workers, Green said it has signing bonuses, inflation protection and profit-sharing that workers should like.
"I think that it's pretty fair and gives our members incentives to make sure we continue to build a quality product," he said.
He also said the raises for entry-level workers put their pay above what some foreign automakers pay at U.S. factories. That should help the UAW with efforts to organize those plants, he said. Organizing workers at foreign-owned plants is one of King's priorities.
King said he hasn't decided if the union will start talks with Chrysler or Ford next. He wouldn't discuss an angry letter sent last week by Chrysler CEO Sergio Marchionne accusing King of missing a meeting to sign a new deal.
"We have a great relationship with Chrysler, with Sergio, with all the Chrysler management," King said. "We're working together, as we did here, to create more jobs."
Marchionne was on his way back to the United States from Europe on Tuesday and may take part in the talks.
General Motors Co. shares fell 62 cents, or 2.7 percent, to $22.43 on Tuesday.