New four-year labor contract for General Motors Corporation

General Motors Co. headquarter

General Motors Co. and the United Auto Workers have agreed upon a tentative new four-year labor contract. This agreement took place Sunday night 15 minutes before a strike was to take place by employees. The two companies have been in talks since July. They believe the new plan will bring about good changes for the company and their employees. Not everyone approves of everything in the plan, but it is a step towards progress.

The contract will need to be discussed and voted on by a council of U.A.W. leaders. This meeting will take place Wednesday October 28th, 2015 in Detroit. Once this is done, details will be released. The details of the UAW-GM contract have not been released as of yet. Then, the contract will be voted on by about 53,000 workers at GM. The new contract is with Fiat Chrysler Automobiles NV. The contract is said to “present stable long-term significant wage gains and job security commitments now and in the future” by UAW President Dennis Williams.

Just in 2009, General Motors was involved in a government-sponsored bankruptcy and bailout. Now, they are back on top with a 10 percent North American operating profit margin. This puts them in a better position in bringing something to the table with Fiat Chrysler. GM made a separate statement from the UAW. Cathy Clegg, GM North America manufacturing and labor relations vice president, said “the new UAW-GM national agreement is good for employees and the business.”Cathy Clegg also stated, “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.”

One of the important outcomes with the new contract is to eliminate the two-tier wage system. Fiat Chrysler has an eight year plan to bridge the wage gap of made by entry-level employees. It is believed that the UAW-GM contract will be tailored to satisfy the union that is being made between the two companies. This will allow the alignment of entry-level employee wages with veteran employee wages to be possible over the eight year period. This is not viewed as a big deal for GM as they have 20 percent second tier employees to Fiat Chrysler’s 45 percent second tier employees.


Fiat Chrysler plans to give ratification bonuses to their employees as well. Fiat Chrysler employees hired after 2007 will receive $3,000 in bonuses and Fiat Chrysler employees hired before 2007 will get $4,000 in bonuses.

Another issue is General Motors has a higher rate of labor cost. GM would like to reduce the labor cost compared to their counterparts at Fiat Chrysler. GM’s labor cost is $8 higher than that of Fiat Chrysler. There will also be a deal made with Ford later on down the line. Their labor cost is $10 higher than that of Fiat Chrysler.

This would have been the first time GM employees would have been allowed to strike after the 2009 bankruptcy. The deal was stated that they had to wait until 2015. With the new tentative plan, this had prevented them from having to take such measures.

Source: Reuters

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