UAW members approve General Motors concessions

DETROIT -- The United Auto Workers union has ratified a package of concessions designed to reduce General Motors' labor costs, completing a key piece of the automaker's massive restructuring effort.

UAW President Ron Gettelfinger said at a news conference Friday that 74% of GM's 54,000 U.S. production and skilled-trade workers voted in favor of the deal.

"We accept what it is and did the best we could," Gettelfinger said. "We've given a lifeline to GM until they can rebound."

UAW leaders agreed to the revised contract last week that freezes wages, ends bonuses, eliminates noncompetitive work rules and requires binding arbitration for the next contract if a deal can't be reached. Gettelfinger said there are some conditions under which the union could still strike. The UAW said the cuts would save GM $1.2 billion to $1.3 billion a year.

"We very much appreciate the support of our employees and retirees," Diana Tremblay, GM vice president for 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."

The agreement also gives a union-run retiree health care trust 17.5% ownership of a post-bankruptcy protection GM, with a warrant to buy another 2.5%. The trust will take on the company's retiree health care costs starting next year. The stock will come in exchange for part of the company's $20 billion obligation to the trust.

The trust also will get $6.5 billion of preferred shares that pay 9% interest, plus a $2.5 billion note.

Gettelfinger said the union "didn't put a whole lot of emphasis" on the 2.5% warrants, which can be exercised when GM's value reaches $75 billion. The company's equity value currently stands at $683 million.

"We feel comfortable with where we're at with the 17.5%. We're comfortable with the preferred stock," he said. "We're basing everything else on reality."