General Motors and DaimlerChrysler offered the United Auto Workers unprecedented lifetime employment guarantees as the companies vie for leadership in industry-contract talks, union officials said.
GM, the world's largest auto maker, also offered to hire "significant" numbers of new workers in coming years and consider building new vehicle models in UAW factories, according to a contract proposed Thursday obtained by Bloomberg News. While fewer details of DaimlerChrysler's offer were available, union officials said it included promises that some workers would have lifetime jobs.
GM's proposals would give the UAW new tools for reducing job losses as current workers, now an average of age 48, retire in droves in coming years. However, the offer is tempered by trade-offs that include continued freedom for GM to shift parts-making jobs to outside companies and introduce new production methods at money-losing small-car plants.
"The offer signals GM's willingness to negotiate about how low employment will go, but that will be tied directly to the UAW's flexibility in parts and in small cars," said Dan Luria, an analyst at the Industrial Technology Institute in Ann Arbor, Mich.
Under current contract terms, retirements are expected to lower GM's U.S. blue-collar employment to less than 100,000 in the next decade, from 148,000 now.
Under the proposal, GM's lifetime employment offer would cover current workers with more than 10 years' seniority. GM would find new assignments for workers when their jobs are eliminated. However, GM asked for great flexibility in determining such assignments, which could require workers to shift to different factories.
U.S. auto makers never before offered such a guarantee to individual workers, union officials said. But they've been signing agreements since 1955 that guarantee income to laid-off workers and since 1987 on minimum employment levels.
Ed Snyder, a GM spokesman, described the offer as a sound solution to problems facing the two sides. Reg McGhee, a UAW spokesman, declined to comment, as did spokesman David Barnas of DaimlerChrysler.
UAW contracts for 370,000 workers at the GM, DaimlerChrysler and Ford Motor expire Sept. 14. The UAW is deciding which company it will negotiate with first, setting the pattern for the others. Companies sometimes vie to be first so they can have a direct say in pay and work-force size, issues that affect their profitability.
DaimlerChrysler has been seen for weeks as the UAW's most likely choice, though GM emerged as a serious candidate for going first with Thursday's offer, UAW officials said. DaimlerChrysler presented the union with a contract proposal similar to GM's on Thursday. Since then, bargaining at both GM and DaimlerChrysler intensified, continuing into the Labor Day weekend.
Another scenario is that UAW President Stephen Yokich, 63, will attempt to settle the two contracts simultaneously, an innovative achievement before he retires. A decision could come as soon as Tuesday.
Ford Motor Co. presented no formal offer and will go last, union and company officials said. Ford's relationship with the union soured over the proposed spinoff of the Visteon parts unit, which the union fears could jeopardize jobs.
Reflecting record U.S. auto sales, GM's offer Thursday was less draconian than initial offers the UAW received in past years, union officials said. In 1993, Ford proposed scrapping pensions for newly hired workers in favor of subsidized savings plans. This idea was quickly dropped.
In its offer Thursday, GM reiterated its desire for labor peace after strikes that cost $2 billion in 1998. It offered to let UAW officials address its board of directors periodically.
The company said it would be willing to consider a contract longer than the usual three years. However, it made only a three-year wage offer.
GM assemblers now make $21 an hour. The company proposed a 2% increase plus a $500 lump-sum payment in the first year, a 3% increase in the second year and a $1,500 lump-sum payment in the third year. It proposed no signing bonus.
The company offered to increase its pensions after 30 years of service by 7.6%, to $2,470 per month. It proposed no increase in out-of-pocket health-care expenses.
In its offer, GM said that in the next few years, the two sides must collaborate in "finding a way to profitably manufacture small cars and trucks here in the U.S."
GM made no mention of the UAW's demand for reduced working hours. If the union wants less overtime, it should let GM expand the use of part-time and temporary workers, according to the proposal.