The deal that ended the two-day strike against General Motors Corp. on Wednesday won't necessarily put GM back in the driver's seat, but unloading some of its massive healthcare obligations will help GM compete with nonunion Japanese rivals -- while sending the United Auto Workers into new territory.
The proposed contract with the UAW, which 73,000 members will begin voting on this weekend, would shift the responsibility for retirees' healthcare benefits to an independent, UAW-administered trust. That would take more than $50 billion in liabilities off the company's books.
"This contract goes a long way toward giving GM the ability to compete," said Harley Shaiken, a professor of social and cultural studies at UC Berkeley. "But GM's success ultimately is going to depend on what it's selling and what market segments it's choosing to compete in."
The automaker's primary goal with the new contract was to narrow the roughly $25-an-hour disparity between its labor costs and those of Toyota Motor Corp. -- which is challenging GM for the title of world's largest car company -- and others.
About half of the difference is blamed on the cost of maintaining health benefits for 339,000 GM retirees and their spouses.
"This agreement helps us close the fundamental competitive gaps that exist in our business," GM Chief Executive Rick Wagoner said. "The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments."
To reach Wednesday's deal, the UAW offered some wage concessions and the company made some job-security pledges, according to people familiar with the situation. Although ballooning healthcare costs were the spotlight issue in the talks, a disagreement over protecting union jobs as GM restructures was the spark for the walkout launched Monday morning.
"Both sides walk away happy," said Rebecca Lindland, an auto industry analyst with Global Insight Inc. "GM got some of the things they wanted and the union got some of the things they wanted."
The most striking aspect of the deal -- which the union will use as a template for negotiations with Ford Motor Co. and Chrysler -- is its plan for taking care of healthcare benefits for retirees and spouses with a trust fund known as a voluntary employees beneficiary association.
GM would put about $35 billion into the trust fund.
