GM sees "minimal" impact on profits from UAW deal
DETROIT (Reuters) - Workers represented by the United Auto Workers union approved a four-year labor contract with General Motors Co on Wednesday, the first such deal for the top U.S. automaker since its 2009 bankruptcy.
Ratification of the GM deal, which covers 48,500 hourly workers, clears the way for the union to complete talks with the automaker's crosstown rival, Ford Motor Co.
GM said the deal, which includes skilled trade worker buyouts and a cap on profit sharing, would have a "minimal" financial impact on the company. Executives said they expected 14 percent of 10,000 skilled trade workers to take the buyout deals.
The buyouts will be "extremely beneficial in keeping our fixed cost in line as industry demand improves," Chief Financial Officer Dan Ammann said during a conference call with analysts.
The GM deal adds or saves more than 6,000 U.S. factory jobs, raises wages for entry-level employees and pays each worker at least $11,500 in bonuses over the four years, the union said in a separate press release.
The UAW also estimated the deal would create another 57,600 jobs at suppliers and other auto-related businesses. GM said adding jobs in the United States was dependent on the nature of the economic recovery.
During the conference call, Ammann said the new UAW contract establishes profit sharing with a cap at $12,000 per employee.
The UAW and Ford could reach a deal on a proposed contract as soon as this week. Workers at Ford have pressed for a richer deal because of the No. 2 U.S. automaker's faster turnaround and ability to have avoided the bailouts needed at GM and Chrysler.
The UAW said 65 percent of production workers voted in favor of the deal, while 63 percent of skilled trades workers also backed it.
GM executives have set a conference call with Wall Street analysts for Wednesday afternoon to explain the financial implications of the contract for the first time.
The new UAW contract leaves GM's break-even point unchanged and allows the automaker to tackle the risk of its underfunded pension plan, one of the few issues left unaddressed by the restructuring directed by the Obama administration. Executives declined to comment on potential pension buyouts.
The deal, which will cost the company $215 million from 2011 to 2013, also includes no pension increases for the first time since 1953.
FORD, CHRYSLER TALKS
King joined the Ford talks this week, and the focus shifted to the tough issues of compensation and additional jobs.
The union began an intense focus on Ford last week, a day after failing to finalize a deal with Chrysler Group LLC. It has extended its contract with the Fiat SpA-controlled automaker until October 19.
While UAW officials in the Ford talks said on Monday they expected "to have good news for our membership by the end of the week," discussions at Chrysler, the smallest and most fragile of the Detroit automakers, are progressing much more slowly. Those talks continued on Wednesday, a Chrysler spokeswoman said.
Chrysler, which nearly collapsed two years ago, is still executing its own financial turnaround and trying to change public perceptions of its vehicle lineup. The company emerged from bankruptcy protection with a debt load that included $7.6 billion in government loans.
In May, Chrysler repaid those loans through a refinancing that helped cut its interest payments, but effectively swapped government loans with private ones.
As a result, Chrysler is eager to hold down its fixed costs beyond the 2015 expiration of the deal now being negotiated.
Last week, Chrysler CEO Sergio Marchionne told reporters in Italy that workers should not expect the package proposed at GM, calling it a "completely different" entity from his company.
(Reporting by Ben Klayman and Bernie Woodall in Detroit, additional reporting by Deepa Seetharaman and Kevin Krolicki in Detroit; Editing by Lisa Von Ahn, Phil Berlowitz)