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Talks continue as automaker seeks contract that cuts health-care costs
By Jeff Green and Bill Koenig Bloomberg News Service
Published on Wednesday, Sep 19, 2007
General Motors Corp. and the United Auto Workers bargained for a fourth day after their previous contract expired as the automaker seeks a cost-saving health-care accord. The UAW told members it might set a new deadline.
GM wants the UAW's approval to offload future retiree medical obligations to a union-run fund. The two sides have met almost nonstop since last Thursday, when the UAW labeled GM a ''strike target'' and delayed talks with Ford Motor Co. and Chrysler LLC to focus on the largest U.S. automaker.
''We continue to believe that this health-care deal should create value,'' Deutsche Bank analyst Rod Lache wrote in a report Tuesday, estimating it might cost GM $32 billion to $35 billion to shed $50 billion in long-term liability.
Talks resumed Tuesday morning after more than 12 hours of bargaining Monday, GM spokesman Dan Flores said. GM and the union have been negotiating under an hour-by-hour contract extension since the scheduled expiration last Friday.
''We have made progress in many areas of the discussions with GM, but there are several major issues separating the parties that must be resolved,'' UAW President Ron Gettelfinger and Vice President Cal Rapson wrote to union executives in a letter dated Monday.
UAW spokesman Roger Kerson didn't return phone calls for comment about the letter, a copy of which was obtained by Bloomberg News.
''We do not take your patience for granted and recognize that the negotiations process must accelerate in an expeditious manner or we will be forced to establish a firm deadline,'' the UAW officials wrote, without giving a time frame.
GM rose 54 cents to $35.77 in trading Tuesday. Ford added 14 cents to $8.42. A Bear Stearns & Co. analyst said Monday that Ford, the second-biggest U.S. automaker, might benefit from a GM-UAW contract.
GM, Ford and Chrysler each seek to form a so-called ''Voluntary Employee Beneficiary Association,'' or ''VEBA,'' to take retiree health-care obligations off their books.
GM offered to cap UAW members' out-of-pocket costs to help gain approval for such a fund, three people with knowledge of the matter said. GM also proposed a freeze in cost-of-living raises and base wages, said the people, who asked not to be identified because they weren't authorized to speak publicly.
''It's really come to crunch time,'' said Gary Chaison, a professor of industry relations at Clark University in Worcester, Mass. ''The union is trying to patch together something that members will ratify.''
Any agreement is subject to a ratification vote by UAW members at GM. The union represented 73,454 active employees at GM when talks began in July. Once an agreement at GM is place, the union will seek a similar contract at Ford and Chrysler.
''We still need to be vigilant. We still need to be prepared for a strike, and we are,'' said David Green, president of UAW Local 1714 at a GM stamping plant in Lordstown, where Chevrolet Cobalts are produced. ''At the same time, they're continuing to talk and move forward. I take that as a positive sign.''
General Motors Corp. and the United Auto Workers bargained for a fourth day after their previous contract expired as the automaker seeks a cost-saving health-care accord. The UAW told members it might set a new deadline.
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