Collective Bargaining: The General Motors-United Auto Workers Deal

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"This agreement helps us close the fundamental competitive gaps that exist in our business… There's no question this was one of the most complex and difficult bargaining sessions in the history of the GM-UAW relationship."¹

- Rick Wagoner, Chairman and CEO, General Motors Corporation, in 2007.

"It's a very important day for GM, probably one of the most important days in a decade… It has taken one of the perennial issues at the company ... and it's really applied a solution. This is not your grandfather's contract."²

- Michael Robinet, Vice President of CSM Worldwide, in 2007.

"Overall, what these negotiations sought to forge is a social contract for the 21st Century -- a more competitive General Motors, translating into middle-class jobs… In the context of the pressure of globalization and the stumbling of the domestic industry, that's not a small feat. That proves a relevance for unions under these circumstances, rather than a hint of their demise."³

- Harley Shaiken⁴, a Professor at the University of California at Berkeley, in 2007.

A 'Monumental Outcome of Collective Bargaining'

On November 12, 2007, an agreement was signed between General Motors Corporation (GM), the world's second largest automobile manufacturer5, and United Auto Workers6 (UAW) for providing healthcare benefits to workers. The agreement was reached after a strike by the workers of GM followed by a collective bargaining process. The prime objective of the contract was to reduce the company's healthcare costs by forming a Voluntary Employees' Benefit Association7 (VEBA) fund. Under the agreement, the UAW was entrusted with the responsibility of administering the healthcare benefits of workers.

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1] Dee-Ann Durbin, "GM, UAW Agreement Allows Compromises," www.manufacturing.net, September 27, 2007.

2] Katie Merx and Tim Higgins, "A New U.S. Auto Industry Emerges," www.freep.com, September 27, 2007.

3] John Gallagher, Jennifer Dixon, M.L. Elrick, and John Wisely, "Improved Prognosis: GM-UAW Agreement Begins New Era for Organized Labor," www.freep.com, September 30, 2007.

4] Harley Shaiken specializes in labor and globalization issues.

5] Toyota Motor Corporation became the biggest automobile manufacturer in the first quarter of 2007 overtaking GM. Toyota Motor Corporation sold 2.35 million vehicles during the first quarter of 2007 while GM sold 2.26 vehicles during the same period.

6] Founded in 1935, UAW (The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America) is one of the largest labor unions in North America with approximately 620,000 active members and more than 500,000 retired members in the US, Canada, and Puerto Rico (Source: www.uaw.org).

7] A VEBA is a fund set by the company and its union for providing healthcare benefits to its employees. It is exempted from tax and approved by Internal Revenue Service (IRS) under IRC Section 501(c) (9). The main aim of setting up of this fund is that the employees continue to get healthcare benefits even if the company gets into any financial trouble. A major portion of the fund is funded by the company and the rest by the union.

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