Labor has taken a lot of the blame for the current state of the U.S. auto industry, and to a degree, rightfully so. But without the labor, no cars can be built, so General Motors has been hard at work on a new contract with the UAW, which has finally been approved by 74% of union locals.

Today GM announced that the new deal would close the competitive gap the company faces against non-labor car manufacturers in the United States - essentially all of the foreign car companies.

The core elements of the plan that will help to reduce the per-unit labor cost are re-worked benefits and retirement plans, which will help GM manage its large retired employee population as well as its current employee wage and benefit rates. The agreement affects about 54,000 workers across 46 U.S. facilities.

Another element often forgotten - by the press at least - in the competitive gap analysis is GM's (and the domestic carmakers in general) long-standing retirement plans and long history of employment.

Carmakers like Toyota, Honda and Nissan build many thousands of cars here each year, but they don't have the history to have the retiree overhead that GM, Ford and Chrysler have. And the cost of that overhead adds up quickly, especially under the previous UAW agreement.

"The leadership demonstrated by UAW president Ron Gettelfinger and UAW vice president Cal Rapson, and the hard work from the members of the GM and UAW negotiating teams, resulted in an innovative agreement that will enable GM to be fully competitive and has eliminated the gap with our competitors," said Diana Tremblay, vice president of GM's Labor Relations. "We very much appreciate the support of our employees and retirees. Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks."

The new deal also improves the situation for any new company that might emerge from bankruptcy should GM file its expected Chapter 11 pleading on Monday. Today's announcement of the planned re-opening of an idled UAW assembly plant for the construction of a new small car in the U.S. is also a probably concession of the deal, offering more employment for UAW members now that they've sacrificed benefits and wages to get the new contract pushed through.