RENEE MONTAGNE, host:
It's MORNING EDITION from NPR News. I'm Renee Montagne.
The United Auto Workers Union has called off its strike against General Motors. The news came in the early hours of this morning, as the two sides announced that they'd reached a tentative agreement on a new contract. That deal still must be approved by rank-and-file union members.
Here is how GM spokesman Dan Flores described the deal.
Mr. DAN FLORES (General Motors Spokesman): We think we've got an agreement here that is subject to ratification, that not only is good for the company, it's good for the union and the members that it represents.
MONTAGNE: That's GM spokesman Dan Flores.
NPR's Frank Langfitt is covering this story, and he joins us now from Detroit. And Frank, what seems to be the breakthrough here that ended this strike?
FRANK LANGFITT: Well, you know, when the United Auto Workers went out on Monday, they said this was all about job security. And they are concerned, because of global competition around the world and the fact that GM can make cars in so many different places, workers were really worried that they were going to lose their jobs. And what they're saying now is that they got a general agreement for job security.
I talked to Cal Rapson, he's the vice chairman of the UAW, after this 4:00 a.m. press conference this morning, and he said that he thinks the union can keep its levels, the job levels up to about 73,000, over the term of this next contract over the next four years, and maybe even more. But what's missing right now is specifics. There are people in Lordstown, Ohio; Fairfax, Kansas, that are looking for new products from GM - workers. And what we - it may be a while until we find out, you know, exactly where this new investment will come.
MONTAGNE: And the significance of this agreement?
LANGFITT: It's huge. You know, what GM has been looking for is to completely rework its cost structure. It's been getting clobbered by Toyota and Honda because, for one reason, its health care costs for retirees are much, much greater. And so what they've done here, and this is really the big story, I think, is they've put together a health care trust fund. And what GM is going to is it's going to put a lot of money into this trust fund, maybe 35, 36, $37 billion, and the union is going to take over responsibility for retiree health care. And what GM hopes is this will free it up to make new investment, to be more competitive, and get these expenses off its books. So that, from GM's perspective, I think, is huge. And it also kind of transforms the relationship between this very famous American company and this once very strong union.
MONTAGNE: Well, let's talk about this health care fund from the union's point of view. How would it work and what are the concerns?
LANGFITT: Well, the major concern, and I think if you talk to retirees - I've spending a lot of time with retirees over the last week or two here in Detroit - and their great concern is what happens if health care costs keep rising really fast? Is there going to be enough money for me in my retirement to look after me or am I going to have a lot of higher co-pays, high premiums? And a few a years back, United Auto Workers did a deal with Caterpillar on this exact kind of deal, and the money ran out a few years ago. So when you'll talk to retirees, they'll say, hey, this happened to Caterpillar.
Now, when I was talking to the UAW this morning, they said they have certain backstops, that they've crunched the numbers very carefully and they think that this is going to last a long time. In fact, the president, Ron Gettelfinger, said to us this morning that he thinks that this health care trust fund will last for 80 years.
MONTAGNE: And of course, the way it works would be billions put in by GM and then that generates more income, which would then theoretically pay for this health care.
LANGFITT: Exactly. And it all comes down to really how the union manages this fund, the kind of investments that it makes, and its return on the stock market in - just like all the rest of us, when we look at our retiree accounts and things like that.
MONTAGNE: Does the union, Frank, come out of this strike in a stronger position?
LANGFITT: I think what the union is looking for, unlike in, you know, past contracts, instead of looking for gains, it was looking not to lose anything. And I think that in terms of jobs, at this point, if indeed these job guarantees do work out and we still have to be - that still remains to be seen - I think they can be said to have done reasonably well. I mean, it's a - the union hasn't really weak hand in this environment right now. And I think Ron Gettelfinger is just trying to play it as well as he can for his members.
MONTAGNE: And just briefly, where to from here?
LANGFITT: Well, the next thing is ratification. And the UAW is going to have a big sales job. What you'll see in the next few days is they'll be going to the members and saying, listen, we got a really good deal. It's a tough environment. We really need your vote to ratify it. And we could see that, those votes, as early as this weekend.
MONTAGNE: NPR's Frank Langfitt in Detroit. Thanks, Frank.
LANGFITT: Happy to do it. Transcript provided by NPR, Copyright NPR.
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