May 30, 2009 - General Motors, Detroit MI

As its stock tumbled to a stunning 75 cents a share, General Motors Corp. tied up several loose ends Friday as it prepares to file for bankruptcy reorganization Monday.

The Detroit automaker locked in a labor deal with the UAW that the union says will save GM as much as $1.3 billion a year. Germany's finance minister said a plan was approved for Canadian auto supplier Magna to move ahead with a rescue of GM's European Opel division.

The 100-year-old automaker even scheduled a news conference for midday Monday in New York City -- the place where most observers believe GM will file for Chapter 11.

UAW ratifies contract changes

UAW members ratified changes to the union's labor contract with General Motors on Friday that the automaker says will make the company competitive.

The deal was one of the final pieces of a GM restructuring to fall into place before GM files for bankruptcy reorganization, a move expected Monday in New York City.

Meanwhile, as the White House braced to lead GM through bankruptcy, administration officials cheered the progress in Chrysler LLC's bankruptcy case and called it "a hopeful example" for GM.

President Barack Obama is to discuss the auto industry in an event set for Monday, and White House spokesman Robert Gibbs said the president's daily economic briefing on Friday focused on the state of GM and Chrysler.

Steven Rattner and Ron Bloom, the leaders of the president's auto task force, were seen walking into the White House late Friday afternoon.

Gibbs also defended the work of the auto task force as "saving jobs, saving dealerships," and said the unions and bondholders had compromised by "fairly comparable" amounts to save the companies.

"It's incorrect and not accurate to say that somehow ... that the unions have given less or haven't played their part," Gibbs said.

The amended 2007 national contract covers 54,000 hourly workers, who voted earlier this week.

It passed with 74% approval by both production and skilled trade workers, UAW President Ron Gettelfinger said at a Detroit news conference Friday.

"There have been a lot of sacrifices made by both our active and retired members," Gettelfinger said.

The agreement should save GM about $1.3 billion a year, said Cal Rapson, the UAW vice president over the union's GM department. In a statement, GM said the new deal allows GM to "eliminate the wage and benefit gap with its competitors."

GM will see additional savings from changes made to the UAW's retiree health care trust.

Under the new agreement, the trust will get 17.5% of the reconstituted GM's common stock, $6.5 billion in preferred stock, a $2.5-billion note and nearly $10 billion in GM assets.

Gettelfinger noted that retirees were originally owed $57 billion in health care benefits prior to the creation of the trust in 2007, which gave GM a substantial discount on that debt. Later, the U.S. Treasury ordered GM to get the UAW to agree to accept half of the $20 billion owed to the trust in company stock.

Under the new arrangement, GM's cash flow will see a $13-billion savings, he added.

GM on Friday also confirmed its plans to build a small car in a U.S. plant, using an idled assembly and stamping facility. The unnamed small car will be in addition to plans to build the Chevrolet Cruze compact car and Chevrolet Volt electric car.

During labor negotiations, the UAW had complained about GM's plans to increase importing vehicles from China, Korea, Japan and Mexico. Gettelfinger said Friday the commitment for future work is a bright spot.

"It's going to stop the imports coming in here from China. It's also going to reduce the number of imports coming in from South Korea," he said.

Original Story - Detroit Free Press