GM reaches deal with UAW at strike-hit Kansas plant

DETROIT (Reuters) - General Motors Corp (GM.N) reached a tentative agreement on Tuesday with striking workers at a Kansas assembly plant, potentially clearing the way for the No. 1 U.S. automaker to resume production there of its strong-selling Chevrolet Malibu sedan.

The United Auto Workers union and GM both confirmed the tentative agreement.

A deal to end the strike at GM's Fairfax, Kansas plant would end a two-week-old work stoppage that has slowed the supply of one of GM's better-selling new vehicles and cap a series of key labor agreements over the past week for the automaker.

UAW Local 31, which represents workers at the plant, scheduled a ratification vote on the proposed deal on Wednesday, according to a posting on the union Web site.

The redesigned Chevy Malibu has won accolades, including "Car of the Year" honors, and represents a key part of GM's effort to recapture car buyers who have abandoned its brands because of a concerns about styling, quality or fuel economy.

Sales of the Malibu were up 18 percent compared to a year earlier through April, while GM's overall sales dropped by 12 percent over the same period.

Last week GM resolved a similar labor dispute when workers at an assembly plant near Lansing, Michigan ratified a new local contract and ended a month-long strike that had shut down production of crossovers like the popular Buick Enclave.

GM and the UAW reached a ground-breaking national contract last year intended to allow the automaker to reduce costs by introducing a second-tier wage and shifting health care liabilities to a union-affiliated trust fund.

But the automaker has struggled to get UAW bargaining units at the plant level to approve agreements on work rules and other local issues, including treatment of seniority rights.

Those local contract issues prompted the strikes at GM's Fairfax and Lansing Delta Township assembly plants, shutting down production of some of GM's newer and key models at the same time that a supplier strike had shut down most of its output of trucks and sport utility vehicles.

A strike at GM supplier American Axle & Manufacturing Holdings (AXL.N) that began in February shut some 30 GM facilities in North America at its peak due to shortages of axles and related components for GM's trucks and SUVs.

Some 3,650 UAW-represented American Axle workers are voting this week on whether to ratify a contract that GM helped to broker by providing $218 million to fund worker buyouts and unemployment benefits at the supplier.

Last week, GM union workers in Canada also ratified new three-year labor contract. That agreement, which covers some 15,000 GM workers represented by the Canadian Auto Workers, allows GM to close a transmission plant in Windsor, Ontario.

GM makes Chevy Silverado and GMC Sierra pickup trucks at an Oshawa, Ontario assembly plant and its Buick Lacrosse and Chevrolet Impala sedans at a nearby car facility.

As part of its deal with the CAW, GM pledged new investment for its Oshawa facilities to support planned vehicle launches, including the upcoming Camaro muscle car and a still-to-be announced rear-wheel drive vehicle.

Taken together, if the pending contracts at GM's Kansas plant and American Axle are ratified, the automaker will have concluded agreements to end a series of labor issues that had emerged as a potential drag on its turnaround efforts.

GM said the American Axle strike depressed earnings by $800 million in the first quarter and cost it 230,000 units of lost production through April.