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UAW says deal with GM creates or keeps 6,400 jobs

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In exchange for an agreement to create 5,100 union jobs in the U.S., General Motors will hire thousands of less expensive employees and try to replace some longtime workers.

The offer is part of a tentative new contract between the automaker and United Auto Workers that union leaders recommended to their membership on Tuesday. Now, nearly 50,000 workers at GM must vote to accept or reject the four-year contract.

The contract also includes a $5,000 signing bonus and profit-sharing checks if GM earns a minimum of $1.25 billion in North America annually. Those payments, and others, will replace annual raises for most workers.

UAW President Bob King hailed the deal as a sign the union and industry can cooperate to save American jobs. And at least one local union leader predicted workers would accept the contract, the first since GM and Chrysler made it through bankruptcy in 2009 after receiving government bailouts.

"The auto industry is back. General Motors and the UAW are working together to create jobs in America," King said at union leader meeting Tuesday in Detroit.

At the meeting, union leaders were briefed on details of the proposed contract.

The union said that under the deal, GM has agreed to create or keep the jobs and invest in its factories, including the reopening of an assembly plant in Spring Hill, Tenn. The Spring Hill plant will make two midsize cars, according to a summary of the agreement released by the UAW. The work originally was slated for Mexico, the union said.

GM will invest $61 million for one of the cars and add 600 jobs, while it will spend $358 million on the other car with 1,100 jobs created.

Other factories scheduled to get new work under the deal include:

— Wentzville, Mo.: Gets additional shift plus a midsize pickup truck. A $380 million investment and 1,850 new jobs.

— Warren, Mich.: Transmission plant near Detroit gets new transmission. A $325 million investment and 360 new jobs.

— Romulus, Mich.: Engine plant near Detroit gets $385 million investment and 285 jobs.

— Saginaw, Mich: Casting plant gets 255 jobs and $215 million investment.

— Fort Wayne: Truck assembly plant gets next-generation pickups, with a $230 million investment and 150 jobs created or retained.

In addition, GM will build a new compact car at a factory that's yet to be determined. It will create more than 500 jobs with a $150 million investment.

The summary of the deal said GM's assembly plant in Shreveport, La., will close as scheduled, while a plant in Janesville, Wis., will remain idled.

The deal raises GM's recurring costs only minimally and keeps its financial break-even point steady, a person briefed on the deal said. The person didn't want to be identified because the contract has not been ratified.

The union will use the contract as a model for separate labor deals with Detroit's two other automakers — Chrysler Group LLC and Ford Motor Co. Nearly 113,000 auto workers would be covered by the UAW contracts at the three companies. The contracts would also set the bar for pay and benefits at nonunion auto companies and other industries across the country.

The GM-UAW deal creates more than 5,100 factory jobs and opens up 1,300 jobs for skilled workers such as electricians and welders. That means the contract preserves or adds a total of 6,400 jobs, the UAW said. 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.

In return, GM will try to entice older employees to leave so it can hire new ones at a wage that's about half the $29 per hour veterans make. 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.

For most workers who don't retire, they'll be new kinds of compensation that replace annual raises. Most workers will get profit-sharing checks and other payments that could total at least $12,500. That includes the $5,000 signing bonus, a minimum of $3,500 in profit-sharing next year and $250 for meeting quality standards for each of the contract's four years. They'll also get three $1,000 bonuses to offset inflation.

If GM makes more money, the checks could be bigger.

Workers who make entry-level wages will get raises. GM's 1,940 entry-level workers will see wages go up as much as 24 percent during the contract. Workers who now make $14.78 per hour will see that increase to $18.28. The company also has around 500 temporary workers who will get smaller wage increases.

GM has also agreed to invest $2.5 billion in its factories, and will reopen an assembly plant in Spring Hill, Tenn. Union-company teams also are identifying 760 more potential jobs at GM and 1,400 more jobs for UAW-represented parts suppliers. Those jobs are in addition to the 6,400.

Dave Green, president of a UAW local at GM's factory complex in Lordstown, Ohio, east of Cleveland, predicted that workers will 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 puts 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.

But Nick Waun, an assembly line worker who makes the Chevrolet Cruze compact in Lordstown, said workers are unhappy because the deal has no cost-of-living pay raises and no ability for entry-level workers to get the same high wages as more senior workers. Without annual raises, veteran workers will eventually be paid the same rate as new employees.

"Inflation will keep chipping away at the top wage," Waun said.

King said he hasn't decided if the union will start talks with Chrysler and 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 U.S. from Europe on Tuesday and may take part in the talks.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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