exv10w3



 


Exhibit 10.3








	

2007 GM-UAW Labor Agreement









 








	

Forward Looking Statements

1

In the presentations and in related comments by General Motors' management, we will
use words like "expect," "anticipate," "estimate," "intend," "evaluate," "seek," "believe,"
"potential," "design," "impact," "projection," or "pro-forma" to identify forward-looking
statements that represent our current judgments about possible future events. We believe
these judgments are reasonable, but GM's actual results may differ materially due to a
variety of important factors. Among other items, such factors include: the ability of GM to
achieve reductions in costs as a result of the turnaround restructuring and health care
cost reductions and to implement capital expenditures at levels and times planned by
management; our ability to maintain adequate liquidity and financing sources and an
appropriate level of debt; costs and risks associated with litigation; changes in our
accounting principles, or their application or interpretation, and our ability to make
estimates and the assumptions underlying the estimates; the successful completion of
collective bargaining agreements with all unions that represent GM employees/retirees
and the legal interpretations of those agreements; labor strikes or work stoppages at GM;
and general economic conditions, in particular health care costs and investment returns.

GM's most recent annual reports on Form 10-K and quarterly reports on Form 10-Q
provide information about these factors, which may be revised or supplemented in future
reports to the SEC on those forms.








 








	

Agenda

2007 Agreement Overview

Retiree Health Care / VEBA Trust

Two-Tier Wage Structure

Other Operating Changes

Financial Summary

2








 








	

2007 Agreement Key Outcomes

Competitiveness

Enables appropriate employment levels and introduces wage
and benefit structures that support efforts to close manufacturing
cost gap

Flexibility

Mechanisms to help deploy labor force where required

Improved ability to adjust workforce to reflect market conditions

VEBA funding structured to allow contribution payments over time

Commitment

Retiree health care benefits funded for current UAW hourly
employees and retirees while largely eliminating health care
inflation risk from capital structure

Continue product and technology investment in the U.S.

3








 








	

2007 Agreement Key Elements

Independent VEBA Trust established for retiree health care
obligations

Two-tier wage agreement established for non-core
employees and new hires

Agreed to hire 2,800 temporary workers as permanent

Job security provisions revised

No base wage increases, lump sums granted instead

Reduced COLA escalation

Upfront agreement on product and sourcing plan

Increased pension benefits for current and future retirees

4








 








	

Agenda

2007 Agreement Overview

Retiree Health Care / Independent VEBA

Two-Tier Wage Structure

Other Operating Changes

Financial Summary

5








 








	

2005 Retiree Health Care Agreement

In October 2005, announced GM-UAW Retiree Health Care
Agreement, which modified postretirement health care benefits for
UAW hourly retirees and actives

Agreement effective through September 2011

Introduced for the first time employee monthly contributions, deductibles
and co-pays, as well as prescription drug and dental coverage changes

A UAW-sponsored Mitigation VEBA was established to help defray
out-of-pocket cost impact to retirees and completely fund retiree dental
benefits

GM agreed to make three $1B contributions in 2006, 2007 and 2011

UAW agreed to defer future wage increases and a portion of future COLA
payments to Mitigation VEBA

Agreed to additional stock appreciation rights and profit sharing diversions

Agreement implemented in March 2006 upon district court approval

Based on final remeasurements related to plan changes, agreement
yielded gross $17B reduction in GM OPEB liability

6








 








	

2007 Retiree Health Care Overview

GM and UAW agree that responsibility for retiree health care will
permanently shift from GM to a new retiree plan funded by a new
Independent VEBA

Incorporates 2005 Health Care Agreement and is subject to court
approval

Implementation will be later of January 1, 2010 or date on which any
appeals or challenges to court approval are exhausted

Agreement ensures UAW may not negotiate to increase GM funding
or otherwise seek to obligate GM to:

Provide any additional contributions to the Independent VEBA

Make any other payments for the purpose of providing retiree medical
benefits

Provide retiree medical benefits through any other means

Employees may in future contribute earnings that they received from
wages, profit sharing, COLA, or signing bonuses

