GM, union call break, talks to resume on Sep 16

Detroit, Sep 16: Negotiators from General Motors Corp and the United Auto Workers union made progress toward a new contract before taking a break late Saturday, people familiar with the talks said.

GM and the UAW will return to the bargaining table on Sunday morning for the fourth day of a marathon session aimed at clinching a contract for the largest U.S. automaker.

The union had agreed to extend its now-expired contract on an hour-to-hour basis late Friday.

That move and subsequent developments stoked expectations the two sides were nearing a deal after eight weeks of bargaining and avoided the threat of an imminent and potentially crippling strike.

The early stages of the labor talks had focused on a complex plan to allow GM to cut billions of dollars in expenses for retiree health care by paying into a new UAW-aligned trust fund, according to people close to the talks.

By Saturday afternoon, some of the bargaining teams poring over other areas of the contract were making progress, although major issues remained, said one person close to the talks.

UAW local leaders, who had readied workers to walk pickets on Friday night, closed up union halls on Saturday after getting word negotiations could take all weekend.

GM and the UAW declined to comment on the talks, which affect more than 73,000 workers and almost 270,000 retirees.

Five GM plants in the United States were operating on Saturday with more than 70 union-represented facilities set to shift back into operation on Monday.

''I've thought we're most likely to get a deal Sunday night,'' said IRN Inc. analyst Erich Merkle. ''Both sides have to believe that they can get a deal to continue these negotiations through the weekend.'' Despite the signs of progress, the contract talks have taken some unexpected turns.

After hitting an apparent snag in talks, the UAW 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 quickly signed contract extensions with the UAW, clearing the way for their factories to keep operating.

STRIKE SEEN UNLIKELY 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 an economy where less than 10 percent of all private workers remain unionized.

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 an eight-week walkout shut down almost all of the automaker's assembly plants, causing sales to plummet. GM never recovered its pre-strike U.S. market share of 31 percent and has lost about 7 percentage points since.

''We need to work together,'' said GM electrician Penny Shumaker, who was waiting for developments outside a Flint, Michigan, union hall. ''GM is not the enemy -- Toyota is. They're the ones we have to watch out for.'' Wall Street analysts have been optimistic GM would clinch a deal to slash health care costs totaling $4.8 billion in 2006.

Like other U.S. industrial companies and local governments, GM has struggled with its obligation to pay for increasingly expensive health care to a growing pool of retirees.

Facing health care costs rising at 10 percent or more, GM has offered the UAW a chance to take a large up-front payment that would set up a new trust fund in exchange for being released of future responsibility for retiree care.

GM's unfunded liability for such costs has been estimated at over $50 billion.

GM and UAW have been sparring over how fully GM should be required to fund a special trust -- known as a voluntary employee beneficiary association, or VEBA -- in exchange for clearing that overhang from its balance sheet.

Two union officials familiar with the UAW's stance said the union has sought a job security guarantee in exchange for acceptance of the VEBA.

Reuters
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