DETROIT, SEPT. 18 -- The new labor pact initialed this week by General Motors Corp. represents a major gamble by the company that it will be able to sufficiently increase its share of the auto market over the next three years to cover the costs of a contract rich in income guarantees for its workers.
In the new contract, the company essentially agreed to guarantee the income of union workers who would lose their jobs in future layoffs and provide new benefits for many of the 30,000 union members already on indefinite layoff.
The new program does not provide any actual job guarantees if GM's share of the market slips. But union officials today said they thought that they had made it so expensive for GM to lay off people or to contract out work that they would be reluctant to let many workers go.
"Our eyes are riveted to the sky," GM Vice President Alfred S. Warren had said Monday morning, when the agreement was reached. The message was clear: There won't have to be future layoffs and plant closings if the company can increase its share of the domestic auto market.
The question the union has so far side-stepped is what happens if GM's share of the market continues to slump as it has over the past decade.
"I think General Motors has made a commitment to grow the business," United Auto Workers Vice President Steve Yokich said today in explaining the new contract.
But it was not at all clear just how much leeway the company will have to close plants or contract out its work in an effort to achieve that growth. UAW President Owen Bieber angrily denounced reports that the new contract allows GM to shut down plants.
Bieber said the company has agreed to a moratorium on future plant closings, but the contract uses the same language as the pact agreed to three years ago. GM has shut down four plants since 1987 under that language.
The union appears to have won a critical victory in its effort to prevent GM from contracting out work to nonunion companies. The contract allows the union to take "outsourcing" decisions to arbitration in a way that could add months to the process.
In addition, GM agreed that any of its own plants that can compete economically with outside contractors must get the work barring "unique or unforeseen circumstances." This is another sign that GM believes it will be able to expand its share of the market.
The company still is determined to reduce the size of its work force and has increased the pensions and buyout offers for any employee willing to take them. The company wants to get its active work force down to 220,000 UAW members by the end of this contract. It currently has 280,000 active UAW workers.
To help make that happen, the company boosted benefits for early retirees. And those workers willing to take a buyout can receive up to $72,000 in a lump-sum payment for simply going away.