7








 








	

Independent VEBA Summary

New retiree health care agreement and VEBA will cover:

All retirees as of 9/14/2007

Active UAW-represented employees with seniority as of 9/14/2007

UAW Delphi retirees and actives covered under GM-UAW-Delphi
restructuring plan (approximately 12k people)

UAW retirees and actives of closed or divested GM-UAW business units
(to the extent GM has responsibility for their health care)

New hires not included in Independent VEBA and not offered defined
benefit postretirement health care

GM and UAW agreed on funding Independent VEBA based on
various key assumptions

Asset returns of 9% annually, with risk borne by VEBA

Ultimate health care trend rate of 5% annually, with risk borne by VEBA

Incorporation of 2005 Health Care Agreement wage/COLA diversions

Standard actuarial assumptions

8








 








	

UAW-Related Health Care Obligations

Addresses UAW-related retiree health care obligations totaling $46.7B

UAW-related obligations estimated at $47B at mid-year for purpose of
negotiations when adjusted for updated Delphi impact ($3B increase)
and assumed discount rate increase

Actuals will be determined at year-end under SFAS 158

9

* Impact of adopting year-end measurement dates for all pension/OPEB plans at 12/31/06, implemented by GM in Q1 '07








 








	

Treatment of 2005 Health Care Agreement

10

Upon effective date, new Independent VEBA deal
supersedes 2005 agreement

GM remains obligated to make final $1B Mitigation VEBA
payment from 2005 agreement in 2011

Profit sharing from the 2005 OPEB agreement eliminated

Capped upside potential from the stock price increase
granted in 2005 OPEB agreement

2005 Health Care Agreement wage/COLA diversions
were calculated and negotiated at $3.8B present value

This amount included in funding for new Independent VEBA

Wage/COLA diversions retained by company








 








	

Independent VEBA Funding

11

Note: All present values calculated at 9% investment rate

Note: All present values calculated at 9% investment rate








 








	

Independent VEBA Timeline

1/1/08

1/1/09

1/1/10

1/1/11

Internal UAW VEBA
/ Temp. Asset
Account to be
Established 1/1/08

($18.5B + $4.4B
Convertible Note)

Initial Effective
Date Est. Q4

($5.6B With
Option To Pay
Over Time)

First Contingent Payment
4/1/08 ($165M)

Continue Retiree HC Cash Payments (Est. 1/1/10)

Final
$1.0B
Payment
From 2005
HC Deal

(4/1/11)

Flat Monthly Lifetime
Pension Benefit
$66.70

Final Effective
Date Est.
1/1/10

Event

12








 








	

Independent VEBA Convertible Note

Independent VEBA funding includes $4.3725B convertible note at
following terms:

6.75% interest paid semi-annually

5 year maturity from issuance on 1/1/2008; callable by GM any time
after Year 3

Convertible for approximately 109 million shares based on $40
conversion price; may be converted in last six months before maturity or
when GM stock price exceeds $48

Note to be issued to a GM subsidiary and will accrue interest from
1/1/2008, but will be treated like treasury stock until assigned to
Independent VEBA on 1/1/2010*

Various key restriction covenants are included

Subject to lock-up period until 1/1/2010*

After lock-up, may sell about half of note or stock per year

Prohibition on sale of more than 2% to one holder

Trustee to vote stock in same proportion as all shareholders

13

* Or date of transfer to Independent VEBA after court and regulatory approval, if later








 








	

Change to Retiree Health Care Accounting

Generally speaking, two types of accounting treatment can be
triggered by reductions in retiree health care

Dependent largely on existence of ongoing actual or contingent
obligations or involvement on the part of the company

Other factors may also impact appropriate accounting treatment

Plan settlement - liability is entirely defeased

Liability is removed from balance sheet and taken as a one-time net gain

Plan amendment - ongoing obligations exist

Liability is reduced to the present value of future obligations; the negative
plan amendment generated by the change in the liability is amortized
over time

GM to seek SEC concurrence with accounting treatment

Expect negative plan amendment accounting to apply given structure of
proposed plan (e.g. future capped VEBA contributions)

