After months of negotiations, General Motors’ hourly UAW workers have finally ratified a new labor contract. The new contract will see the union giving more concessions, saving GM an estimated $1.2 billion to $1.3 billion per year. The new agreement goes into effect at 4pm EST.
According to Automotive News, the UAW voted 74 percent in favor of the new contract. Under the terms of the new contract, cost of living adjustments will be cancelled and bonuses will be suspended indefinitely. GM will also be able to higher low-wage entry-level workers.
Perhaps the biggest cost saver for GM is the new ability to fund the UAW’s Voluntary Employee’s Beneficiary Association with equity in the company. GM can now fund part of VEBA with equity, which could save the Detroit automaker about $20 billion.
GM UAW vice president Cal Rapson estimates the new contract could save GM as much as $1.3 billion per year.
“We very much appreciate the support of our employees and retirees,” Diana Tremblay, vice president of GM labor relations, said in a statement. “Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks.”
Despite the ratification of the new contract, GM is expected to file for Chapter 11 bankruptcy next week.
