GM or General Motors finally reached an agreement with the United Auto Workers, saving it from a potential strike of its workers.
However, GM can't celebrate yet as according to the Wall Street Journal, the labor deal between the Detroit-based automotive giant and the UAW is just temporary.
The Union officials have yet to disclose the details of the agreement, which was announced before midnight of Sunday and covers over 52,600 union-represented members at GM.
However, according to USA Today, GM, along with Ford Motors, is currently enjoying profit booms, but that may hurt their chances of reaching an agreement with the union that favors the company.
Analysts announced that General Motors beat expectations last week and reported to have earned $1.4 billion in the third quarter.
And while those kinds of results may make owners and shareholders of the company happy, they could be even better for union negotiators who will point them in trying to get new four-year pacts with the automotive giants.
More than a decade ago, generous contracts were handed during the last sales boom. However, it was followed by a sales bust. Automakers were mired by expensive labor contracts even as losses piled up, while Ford, squeezed by GM and Chrysler, decided to reorganize by declaring bankruptcy.
But now, with car makers enjoying another all-time high due to low gas prices, the momentum has shifted once again to the United Auto Workers union.
Marick Masters, head of the Douglas A. Fraser Center for Workplace Issues at Wayne State University in Detroit said, "They are in a stronger bargaining position to negotiate a better deal with GM and Ford, but I would not expect it to be phenomenally better."
Furthermore, the lower wage instituted in previous contracts as Detroit automakers complained that their labor costs were not competitive with the non-union U.S factories of Asian and European rivals. They try to maintain their flexibility if sales fell again so now, automakers have turned to profit-sharing.
In a related report by Bloomberg Business, the UAW comes to GM and Ford by having approved the new contract last week with Fiat Chrysler. With that, the union won raises for all members at Fiat and a path to bring wages of so-called "tier 2" employees equal to those of senior workers.
This move, unfortunately, will cost Fiat Chrysler close to $2 billion over four years, which is a big blow as it is seen as being the most financially weak among Detroit's "Big 3" car makers.
According to Harley Shaiken, a labor professor at the University of California, "GM is in far stronger economic shape than Chrysler, and the union wanted to see more in what they got from them."
Shaiken added, "These contracts provide an entrance ramp to the middle class. That's a contrast to the contracts we've seen in recent years that provided exit ramps."
