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Last Updated: Saturday, 29 September 2007, 00:23 GMT 01:23 UK
GM union approves health contract
UAW president Ron Gettelfinger
Ron Gettelfinger said he felt "pretty good" about the deal
General Motors will pay $29.9bn (14.6bn) into a fund to cover the cost of health care for its retired workers, the United Auto Workers union has said.

The agreement was a key part of a new four-year labour contract approved unanimously by local UAW officials.

It followed a tentative deal reached with the carmaker on Wednesday that ended a two-day national strike by GM's UAW members.

Under the deal GM will shift healthcare benefits to an independent trust fund.

The UAW said ratification of the deal by GM workers should begin on Sunday.

Correspondents say the deal is a major breakthrough for the company, which is struggling to cut costs in the face of growing competition from Japanese rivals like Toyota.

In return, GM committed to pay an initial $24.1bn into the fund, known as a voluntary employee benefit association (Veba), by the start of 2007.

However, it will not start covering retiree healthcare costs until 2010, UAW President Ron Gettelfinger said.

US job security

The UAW also said it won guarantees that new vehicles and models would be built in the US.

GM to pay $29.9bn to cover retirees' healthcare
Commitment to retain current production at 16 US plants over the next four years
New manufacturing workers can be paid at double the rate as those not employed on the assembly line
Source: United Auto Workers
It added that GM had committed to a "total moratorium on outsourcing" its production facilities, which would help stem job losses in the auto giant's home market.

Job security had been a major sticking point in negotiating new contracts for the 73,000 UAW members at GM whose previous contracts expired on 14 September.

As part of the agreement GM said it would make 3,000 temporary workers permanent.

But it also said it would be able to hire new workers for non-core manufacturing jobs for about half the hourly rate of those working on the assembly line, creating fears of a "two-tier" system.

Mr Gettelfinger said he expected the deal to be ratified by GM workers, though some retained some concerns over the terms.

"We're very happy with this stuff," he said.

If approved by GM's rank-and-file the contract is likely to form the basis of UAW negotiations with the two other main US carmakers, Ford and Chrysler, due to start next week.

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