General Motors Corp. and its union employees should not be surprised if public reaction to the four-year tentative contract is less than enthusiastic. After all, the idea of a corporation, saved from extinction with an infusion of billions of taxpayer dollars, granting bonuses in the midst of a national economic recession is difficult to comprehend.
Which is why it’s helpful to view the agreement within the context of General Motors’ future plans, which are certainly encouraging. The 48,500 UAW members who work for the leading American automaker will be voting on the tentative agreement in the near future. And as the details of the pact emerge, the public will see that labor-management relations are key to GM’s economic viability.
According to the Detroit News, the proposed contract will result in 6,400 saved or added jobs and $2.5 billion in additional investment in the United States.
Indeed, in addition to reopening the former Saturn assembly plant in Spring Hill, Tenn., and boosting operations in plants in Warren, Mich., Wentzville, Mo., and Saginaw and Fort Wayne, Ind., the company plans to build a new compact car at a site that has not been disclosed. It will add or retain 500 jobs, the Detroit News reported.
While there was no mention of the GM’s Lordstown assembly plant, which is operating three shifts and producing the Chevrolet Cruze, the top-selling compact car in the nation, we are confident the decision makers in Detroit have taken notice of what’s going on in the Mahoning Valley.
There have been persistent reports that GM is planning to build a diesel model of the Cruze.
The Cruze has not only surpassed all sales projections, but the quality and engineering of the car have drawn rave reviews. If General Motors intends to build another compact model, it would be worth its while to consider the Lordstown plant. Management and labor have developed a working relationship that has become the standard for the company.
As for the details of the four-year labor pact, there will be a $5,000 signing bonus, profit sharing as high as $12,000 and $1,000 inflation- protection lump sums paid out in 2012, 2013 and 2014, according to the United Auto Workers. There is an additional $250 yearly award for meeting quality targets.
Entry level wages would increase to $19.28. About 4 percent of GM’s workforce is made up of tier-two workers who earn $14-$16 an hour. Veteran employees earn about $28 an hour.
These are crucial times for GM, and by extension, the Mahoning Valley because of the importance of the Lordstown plant to the region’s economic well being. The automaker’s profitability depends on a lot of factors, foremost of which is a stable labor climate. The agreement that will be voted on at the various plants provides such an environment.
The federal government has received $6.7 billion from GM in loan repayments, and currently has a 26.5 percent stake in the company. It had owned $2.1 billion in preferred stock and a 60.8 percent stake, but sold about half in an IPO last year.
Therefore, it is to the benefit of American taxpayers that GM keep making money so the value of its shares increases.
The contract bodes well for the future of the company.