14








 








	

Independent VEBA Accounting Impact

Under a negative plan amendment, balance sheet must
recognize net liability equal to present value of cash flows
associated with future obligations

GM's net balance sheet liability under the new plan would be
limited to GM's capped contributions to the new Independent
VEBA

Negative plan amendment arises due to cap on GM
contributions (vs. increased cost share or reduced benefits)

Requires mutual understanding with plan participants that benefits
have been reduced

Requires all employer contributions be included in initial
measurement of capped obligation

Includes contingent payments

15








 








	

Independent VEBA Timeline

1/1/08

1/1/09

1/1/10

1/1/11

Internal UAW VEBA
/ Temp. Asset
Account to be
Established 1/1/08

($18.5B + $4.4B
Convertible Note)

Initial Effective
Date Est. Q4

($5.6B With
Option To Pay
Over Time)

Transfer New VEBA
Assets To New Trust

Transfer 2005 VEBA
Assets

Transfer Convertible
Note

First Contingent Payment
4/1/08 ($165M)

Continue Retiree HC Cash Payments (Est. 1/1/10)

Final
$1.0B
Payment
From 2005
HC Deal

(4/1/11)

Flat Monthly Lifetime
Pension Benefit
$66.70

Final Effective
Date Est.
1/1/10

Assets Reported In GM's
Consolidated Balance Sheet

Convertible Debt Will Be
Presented Similar To
Treasury Stock

No Change In OPEB Accounting

Event

Accounting

Negative Plan Amend.

16








 








	

Post-Implementation Pro-forma OPEB Liability

17

Accounting rules require the OPEB liability to be measured based on economic
conditions existing on 1/1/2010

Impossible to precisely predict future economic conditions, but net UAW hourly
health care balance sheet liability estimated to be about $6B - 13B depending on
assumptions, including FAS 106 discount rate (assumed to be 6%)

Low end of range assumes all required contributions have been made except:

PV of remaining contingent payments

PV of remaining Mitigation VEBA contribution ($1B in 2011)

7/8ths of face value of the convertible note

High end of range assumes the same items above as well as:

PV of timed additional contributions and 2005 wage/COLA deferrals

Additionally, measurement of balance sheet liability will be based on actual market
value of convertible note on 1/1/2010

Therefore, high end of liability range will increase if value of note increases

Due to market transferability restrictions on convertible note, pro-forma
1/1/2010 liability assumes 7/8ths reflected in GM's OPEB liability with remainder
carried on GM balance sheet as debt

Following maturity of convertible note in 2013, projected net OPEB liability
would range from $2B (reflecting only PV of remaining contingent payments) to
$9B (including PV of remaining base and wage/COLA payments)








 








	

Pro-forma OPEB Expense Impact

18

2008/2009:  No change in what GM's OPEB accounting otherwise
would have been

2010/2011:  Estimated annual pre-tax savings projected to be $2.6B -
$3.4B primarily due to the effect of the negative plan amendment

Significant assumptions include the following:

Negative plan amendment amortized over the remaining average period for
active UAW participants to reach full eligibility for retiree health care benefits

Assumed discount rate of 6% remains constant

Assumed market value of the convertible note at 1/1/2010 equals face value

Changes in these and other assumptions could result in a lower or
higher plan amendment

For example, if the market value of assets actually contributed on
1/1/2010 increases (e.g. due to appreciation on the convertible note),
the amount of the negative plan amendment will be lower








 








	

Cash Flow Impact of Independent VEBA

19

Incremental cash flow impact for GM includes upfront and other
ongoing cash contributions

Excludes cash flow impact of wage/COLA deferrals from 2005 Agreement
as not considered incremental

Favorable cash flow impact beginning in 2010 driven by savings of
future health care payments

GM's reported liquidity as of year-end 2007 will decline by $2.6B due
to exclusion of short-term VEBA assets








 








	

Retiree Health Care Summary

20

GM to fund an Independent VEBA trust with substantial
level of capital

After final implementation, GM no longer responsible for
providing retiree health care benefits to UAW-represented
retirees and actives

