Updated from 7:28 a.m. EDT
announced a historic deal with the United Auto Workers on a new labor contract early Wednesday that ended the union's first nationwide strike against the company in 37 years and sent auto stocks higher in early trading.
The deal includes an agreement on creating a union-controlled health care trust fund for GM retirees, or a so-called VEBA, which promises to free the company from most of its $51 billion in long-term health care liabilities in return for a large cash payment.
It also reportedly includes an agreement for a lower wage structure for newly hired workers, as well as financial offerings to give existing workers an incentive to retire. GM said the deal will strengthen its U.S. manufacturing presence with "significant future investments."
"This agreement helps us close the fundamental competitive gaps that exist in our business," the automaker said in a press release. "The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments."
Negotiations are now expected to shift to
, GM's counterparts in Detroit. Those companies will be looking for their own deals with the UAW that will likely be similar to the result at GM.
The Big Three have argued that spinning off their health care obligations for retirees into a trust funded by the companies and run by the union was crucial to cutting their per-car cost gap with overseas carmakers like
With GM workers returning to their jobs on Wednesday, the deal helped the company and the union avert what could have devolved into an ugly standoff inflicting financial pain on both parties. Wall Street had anticipated a quick end to the strike, with auto stocks holding their ground throughout the two-day ordeal. Early Wednesday, shares of GM were up $1.52, or 4.4%, to $35.94. Shares of Ford were rising 23 cents, or 2.8%, to $8.57.
GM's contract must now be reviewed by local UAW presidents and it will then be put to vote from GM's 74,000 members that work at the automaker.
The deal provides a victory for the UAW, in that its strike was short and it appears to have brought the extended contract negotiations to a swift conclusion. It's unclear, however, whether the union got any real guarantees on job security for its U.S. workers, which was the stated purpose of the work stoppage.
"We're very comfortable with this agreement, and we're happy to be able to recommend it to our membership," said UAW President Ron Gettelfinger at an early morning news conference. "I'm pleased to say that we have a VEBA in place that will secure the benefits of our retirees."