The landmark agreement General Motors Corp. and the United Auto Workers union reached early Wednesday includes no worker wage increases, a report said.GM settlement lifts Wall Street.
However, each worker will receive a $3,000 signing bonus, plus annual lump-sum bonuses of 3% or 4% for the final three years of the contract, in lieu of a pay increase, The Detroit Free Press said. General Motors Corp. also agreed to make more than 4,000 temporary workers permanent employees as part of the deal, the newspaper said. The automaker will implement a two-tier wage and benefits scale for jobs GM and the UAW have agreed are “non-core” production jobs. “Non-core” involves workers who “do not have their hands on a vehicle in the assembly process,” the newspaper said.
The newspaper said GM agreed to pay up to $35 billion in cash, GM stock and other assets to fund a key contract provision -- a retiree healthcare fund known as a voluntary employee beneficiary association, or VEBA, which the UAW will take over. GM and the UAW will review the fund annually. If it is found to be under-funded, GM would make further contributions, although there could be limits to how much GM would add, The New York Times reported. Retirees will likely have to pay higher high-insurance premiums or doctor-visit co-pays, the Free Press said. GM said implementation of the trust would be subject to court approval, as well as a review by the US Securities and Exchange Commission.
US stocks rallied across the board Wednesday on the news that General Motors and the United Auto Workers had settled their differences, ending a two-day strike. GM stock climbed $3.22 or 9.4%, to $37.64, Bloomberg financial news service reported. Reports that billionaire investor Warren Buffett could buy a stake in the huge mortgage bond underwriter, Bear Stearns Cos, also spurred on the market. The New York Times reported that Buffett could provide capital to help stop losses from slumping home prices and mortgage defaults.
The Dow Jones Industrial Average climbed 99.50 points or 0.72% to close at 13,878.15. The broader Standard & Poor’s 500 Index gained 8.21 points, or 0.54%, to 1,525.42. The technology- heavy Nasdaq Composite Index increased 15.58 points, or 0.58%, to 2,699.03. The US currency rose to 70.77 euro cents from 70.75 euro cents at Tuesday’s close. The dollar also gained against the Japanese currency to 115.44 from 114.83 on Tuesday. Gold fell $3.30 to $735.50 per fine ounce. (m&c.com)