UAW deal with GM to end strike includes pay raises, but three plants would close

DETROIT (Reuters) – The United Auto Workers union wrung higher pay and better coverage for temporary workers from General Motors Co (GM.N) as part of its tentative deal to end a month-long U.S. strike, but the deal would also allow the automaker to move forward with closing three plants, the union said on Thursday.

The highlights of the agreement were released by the UAW after the union’s national council, representing GM plants across the United States, reviewed the terms of the four-year deal. It will now be up to the 48,000 workers to ratify the deal.

It was not immediately clear whether the workers would end their strike at that point or stay on the picket lines while the voting occurs – a process that could last up to two weeks.

GM shares were down 1.1% at $36.25 on Thursday afternoon, after a modest rally on Wednesday following the UAW’s announcement it had reached a tentative contract deal.

On Wall Street, reaction to the proposed agreement has been muted. “We continue to believe that if this is ratified, it is a fairly solid outcome for GM,” RBC Capital Markets analyst Joseph Spak wrote in a note Thursday. “The financial implications of the deal don’t look too onerous.”

The strike began on Sept. 16, with UAW negotiators seeking higher pay for workers, greater job security, a bigger share of profit and protection of healthcare benefits. Other issues included the fate of plants GM has indicated it may close, the use of lower-paid temporary workers and GM’s production of vehicles in Mexico.

The strike cost GM an estimated $2 billion according to analysts, hurt auto suppliers and played a role in U.S. manufacturing output falling more than expected in September.

The longest nationwide strike against a Detroit automaker since 1970 became a political event. Democratic presidential candidates joined UAW picket lines, eager to win union votes in Midwest swing states. For his part, U.S. President Donald Trump put pressure on GM Chief Executive Mary Barra before the strike to preserve jobs at a car plant in Lordstown, Ohio, that she had targeted for closure.

However, under the deal, GM will move ahead with closing Lordstown and two parts plants in Baltimore and Warren, Michigan. Workers from Lordstown on Thursday were outside GM’s Detroit headquarters, where UAW leaders were meeting, to protest the planned agreement.

GM also appears to have dodged a significant addition to its long-term balance sheet liabilities by agreeing to make a one-time cash distribution to UAW members eligible for pensions.

The union said GM has agreed to put “new product” in the company’s Detroit-Hamtramck assembly plant as part of the deal. Details were not provided in the UAW summary but sources have said the plant will build electric trucks.

Separate from the UAW deal, GM on Thursday confirmed plans for an electric battery plant near the Lordstown complex that could eventually employ 1,000 people. Sources have said the battery plant would be a joint venture, where the workers are represented by the UAW and earn in the range of $15 to $17 an hour. The company did not comment on the deal with the UAW.

LORDSTOWN’S DISPLACED WORKERS

GM has said it plans to sell the Lordstown plant to a group affiliated with electric truck startup Workhorse Group Inc (WKHS.O) that would initially employ 400 people – barely a tenth of the workforce Lordstown had when it was operating on three shifts. A Workhorse spokesman could not immediately be reached for comment.

A group of workers from the Lordstown plant stood outside the hotel ballroom where UAW leaders were meeting on Thursday, reading the UAW summary of the contract on smartphones. The Lordstown workers, some wearing red shirts with the slogan “Stop Building in Mexico,” said they were not satisfied with what they saw.

Scott Gearhart, who worked for 26 years at Lordstown, said he is now working at GM’s Wentzville, Missouri, pickup truck assembly plant, living in an apartment and driving 10 hours to go home on days off. “I have my family at home. My mom’s by herself,” Gearhart said, explaining why he has not moved.

Tommy Woliko looked up from reading the contract summary on a smartphone. “I’m looking for something that says we’re not losing jobs to Mexico,” he said. “I see nothing.” Woliko worked for 11 years at Lordstown before moving to GM’s heavy duty pickup truck plant in Flint, Michigan.

“It’s a very good experience working there,” Woliko said. “But it’s not home.”

GM also is moving ahead with plans to invest $9 billion in its U.S. plants over the life of the next UAW deal, sources said. It also would create or retain 9,000 UAW jobs, a substantial number of which would be new, a person familiar with the plans said. The UAW contract summary did not address these figures.

As part of the push to protect jobs, the UAW said the union and company will jointly form a committee that would meet at least quarterly to discuss the impact of future technologies like electric and self-driving vehicles and their impact on UAW members. This group would address instances where work has shifted out of the union due to new manufacturing processes.

The UAW has expressed concern that it could lose thousands of workers at engine and transmission plants operated by the Detroit Three automakers as the companies launch more electric vehicles in coming years.

In the short term, the deal promises better pay and bigger bonuses to UAW workers who have been living for a month on strike pay of $250 to $275 a week.

FORD, FIAT CHRYSLER LOOM

If the deal is approved by the workers, the union will next begin negotiations with Ford Motor Co (F.N) or Fiat Chrysler Automobiles NV (FCA) (FCHA.MI), covering many of the same issues. The UAW previously agreed to temporary contract extensions with both automakers while it focused on GM.

A successful ratification is not a sure thing as workers during the 2015 talks initially rejected a deal with FCA before eventually approving a revised offer.

This year’s talks have been overshadowed by a widening federal investigation into corruption at the union, although officials and workers said they were focused on the negotiations.