GM Settles Deal with UAW; Win or Lose, Ford is Next

GM announced on Friday September 16, that they had tentatively agreed to add jobs, raise tier two wages and offer buyouts for skilled workers in a new agreement with the UAW. UAW union reps are excited about the deal because they claimed to have resisted changes to the retirement plans for hourly workers and negotiated new jobs that include a $5,000 sign on bonus.

This agreement could possibly be one of the most important deals in the history of the UAW. One of the UAW's bargaining tactics has always been to target the automaker with the weakest bargaining position and strike a deal with them first. The UAW will likely use the deal with GM as a template for bargaining with Ford and Chrysler. Overall the automotive industry is considered to be stable, but in a shaky economy the continued ability of consumers to take on car loans is not assured. If

This is the first wage increase that a UAW worker has seen from the big Detroit 3 since 2003. Analysts have watched this deal closely to use as a gauge for both the company's outlook and as a possible outline for future agreements with Ford and Chrysler. GM is unique in the fact that the U.S. government still holds a 26.5 percent stake in the company.

Analysts tend to forget that GM wasn't required to pay back every dime that was given to them from tax coffers. Paying back a small percentage of a loan and saddling taxpayers with paying for the majority of their mistakes does not prove to me that GM is a viable investment. If anything, the shares should be dispersed to the taxpayers as a form of stimulus and GM should be forced to use the money they are conceding to the UAW to buy back some of them.

Auto workers in Detroit have relatively good jobs as it is. The middle class has become the new lower class, but anyone in the UAW has a "middle class membership card" that guarantees them a huge severance package if they ever lose their job. Meanwhile there are citizens who do not even qualify for unemployment benefits after they get fired from jobs that pay less than $30,000.

Meanwhile the average GM employee got nothing. While inflation has risen approximately 20 percent since 2003, the $58,230 that an assembly line employee earned then has stayed the same. Seeing that the UAW won concessions in the areas of skilled trades, Ford workers who have the option of striking may wish to go for a more lucrative package deal while the auto industry outlook is good. We may be playing the bailout game again in a few years, and auto workers have been known to 'strike' while the iron is hot.