How the UAW's drive to 'end tiers' will change GM

[November 04, 2023]  DETROIT (Reuters) - The United Auto Workers union's tentative contract deal with General Motors contains significant steps toward one of UAW President Shawn Fain's top goals: Ending wage "tiers" that divided UAW-GM workers into upper and lower pay classes.

The tentative 4-1/2 year deal will pull more than 7,000 UAW workers in GM component plants, service parts warehouses and what GM calls "subsystems" operations up to the higher wage levels paid to assembly plant workers.

The contract will largely unwind a strategy the automaker has used for years to hold down labor costs, UAW officials have said.

Fain and UAW Vice President Mike Booth are expected to provide more details of the agreement with GM on Saturday at noon ET (1600 GMT).

Workers at GM Components Holdings operations could get pay increased by as much as 89%, while workers at parts warehouses would get raises of 79%, Fain said when he announced the agreement on Oct. 20. As at Ford and Stellantis, GM will raise pay for temporary workers and give them a faster path to full-time status and wages.

GM, Ford and Stellantis, which faced a coordinated UAW strike, have said tiers of workers allows them to keep costs down and remain competitive with non-union factories operated by Tesla and foreign makers' U.S. plants, and the Detroit Three have warned that the strike-ending deals present major financial challenges.

Eliminating tiers of lower-paid UAW workers at the Detroit Three was a top priority for Fain and UAW bargainers. Fain and UAW members would often wear red t-shirts printed with the slogan "End Tiers" at rallies and on picket lines.

United Auto Workers President Shawn Fain addresses the audience during a rally in support of striking UAW members in Detroit, Michigan, U.S., September 15, 2023. REUTERS/Rebecca Cook

GM "has been the worst actor" in creating tiers of lower-wage UAW employees within its operations, Booth said in an Oct. 20 video address. “We believe in equal pay for equal work."

In addition, the UAW-GM agreement will bring GM's Ultium LLC joint venture battery factories in the U.S. under the UAW's master agreement with the automaker. Workers furloughed when GM closed and sold its Lordstown, Ohio, small car assembly plant will have rights to jobs at Ultium's Lordstown battery plant under an agreement that allows them to earn GM wage rates, a person familiar with the agreement said.

That arrangement is similar to agreements at Stellantis. New hires at the joint venture battery factories will earn less than assembly workers. The emerging U.S. car battery industry generally pays less than vehicle manufacturing.

Fain and leaders of local unions at GM operations are expected to meet late on Friday to review the tentative contract and decide on sending it to rank-and-file members for ratification votes. UAW leaders at Ford and Stellantis have already approved their contracts, and ratification votes have begun.

(Reporting By Joe White; editing by Peter Henderson and Josie Kao)

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