UAW, GM deal likely will slice wages - Friday, October 08, 2010
UAW, GM deal likely will slice
Agreement may lead to profit on small
vehicles built in U.S.
By Tom Krisher • ASSOCIATED PRESS • October
ORION TOWNSHIP, Mich. — General Motors and the
United Auto Workers have reached a cost-cutting
deal that could help accomplish what once seemed
impossible: Making a profit on small cars built in
the United States.
The deal, announced Thursday, could cut in half the
hourly wage of some longtime UAW workers at a
factory in Orion Township, Mich. It's the first time
the union has agreed to a pay cut for workers who
are not new hires.
A revamped subcompact, the Chevrolet Aveo, will be
built at the plant starting next year. The plant is
Most other automakers, including GM's main rival F-
ord Motor Co., build subcompacts in Mexico or
other countries with far lower labor costs. U.S.-
based automakers have struggled for years to make
money on small cars. Subcompacts generally start
around $14,000, so they don't generate enough
cash to cover the traditional UAW labor costs.
But Mark Reuss, GM's president for North America,
said the company will make money on the Aveo. The
UAW deal, he said, is one of many reasons the small
car will be profitable. Others include a highly
efficient factory with new equipment, and help from
state and local governments. GM also received tax
incentives to build the cars in Michigan, but the
company would not reveal the total value.
The factory also will produce a small Buick sedan
called the Verano. Because the Buick is an upscale
version of the Chevrolet Cruze, it will fetch a higher
price. The Cruze, which is just reaching
showrooms, starts around $17,000.
The plant, which was closed in November, will
employ 1,550 blue-collar and salaried employees.
Under the wage deal, 40 percent of the line workers
will be paid $15 an hour. The remaining 60 percent
will make traditional UAW wages of around $29 an
GM has about 3,500 laid-off workers who have yet
to be recalled to factory jobs. Once 60 percent of
Orion's workers are recalled, UAW members who are
still on layoff will get the option of working for $15
an hour or staying on layoff.
If GM doesn't get enough laid-off workers to fill the
lower-paying jobs, the automaker can hire new
people for $15 an hour.
GM's Spring Hill plant already has a two-tier wage
agreement with the UAW, but it does not permit
lower wages for regular assembly-line workers, only
for employees of suppliers who work inside the
plant, said Michael Herron, chairman of UAW Local
1853, which represents hourly workers at the
facility, including the suppliers.
The UAW agreed to a lower wage for some of the
assembly workers who will be building the Aveo at
Lake Orion so that GM would produce the vehicle in
the United States, rather than in China, as originally
planned, Herron said. The union proposed a special
deal for Lake Orion specifically to bring the small
car there, he said, but that two-tiered wage
agreement is specific to that plant and product.
Reuss said the Aveo's name may be changed
because it's a totally new product from the Korean-
built Aveo that GM now sells.
Tennessean staffer G. Chambers Williams
contributed to this report.
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