Independent VEBA assumes all future investment return
and trend risks

New hires to receive $1 per compensated hour in lieu of
postretirement health care benefits

Agreement is permanent, UAW may not negotiate further
for retiree health care benefits








 








	

Agenda

2007 Agreement Overview

Retiree Health Care / Independent VEBA

Two-Tier Wage Structure

Other Operating Changes

Financial Summary

21








 








	

Two-Tier Wage Structure Overview

New Tier II wage for "non-core" positions

Applies to new hires only

Tier II new hires enter at base wage rates that are
approximately 50% of current UAW GM "Tier I" rate

Benefit structure also significantly modified

Higher cost share for active health care coverage

Cash balance pension plan vs. traditional defined benefit
pension plan

401k defined contribution plan in lieu of retiree health care
coverage (applies to all new hires, including those in "core"
positions)

22








 








	

Tier II / New Hire Wage & Benefit Plan

23

 * Base wage before inflation adjustment after full grow-in over 2 years

** Will continue in plans even if later transitioned to core position








 








	

Post 2007 Bargaining - Transition to Tier II

Core

Non-

Core

GM Internal Employees

Examples --

 Vehicle General Assembly

 Engine/Transmission Assembly

 Productive Maintenance

 Quality

Examples --

 Material Movement

 Kitting and Sequencing

Internal GM at

Tier II wage/benefit Structure

In excess
of 16k
positions

24

Non GM 3rd Party

Example -- Housekeeping








 








	

Current Workforce Demographics

56k

(75% of current
workforce)

Present U.S. hourly workforce demographics indicate that 65-75%
would be retirement eligible in contract period

25

Retain ability to adjust workforce based on market conditions and
productivity gains, and transition significant number of positions to
Tier II wage structure

Current demographics of workforce a key enabler

Will require upfront restructuring costs


48k

(65%)








 








	

Agenda

2007 Agreement Overview

Retiree Health Care / Independent VEBA

Two-Tier Wage Structure

Other Operating Changes

Financial Summary

26








 








	

Other Key Elements Overview

No annual base wage increases

Lump sum payments of $3,000 in 2007 and 3%/4%/3%
($2,600/$3,200/$2,600) performance bonus in 2008/2009/2010

COLA reduced vs. prior agreement

Approximately two-thirds retained by GM to partially offset VEBA
contributions and active health care

Significant revisions to job security language

Secured Employment Level requirements also removed

Significant time spent upfront with the UAW defining work which
would be retained vs. outsourced

Attendance Policy revisions to reduce absenteeism

Pension increases of approximately 1.3% annually per retiree
(excluding impact of VEBA-related lump sum payments)

27








 








	

Historical Wage Escalation

In exchange for additional VEBA contributions, UAW agreed to no
base wage increases for 4 years

Base wage increases in every previous contract since 1982

Wage/Benefits have historically had four major inflationary drivers:

28








 








	

Reduced COLA Escalation
        2003 Agreement    2003 Agreement Incl. '05 Health Care Agreement    2007 Agreement
    Employee    2.25    2.08    0.8
    Diversions Retained by GM    0.22    0.39    1.5
    Total    2.47    2.47    2.3


Approx.
65%

29








 








	

JOBS Bank / Job Security Revisions

30
      2007 Agreement provisions
   JOBS Bank Reduction Programs   New Special Attrition Program including mandatory placement
   Area Hire
(< 50 miles)   One job offer refusal results in leave without pay/benefits
   Extended Area Hire
(> 50 miles)
   4 job offer refusals results in leave without pay/benefits
Exception: 2 job offer refusals at Linden, Oklahoma City, Rancho Cucamonga
Maximum 2 years protection
 Shorter if employee refuses jobs








 








	

Secured Employment Levels Eliminated

Prior Agreement contained language which calculated
specific employment levels based on UAW hourly
employee attrition

Based on complicated formula using a Benchmark Minimum
Employment Level from 1999 Agreement

2007 Agreement removes all language that requires
facilities to calculate specific employment floors

All formulas, benchmark minimums and related administration
have been eliminated

31








 








