(Reuters) - United Auto Workers officials unanimously endorsed a new cost-cutting labor agreement with General Motors Corp on Tuesday, paving the way for a quick ratification this week.
The UAW, in documents prepared for its members, said that it was required to make a series of changes to a retiree healthcare trust and other benefits in order for GM to receive additional government support.
Following are highlights of the new GM contract agreement, a copy of which was obtained by Reuters.
* The UAW-aligned healthcare trust — the Voluntary Employees Beneficiary Association — will receive half of the $20 billion debt GM owes the fund in the form of stock and new debt, instead of cash.
* The VEBA will receive 17.5 percent of the common stock in a restructured automaker. The remaining GM stock will be allocated between other creditors of the company and the U.S. government.
* The VEBA will also receive $6.5 billion in preferred shares that pay a 9 percent cash dividend and a new $2.5 billion note. Cash payments under the note including accrued interest will be $1.38 billion payable in 2013, 2015 and 2017.
* The UAW’s VEBA will also receive warrants representing an additional 2.5 percent of GM common shares.
* Retiree medical benefits will be cut with immediate effect at the insistence of the U.S. Treasury because of GM’s “difficult financial situation.”
* Benefits for retirees could be cut further in 2010 and 2011 because of the “uncertainty regarding the long-term value of the GM stock” received by the VEBA.
* UAW anticipates paying retiree health care benefits in 2010 and 2011 from cash, including the $585 million dividend from preferred stock. It does not expect to be able to sell GM stock until 2012 at the earliest.
* GM will assume ownership of five Delphi Corp plants as part of its restructuring plan. Those include parts plants in Saginaw, Michigan; Lockport, New York; Rochester, New York; Grand Rapids, Michigan, and Kokomo, Indiana. The plants will be operated as a wholly owned subsidiary of GM.
* GM agrees to reactivate three U.S. assembly plants and one stamping plant if sales exceed expectations.
* GM will build compact and small car assembly operations in the United States using one of its idled plants represented by the UAW.
* GM will offer new buyouts to all UAW-represented employees under a program that will be presented to workers by June 9.
* Workers with 20 years’ experience or more will be offered $115,000 in cash and a $25,000 vehicle voucher. Those who worked more than 10 years and less than 20 years will be offered $80,000 and a $25,000 vehicle voucher. Workers with less than 10 years of experience will be offered $45,000 and a $25,000 vehicle voucher.
* Employees will have 45 days to accept the buyouts following the rollout of the program.
* UAW workers will be eligible for time-and-a-half overtime only after working 40 hours in a week.
* Break time reduced to 40 minutes per eight-hour shift.
* Cost-of-living adjustments will not be paid for the duration of the modified contract. Performance bonuses will not be paid in 2009 and 2010.
Reporting by Soyoung Kim, editing by Matthew Lewis