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GM And UAW Seal Deal: Was Strike Worth It?

Wednesday, 26 Sep 2007 | 10:17 AM ET
Ron Gettelfinger, United Auto Workers President
AP
Ron Gettelfinger, United Auto Workers President

I can't say I'm a fan of the 3:15 am wake up call, but this one I didn't mind. By 4 am I was interviewing UAW President Ron Gettelfinger about the new contract his union signed with General Motors . The strike is over and both sides get what they need out of this deal.

For GM, the biggest benefit is the VEBA (Voluntary Employee Benefit) Fund that will cover future healthcare expenses for current and retired UAW members. This will cost GM roughly $35-35 Billion. The good news for GM is that payment will unburden it from future healthcare bills that put the company at $1,500 per car disadvantage compared to foreign automakers.

For the UAW, the new contracts includes job guarantees and the chance to boost its membership. GM will hire roughly 5,000 temporary workers, who will become UAW members. Also, with a new 2-tier wage scale, the UAW will be able to bring in non-manufacturing employees. This deal could mean the UAW has more members on the rolls in four years when this contract expires.

Is this enough to make GM competitive? Certainly on the cost side, the automaker is more in line with Toyota and Honda . But to be competitive and grow, GM will now have to boost revenue in the U.S. That means selling more cars, trucks, and SUV's. GM has restructured, sold assets, and now, lowered labor costs. The automaker's new challenge? Bringing in more revenue.

Tentative Agreement Reached
A tentative UAW-GM agreement ends a two-day nationwide strike immediately, reports Phil Lebeau; John Casesa, Casesa Shapiro Group and CNBC's Carl Quintanilla

Questions? Comments? BehindTheWheel@cnbc.com

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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