DETROIT, Oct. 15 (UPI) -- New hourly workers will cost General Motors Corp. half as much as current workers under the new United Auto Workers labor pact, the U.S. automaker said Monday.
The four-year contract will transfer an estimated $46.7 billion worth of retiree healthcare liability to the union from the company, GM said.
The deal clears the way for landmark changes GM says will slash labor costs and cut retiree obligations to $18 billion from $64 billion, saving the automaker billions of dollars.
GM Vice Chairman and Chief Financial Officer Fritz Henderson said in a presentation the new contract meant the company could move 56,000 current UAW members, or 75 percent of its current UAW workers, into retirement.
Many of those legacy workers could be replaced by "non-core" workers making total wages and benefits of $25.65 an hour, compared with $78 an hour on average under the old contract, The Detroit News reported.
While many workers hired at the lower-tier wage could move into higher-wage jobs on the assembly line, they would not get costly defined-benefit pension plans or retiree healthcare promises, Henderson said.
The cost savings GM realizes from expanded use of temporary workers and lower-wage permanent workers will come on top of an estimated $2.6 billion to $3.4 billion the automaker expects to save by 2011 because of the UAW's agreement to shift GM's existing retiree healthcare costs to a union-managed trust, the newspaper said.