A tentative contract between General Motors Co and the United Auto Workers union adds U.S. factory jobs and replaces traditional wage increases with profit-sharing, union officials said on Tuesday.

The union, confident that rank-and-file UAW members will support the GM deal, plans to resume intensive negotiations with Chrysler Group LLC before GM workers complete a ratification vote expected by next Thursday, people with direct knowledge of the discussions said.

The GM four-year deal covering 48,500 workers represents the first new contract for American auto workers since the Obama administration's bailout of GM and Chrysler in 2009.

The deal has something for both sides. It preserves or adds 6,400 U.S. union jobs, most at lower wages. The profit-sharing provisions also give GM flexibility on labor costs it has never had before.

GM emerged from bankruptcy saying it had cut costs to the point that it would break even at the trough of any recession. The proposed contract would not dent GM's profitability on that basis, a person familiar with the terms said.

The talks in Detroit have played out at a time of increasing uncertainty about the strength of U.S. auto sales and the risk of another recession.

From the company's perspective, they mostly kind of held on and changed the game from fixed increases to lump sums, said Art Schwartz, a former GM labor official and now president of consultancy Labor and Economic Associates in Ann Arbor, Michigan.

GM has reserved detailed comment on the pact until it is ratified. The union on Tuesday released highlights of the agreement.

UAW President Bob King said he would take the basic framework of the GM deal into talks with Chrysler and Ford.

King and UAW Vice President Joe Ashton said the biggest win for the union was the pledge of new factory jobs at GM, the top U.S. automaker. The UAW aspires to exceed the 6,400 U.S. jobs either retained or created during the life of the contract. Ashton said that the union aspires to have as many as 60,000 UAW-represented GM workers in four years.

We're bringing a lot of work that left this country back into this country, King said.


Shares of GM fell 2.7 percent to $22.43 Tuesday. Ford shares fell 1.1 percent $10.42.

Entry-level workers would receive base wage increases and improved health benefits, and all workers would receive a $5,000 signing bonus and other lump-sum payments of at least $6,500 over the life of the four-year contract.

But GM also made gains, analysts said. The contract does not saddle the company with a recurring wage increase for the veteran workers that make up 95 percent of its payroll.

The proposed deal also does not increase pension payouts, an important win for a company where retired workers outnumber the active payroll by 10 to one.

The union got two things that they wanted, more money in their members' pockets and more members, said Kristin Dziczek, labor analyst at the Center for Automotive Research.

Four years ago, after short strikes at GM and Chrysler, the UAW deals with the automakers established trust funds for retiree healthcare and lower wages for new workers. GM and Chrysler workers are barred from striking until 2015 under the terms of the U.S. government bailout.

GM is offering $10,000 buyouts to as many as 17,000 eligible workers if they retire in the next two years. Of that number, about a third are skilled trade workers who could get an additional $65,000 if they retire by March 31, 2012.

As expected, the proposed contract includes commitments for new vehicles at GM assembly plants in Tennessee and Missouri and additional jobs at three Michigan powertrain plants.

The completion of the GM negotiations clears the way for King to turn to Chrysler, which is controlled by Italian automaker Fiat . Contract talks with Chrysler, the smallest of the Detroit automakers, broke off last week on the cusp of an expected agreement.

Chrysler Chief Executive Sergio Marchionne was scheduled to return to Detroit by Tuesday.

The UAW's four-year contracts with all three Detroit automakers expired last week, but terms were extended.

At stake are wages and benefits for about 112,500 unionized U.S. auto workers at GM, Chrysler and Ford, who have gone without a base pay increase since 2003.

The UAW has hoped to use new labor agreements with the Detroit automakers as a springboard to winning first-ever contracts to represent workers at U.S. factories operated by Japanese, Korean and German automakers.

GM shares have lost almost 39 percent of their value since the start of the year. Shares of Ford are down almost 37 percent.

(Additional reporting by Kevin Krolicki and Ben Klayman in Detroit; Editing by Lisa Von Ahn, Matthew Lewis, John Wallace and Carol Bishopric)