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Analysts expect UAW to quickly ratify deal
By Karl Henkel
LORDSTOWN
The United Auto Workers should ratify a tentative agreement with General Motors Co. without any hiccups, auto analysts predicted Monday.
“I expect a quick passage,” said Bill Visnic, analyst and senior editor at Edmunds.com. “It’s the best deal they [the UAW] could have legitimately hoped for.”
The deal, struck late Friday, is expected to include a $5,000 signing bonus, $2- to $3-an-hour pay increases for Tier 2 workers and simplified profit- sharing calculations.
“That adds up to somewhere around $20,000 over the course of the agreement for some workers,” said Kristin Dziczek, a labor analyst with the Center for Automotive Research in Ann Arbor, Mich.
GM also will reportedly announce the reopening of the Spring Hill, Tenn., plant, idled since 2009.
Neither GM nor the UAW will confirm details of the agreement until the contract is presented to officials today in Detroit.
Dziczek said the economic context of the deal — GM was on the brink of extinction just a few years ago — makes the agreement that much more attractive to the UAW.
“The fact that there are gains in jobs and other areas is quite remarkable,” she said.
Jesse Toprak, industry analyst with TrueCar.com, said the deal was not only good for the UAW, but also for GM, which could benefit in the long run, especially if new vehicle sales improve as projected.
Toprak said that new-vehicle sales should top 14 million by 2013 or 2014; automakers are on pace to sell about 12.6 million in 2011, according to J.D. Power & Associates.
Not all aspects of the tentative deal have been well-received.
One expressed disappointment among some UAW workers is the lack of cost of living adjustments and the continuation of the controversial two-tier wage system.
Tier 1 workers, which make up a majority of GM’s 48,500 hourly workers, currently make about $28 an hour but will receive no COLA in the new contract.
Tier 2 workers, implemented in a 2009 national contract revision, currently make $14-to-$16 an hour, though those figures will rise to $16 to $19 an hour if the contract passes. About 5 percent of GM’s hourly workers are Tier 2.
Visnic said neither factor should be a point of contention when it comes to voting time, which should take place within the next week.
“I think they’d rather see bonuses, Tier 2 wage increases and more work in this country,” he said.
Dziczek said cost of living adjustments would have come at too great a cost for GM.
A source with knowledge of the automaker’s plans prior to the start of negotiations, which kicked off eight weeks ago, said one of GM’s goals was to shrink labor costs.
GM’s labor costs are about one-third of what they were five years ago.
Dziczek also said that if the UAW came away from contract talks with too many individual victories, it could have negatively impacted the federal government’s equity share in GM.
The U.S. Treasury owned $2.1 billion in preferred stock and a 60.8 percent stake in the company. It sold about half of its stake in an IPO late last year and now owns a 26.5 percent stake.
An independent trust to provide health care to retired workers owns about 13 percent.
“It’s kind of like shooting yourself in the foot,” Toprak said. “If you insist too much and it causes a small-scale shock wave in the market, you’re negatively affecting your own bank account.”
GM shares closed at $23.05 on Monday, up 44 cents.
GM has successfully repaid the federal government $6.7 billion in loans.