Detroit, Sept 15: General Motors Corp. and the United Auto Workers union called a break in contract talks in the early hours on Saturday, saying they would return to the bargaining table later in the day, according to a person familiar with the talks.
Earlier, the union extended the current labor contract with the largest U.S. automaker as long as both sides were making progress in negotiations. The move stoked expectations the two sides were nearing a deal after eight weeks of talks and avoided the threat of an immediate strike against GM.
In another sign of progress, GM's Chief Executive Rick Wagoner sat down at the bargaining table for the first time during the marathon negotiating session that began Friday morning, a source close to the talks said.
UAW local officials said the rolling contract extension suggested that the two sides were making progress.
''They are still talking, so that means it's good news. I think it is either a contract or an extension. I don't think it'll be a strike,'' said Chris ''Tiny'' Sherwood, president of UAW Local 652, who represents GM workers at a Cadillac assembly plant in Lansing, Michigan.
About a hundred GM workers and family members waited anxiously in a UAW hall in Flint, Michigan, in the early hours Saturday, ready to walk pickets at a nearby engine plant if a strike was called. Similar scenes played out near GM's more than 80 unionized facilities across the United States, union officials said.
GM and UAW declined comment on the progress of the talks which will affect over 73,000 hourly workers and almost 270,000 blue-collar retirees.
The UAW on Thursday singled out GM as its ''strike target,'' a term it had avoided in more collegial negotiations in 2003.
Rival automakers Ford Motor Co. and privately held Chrysler LLC signed contract extensions with UAW, clearing the way for their union-represented workers to continue working.
But strike preparations began on Friday at GM plants across the United States after the UAW's lead negotiator with GM, Cal Rapson, told members a strike ''might well be unavoidable'' in the absence of ''serious movement.'' The Detroit-based automakers lost more than $15 billion in 2006 and have cut more than 80,000 jobs through buyouts driven by plant closings. Given the industry's weakness, analysts have viewed a strike as unlikely.
The last major UAW strike against GM was in 1998 when a 59-day walkout at two GM parts plants caused shortages that eventually shut down almost all of the automaker's assembly plants and caused sales to plummet.
GM never recovered its pre-strike U.S. market share of 31 percent, and the automaker has lost about 7 percentage points since.
Ratcheting Up The Pressure
Wall Street analysts have been optimistic that GM would clinch a deal that slashes health care expenses that totaled $4.8 billion last year.
Membership in the UAW has dropped to about 540,000, just over a third of its peak in 1969, reflecting the toll foreign competition has taken on U.S. automakers.
Despite its waning size and influence, the UAW has historically negotiated pay and benefit packages considered the gold standard for organized labor in a U.S. economy where less than 10 percent of all private workers remain unionized.
The contract talks between the UAW and GM have been dominated by complex negotiations over the idea of cutting billions of dollars in GM's health-care expenses by funding a new stand-alone trust fund to pay for retiree care.
The two sides continue to spar over how many billions of dollars the automaker would offer for such a fund -- known as a voluntary employee beneficiary association, or VEBA -- and how large a discount the UAW would accept.
Two union officials familiar with the UAW's stance said the union was seeking a job security guarantee -- including a commitment that GM would allocate new products to its existing factories -- in exchange for accepting a VEBA.
But Gregg Shotwell, a veteran GM employee and UAW dissident, said the union would face a ''hard sell'' in convincing rank-and-file workers to ratify a contract including a fund earmarked for retiree health care.
''The UAW has lost credibility over job security,'' he said.
''Nobody believes it anymore.''