Crippling GM Strike Ends

General Motors and union officials have reached a tentative agreement Tuesday to end a crippling eight-week strike at the No. 1 automaker.

GM shares leaped as investors anticipated the news, which was announced after the market closed. The stock closed up 1 1/8 to 74 1/4.

The settlements still need to be ratified by the members of the two striking flint plants, reports CBS News Correspondent Diana Olick. That should take place Wednesday and workers could return to their jobs immediately after ratification.

While union officials generally don't discuss specifics of strike settlements until ratification by members, they did release some details.

GM has agreed to invest the remaining $120 million it promised to invest in the metal-stamping plant in Flint, Mich., where the strike began, in return for productivity improvements.

The automaker also agreed to a "no-sale" agreement regarding the East Delphi parts plant in Flint - which also went on strike - until December 1999 in return for a promise by workers there not to strike again before that date.

GM also won concessions from the union not to strike at four other plants that have been threatening work stoppages.

The strike started in early June at a metal-stamping plant in Flint, Mich., and spread a week later to the East Delphi parts plant across town. Since the two Flint plants make key parts for most GM vehicles, the strike forced GM to shutter nearly all of its North American assembly lines.

The standoff cost GM more than $2 billion in profits, but analysts suggest the company can recover a sizable portion of that through ramped-up production. Still, it will be several weeks before the auto maker is fully back up to speed.

The agreement comes just three days after an independent arbitrator concluded a hearing on whether the strike is legal under the union's national contract with the company.

Worries that the arbitrator might rule against one or the other partly drove both sides back into serious bargaining, analysts say.

Indeed, some analysts suspect the arbitrator has been a guiding force behind the settlement. With an agreement in hand, GM probably would agree to withdraw its complaint, allowing both sides to avoid a potentially embarrassing ruling.

The company sued the UAW two weeks ago in federal court, arguing that the strike is over national issues. Individual plants can strike over local issues, but not national ones.

Still, the settlement is unlikely to prevent future strife between the automaker and union. GM is the least efficient of the big three US auto makers and earns less profit per vehicle, a problem exacerbated by periodic UAW strikes over the past several years.

Wall Street analysts say the company needs to become more productive, in part by the eventual elimination of up to 50,000 jobs.

Not surprisingly, the UAW is loath to see its membership - and influence - dwindle further. They want GM to maintain joband invest more in US plants.

The strike started June 5 after GM removed from the Flint metal plant crucial die-casting equipment used to stamp hoods, fenders and other parts. GM acted to ensure that a threatened strike there did not delay launch of the company's new flagship line of 1999 pickup trucks.

That prompted workers, already upset by GM's decision to delay investment of millions of dollars to modernize the plant, to make good on their threat to walk out. The union also feared that GM wanted to close the plant and ship jobs overseas.

GM says it refused to invest further in the plant because the union declined to change work rules that the company said resulted in the plant losing $50 million a year. Executive said repeatedly during the strike that they would not invest in "noncompetitive" operations.

To put more pressure on GM, workers at the East Delphi workers joined the strike a week later. Most other GM plants soon ran out of parts and had to shut down.

Each side, however, misread the seriousness of the other's intentions, prolonging the dispute. The 53-day standoff was the longest since a 67-day strike in 1970.

Written By Jeffry Bartash