Transcripts

GM & UAW Strike A Deal

SUZANNE PRATT: The General Motors strike is over. The United Auto Workers union and GM reached a tentative deal on a new contract today, putting an end to the two-day-old national strike. The agreement includes a groundbreaking health care trust for GM retirees and job security pledges for U.S. workers. GM shares surged nearly 10 percent on the news. Scott Gurvey reports.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Picket signs came down early this morning, ending a two-day walkout. General Motors reportedly agreed to put $35 billion into a new employee heath benefit trust fund and to provide job guarantees for the UAW's 73,000 GM employees. The company will also make some one-time bonus payments. The union agreed to take responsibility for health care benefits for retirees and active workers and to a two-tier wage structure, allowing the company to buy out older, highly paid workers. UAW President Ron Gettlefinger says the strike was worth it.

RON GETTELFINGER, PRESIDENT, UNITED AUTO WORKERS: I think our retirees will be exceptionally pleased with this contract. And for our active membership, there'll be -- obviously, by them being in the plan, there will be some changes, but I think overall they will be very, very pleased with the outcome of these negotiations and the job security that's associated with it.

GURVEY: The transfer of health care liabilities to a voluntary employee beneficiary association or VEBA, should help GM bring costs in line with those of competitors like Toyota. Auto analyst Bradley Rubin of BNP Paribas says he thinks both sides are winners.

BRADLEY RUBIN, AUTOMOTIVE SPECIALIST, BNP PARIBAS: For GM, this is fantastic, because they're able to get $51 billion in health care liabilities for retirees off the balance sheet and that's going to save them, per annum, $3 to $3.5 billion, which is going to allow GM to be profitable. And it's also a win-win for the UAW retirees because they have a well-funded VEBA, which will be managed by some sort of outside management company that will take care of them and make sure that they have their health care taken care of.

GURVEY: Auto analyst Efraim Levy of Standard & Poor's says in spite of the agreement, S&P still has a "hold" on GM stock.

EFRAIM LEVY, SR. AUTOMOTIVE EQUITY ANALYST, STANDARD & POOR'S: It will be something that will have significant improvement in General Motors costs, to make them more cost competitive compared to the foreign competitors. But we still say that the product is an area they have to work on. It's improving, but they still have to stabilize their share losses.

GURVEY: The contract must still be approved by the rank and file, which is not a sure thing. If it is approved, similar agreements are expected at Ford and Chrysler. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.