	

Upfront Sourcing Agreements

32

Housekeeping to be sub-contracted

Agreement to exit substantial portion of ~1,700 current
housekeeping functions before January 2009

Also able to sub-contract large scale construction projects
and roof/HVAC/sub-station repairs

Upfront agreement on outsourcing for core vehicle
production and non-core operations

Non-core operations will transition to Tier II wages and benefits

As part of the agreement GM agreed to:

Hire 2,800 temporary employees permanently at Tier I wage

In-source 3,000 Tier II positions if positive business case








 








	

Capacity Action Summary

33








 








	

Manufacturing Capacity Considerations

Agreement confirms GM's ability to continue implementing
capacity actions announced in 2005

Investment commitments specified at select plants
conditional on market demand, business case and GM
Board of Directors approval

14 assembly plants and 25 related powertrain and stamping
facilities

Plants without specific investment commitments will be
dependent on future market conditions and product plans

Revised job security provisions are key enablers to
managing capacity in response to market conditions

From a cost perspective, most critical aspect is ability to utilize
available workforce through timely redeployment

34








 








	

Pension Plan Revisions

35

Basic benefit increases for both current and future retirees

Current:  $2.00 increase

Future:  $2.65 increase (compares to $4.20 in 2003 agreement)

Also modest increases to "30 & out", survivor, and other benefits

Delphi covered employees granted same increases

Current retirees (including Delphi) granted lump sum
payments of a maximum of $700/year over life of
agreement

Will be covered by pension plan assets (new to this agreement)

These revisions estimated to increase YE 2007 PBO by
$4.3B

Additional $2.8B estimated increase to YE 2010 PBO associated
with pension pass-thru to Independent VEBA








 








	

2007 Labor Contract Pension Summary

Pension changes ($7.1B) comprised of "Traditional" ($4.3B) and VEBA
related ($2.8B) increases

Comparison to prior Contracts:
   Type of Increase   2007 Contract   2003 Contract   1999  Contract
   Basic Benefit Increase (PBO)   $3.5B   $2.1B   $5.4B
   Lump Sums paid from Plan Assets   $0.8B   -   -
      Total "Traditional" Increases   $4.3B   $2.1B   $5.4B
   VEBA Related (PBO impact 1/1/2010)   $2.8B   -   -
   TOTAL PBO Increase   $7.1B   $2.1B   $5.4B
   Lump Sums paid from Cash   -   $0.9B   $0.7B
   TOTAL Pension Consideration   $7.1B   $3.0B   $6.1B

36

Note: VEBA related PBO not recorded until implementation date of Independent VEBA.
2007 amounts assume 5.9% discount rate, which may differ from market rates in
2010, that will be used to measure PBO.








 








	

Funded Status Projection

FAS 87 pro-forma funded status for Hourly Plan
(using 5.9% discount rate and assumed asset returns):

37








 








	

Agenda

2007 Agreement Overview

Retiree Health Care / Independent VEBA

Two-Tier Wage Structure

Other Operating Changes

Financial Summary

38








 








	

U.S. Hourly People Cost (Expense)
        2003    2004    2005    2006    2007 Est.
    Traditional    12.8    12.8    12    10.2    8.6
    Legacy    5.6    3.2    3.8    2.4    1.5
    Total    18.4    16.1    15.8    12.6    10.1


39

2008 - 2011

Health care cost shifts
to Independent VEBA

Adjust workforce levels

Transition to Tier II

Restructuring costs

Significant Cost
Reduction Expected








 








	

Financial Summary

40

Believe new labor agreement significantly reduces GM's
manufacturing cost gap to competitors

Current VEBA and well-funded pension plan provide
flexibility to fulfill obligations within contract

Independent VEBA transfers responsibility and risk
associated with future UAW retiree health care costs away
from GM starting in 2010

New contract and labor demographics provide opportunity
for significant, operating-related, positive cash flow and
earnings

Will work with UAW leadership to determine appropriate ways to
implement sourcing agreements and transition non-core portion
of workforce