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GM confirmed today that the United Auto Workers (UAW) union has approved modifications to its national contract that “…will enable GM to be fully competitive and has eliminated the gap with our competitors.”  GM claims the changes eliminate the wage and benefit (cost) gap with its competitors.  It also includes changes to the agreements regarding the Voluntary Employee Beneficiary Association (VEBA) trust for retiree healthcare.

Separately, GM announced a plan to utilize a UAW-represented idled assembly and stamping facility for future production of an unnamed compact/small car in the United States to meet future fuel efficiency regulations.  GM did not specify the facility to be used, but the re-tooled plant will be capable of building 160,000 cars annually, which can be a combination of both small and compact vehicles. 

GM already has a strong manufacturing presence in the United States. Currently, about 67 percent of GM cars and trucks sold in the U.S. are built in the U.S. With this announcement, GM anticipates that U.S. production levels will increase beyond 70 percent by 2013, augmenting its already automotive industry-leading U.S. manufacturing footprint.

This is clearly a bone thrown to the UAW and the federal government.  The UAW has complained very publicly about GM’s plan to close US plants and increase imports.  This has put pressure on the feds because the public believes the $19.4 billion in loans that GM has received should not be used to subsidize the elimination of US jobs in favor of foreign-based jobs.  GM (and the other Detroit automakers) has long stated that high costs prevent them from manufacturing small cars in the US profitably.  Could the new contract really save them enough to make this turn around, or are they just saying this for PR or are the y just willing to continue to lose money to please their new overseers in DC?

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