DETROIT — In exchange for an agreement to create 5,100 union jobs in the U.S., General Motors will hire thousands of less expensive employees and try to replace some longtime workers.
The offer is part of a tentative new contract between the automaker and United Auto Workers that union leaders recommended to their membership on Tuesday. Now, nearly 50,000 workers at GM must vote to accept or reject the four-year contract.
The contract also includes a $5,000 signing bonus and profit-sharing checks if GM earns a minimum of $1.25 billion in North America annually. Those payments, and others, will replace annual raises for most workers.
UAW President Bob King hailed the deal as a sign the union and industry can cooperate to save American jobs. And at least one local union leader predicted workers would accept the contract, the first since GM and Chrysler made it through bankruptcy in 2009 after receiving government bailouts.
"The auto industry is back. General Motors and the UAW are working together to create jobs in America," King said at union leader meeting Tuesday in Detroit.
At the meeting, union leaders were briefed on details of the proposed contract.
The deal raises GM's recurring costs only minimally and keeps its financial break-even point steady, a person briefed on the deal said. The person didn't want to be identified because the contract has not been ratified.
The union will use the contract as a model for separate labor deals with Detroit's two other automakers – Chrysler Group LLC and Ford Motor Co. Nearly 113,000 auto workers would be covered by the UAW contracts at the three companies. The contracts would also set the bar for pay and benefits at nonunion auto companies and other industries across the country.
The GM-UAW deal creates more than 5,100 factory jobs and opens up 1,300 jobs for skilled workers such as electricians and welders. That means the contract preserves or adds a total of 6,400 jobs, the UAW said. The skilled work is now done by outside contractors, but UAW workers will be able to bid on it. The union said much of the work is being brought back from Mexico.
In return, GM will try to entice older employees to leave so it can hire new ones at a wage that's about half the $29 per hour veterans make. Eligible workers can get up to $10,000 if they retire within the next two years. There's also a $65,000 bonus for skilled-trades workers if they retire or leave the company between Nov. 1 and March 31.
For most workers who don't retire, they'll be new kinds of compensation that replace annual raises. Most workers will get profit-sharing checks and other payments that could total at least $12,500. That includes the $5,000 signing bonus, a minimum of $3,500 in profit-sharing next year and $250 for meeting quality standards for each of the contract's four years. They'll also get three $1,000 bonuses to offset inflation.
If GM makes more money, the checks could be bigger.
Workers who make entry-level wages will get raises. GM's 1,940 entry-level workers will see wages go up as much as 24 percent during the contract. Workers who now make $14.78 per hour will see that increase to $18.28. The company also has around 500 temporary workers who will get smaller wage increases.
GM has also agreed to invest $2.5 billion in its factories, and will reopen an assembly plant in Spring Hill, Tenn. Union-company teams also are identifying 760 more potential jobs at GM and 1,400 more jobs for UAW-represented parts suppliers. Those jobs are in addition to the 6,400.
Dave Green, president of a UAW local at GM's factory complex in Lordstown, Ohio, east of Cleveland, predicted that workers will approve the contract.
Even though it has no pay raises for longtime workers, Green said it has signing bonuses, inflation protection and profit-sharing that workers should like.
"I think that it's pretty fair and gives our members incentives to make sure we continue to build a quality product," he said.
He also said the raises for entry-level workers puts their pay above what some foreign automakers pay at U.S. factories. That should help the UAW with efforts to organize those plants, he said. Organizing workers at foreign-owned plants is one of King's priorities.
But Nick Waun, an assembly line worker who makes the Chevrolet Cruze compact in Lordstown, said workers are unhappy because the deal has no cost-of-living pay raises and no ability for entry-level workers to get the same high wages as more senior workers. Without annual raises, veteran workers will eventually be paid the same rate as new employees.
"Inflation will keep chipping away at the top wage," Waun said.
King said he hasn't decided if the union will start talks with Chrysler and Ford next. He wouldn't discuss an angry letter sent last week by Chrysler CEO Sergio Marchionne accusing King of missing a meeting to sign a new deal.
"We have a great relationship with Chrysler, with Sergio, with all the Chrysler management," King said. "We're working together, as we did here, to create more jobs."
Marchionne was on his way back to the U.S. from Europe on Tuesday and may take part in the talks.
General Motors Co. shares fell 62 cents, or nearly 3 percent, to close at $22.43.