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GM, UAW Reach Labor Agreement

Barry Wood
Washington, D.C.
September 18, 2003

The trade union representing 300,000 American auto workers Thursday reached agreement with General Motors, the last of Detroit's big three car companies with whom it was negotiating.

The agreement averts the threat of an industry-wide strike and could improve the competitive position of the beleaguered U.S. car companies.

Details of the accord have not been released but it is assumed that only modest pay increases have been granted while companies will have greater flexibility in closing unprofitable operations. U.S. car companies have been losing market share to European and Japanese competitors and last month accounted for a record low 58 percent of the U.S. car market.

Earlier the United Auto Workers reached agreement with Ford and the Chrysler division of German based DaimlerChrysler. The big three have lost billions of dollars in recent years and some experts say more mergers in the industry are likely.

The U.S. car market has become fiercely competitive and U.S. companies have considerably higher labor costs than their Japanese rivals. Health care costs for the big three have become increasingly onerous as auto workers enjoy some of the most generous benefits available to American workers.

The union made preserving health benefits a principal negotiating objective along with hoping to persuade the big three not to move more U.S. operations to Mexico and other countries.

Amid falling sales and weak demand, the big three over the past two years were forced into costly discounts that drove down the price of their cars. Despite the buyer incentives consumers continued to turn to German and Japanese cars, perceiving them to be of superior quality.

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