DETROIT — (WWJ) With its new contract now ratified by the rank-and-file, General Motors is selling the deal to a new audience, Wall Street.
“This is a critically important step in the ongoing development of General Motors, and the continuing recovery of the U.S. auto industry,” said GM CEO Dan Akerson, in a conference call with analysts.
Akerson said the deal keeps GM’s break even point low, and adds relatively little cost. The company put those additional costs at $175 million this year, and $20 million each of the next two years.
“The new agreement positions GM to win long term,” said Akerson. “It enables us and encourages us to pursue our corporate vision, to design, build and sell the world’s best vehicles.”
The ratification vote wasn’t close. The UAW says 65 percent of production workers and 63 percent of skilled trades workers voted for the deal.
“We were determined to work together with GM management to grow jobs in the U.S. and to get more Americans back to work and we are doing just that,” said UAW President Bob King, in a statement announcing the ratification.
“When GM was struggling, UAW members shared deeply in the sacrifice,” said King. “The UAW has shown that we are totally committed to helping the U.S. auto companies succeed. GM is prosperous today because of its workers.”
The union has said the deal will add or retain more than six thousand jobs. It also means a five thousand dollar signing bonus. Workers were expected to get their checks shortly after ratification.
The only raises were for lower paid “second tier” workers, who will get approximately $3 an hour more than they had been getting.
GM Chief Financial Officer Dan Ammann says keeping labor costs under control was an important part of the deal.
“The baseline labor costs for this agreement are at a historically low level,” he said.
Amman says that General Motors’s labor costs today are almost lower than their retiree health care costs five years ago He also says that for the first time since 1953, the deal didn’t add any pension costs.
While the UAW says the deal adds or retains more than 6 thousand jobs, GM says that’s all contingent on market conditions. GM also says the agreement caps profit sharing at 12 thousand dollars a year, and makes the profits sharing formulas for hourly and salaried workers comparable.
Still, UAW President Bob King says General Motors didn’t get everything it was looking for in this deal.
“With the continued support and solidarity of our members at GM, we stood strong and not only stopped these proposed givebacks, but we made important gains for our members in this contract,” said King.
The union is now focusing its attention on Ford, where it hopes to have an agreement by the end of the week. A bulletin to UAW negotiators earlier this week warned them to be prepared for around the clock talks as a deal became close. That hasn’t happened yet, as negotiators went home at around 9 last night, and returned around 9 this morning.
The union’s most recent update to workers, on a telephone hotline, from UAW Local 900 President Anderson Robinson gave very little details, but said they are making progress.
“We are on track to secure an economic package that our membership deserves.”
A similar message was left on the union’s Facebook page.
“We will not accept an agreement that is not satisfactory to our membership.”
Analysts have said that the union may have to “sweeten the pot” at Ford, which is the most profitable domestic carmaker. They have also raised the possibility that the union could have been waiting to finalize the Ford deal, not wanting that to impact the GM vote.
Bloomberg News reports that the Ford talks are now focusing on jobs, and as many as 10 thousand new jobs could come to the U.S. as a result of the items being discussed. Neither Ford nor the UAW will comment on these reports.
The UAW is also talking with Chrysler. But those talks are believed to be behind the talks at Ford.
All three companies say their goal is to become competitive. General Motors is hoping it will also impress investors, who have not been kind to the company’s stock, which continues to trade well below its IPO price of $33 a share.
GM is hoping that having a deal in hand, will convince investors that the company has changed for the better.
“This agreement is further evidence that this is really a new GM,” says Akerson. “We have a new attitude. We expect to win.”