GM, UAW resume negotiations, but significant hurdles remain

Sunday, September 16, 2007
United Auto Workers members Mike Freeman, left, and Roger Kendrick, right, who have both worked at General Motors Corp. for 35 years, got picket signs ready Friday in case of a strike at UAW Local 599 in Flint, Mich. Bargaining between the UAW and GM continued early Saturday past a midnight contract deadline, a local union leader said, as GM workers across the country prepared for a possible strike. (CHARLES V. TINES ~ The Detroit News)

DETROIT -- General Motors Corp. and the United Auto Workers made progress at the bargaining table Saturday but still faced significant hurdles and weren't expected to agree on a new contract until later in the weekend.

Union subcommittees -- which handle issues such as pensions, benefits and job security -- have wrapped up talks, but an agreement wasn't expected Saturday because negotiators were still dealing with some key issues, according to a person who was briefed on the negotiations.

The person, who spoke on condition of anonymity because the talks are private, also confirmed that GM chairman and chief executive officer Rick Wagoner is actively involved in the talks.

Talks were ongoing Saturday evening, GM spokesman Tom Wickham said.

Several local union officials who have been in touch with bargainers said the outstanding issue is retiree health-care expenses. GM wants the union to take over responsibility for retiree health care costs using a company-funded trust and the union was asking for job guarantees in exchange for taking on the costs. The local officials spoke on condition of anonymity because they weren't authorized to speak publicly about the talks.

GM's 73,000 U.S. auto workers were without a contract as of midnight Friday and could go on strike at any time if negotiations break down. In Spring Hill, Tenn., hundreds of union members were at the local UAW hall Saturday, waiting for news.

"Members are very apprehensive. These are historic times and everybody realized that," said UAW Local 1853 president Mike O'Rourke. Workers have faith in the UAW's negotiating team, he added.

Some other union halls were quiet as local leaders prepared for membership meetings or awaited word from the UAW. In Lansing, UAW Local 652 president Chris "Tiny" Sherwood said he was keeping the hall open and making sure members were ready if a strike was called.

A message left Saturday for UAW spokesman Roger Kerson was not returned.

Five of GM's 18 U.S. assembly plants were operating Saturday, Wickham said, including two plants in the Lansing area and one each in Flint, Wentzville, Mo., and Lordstown, Ohio. Only two plants in Flint and Lansing were scheduled to be running Sunday.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said tensions often run high when the union and the automakers dive into the details.

"If there aren't some raised voices and sweaty palms, you're not doing your job," he said.

But Cole said he believes there's little chance for a strike. A short strike might not have much effect on GM but could backfire against the UAW if the public believes the union is asking for too much from a company that is struggling, Cole said.

"They've got to be very careful of anything that could hurt their public image," he said.

This year's contract talks are considered crucial to the survival of GM and its U.S.-based counterparts, Ford Motor Co. and Chrysler LLC. Ford and Chrysler were also in talks over the weekend, but they extended their contracts with the UAW indefinitely Thursday after the UAW named GM the lead company in the negotiations. Once the union wraps up talks with GM it will try to implement similar agreements at Ford and Chrysler.

All three companies want to cut or eliminate what they say is about a $25-per-hour labor cost gap with their Japanese competitors. The gap, the companies say, is one reason why the Detroit Three collectively lost about $15 billion last year, forcing them all to restructure by shedding workers and closing factories.

The UAW is also fighting for its survival. The union represented 302,500 active workers during the last contract talks in 2003. This year, that number fell to 180,681.

The central issue this year has been skyrocketing health care costs. Automakers have been pushing the union to take over responsibility for retirees' health care, an unfunded expense estimated at more than $90 billion for GM, Ford and Chrysler. The automakers want that liability off their books in order to improve their stock prices and credit ratings.

Both sides have been wrangling over how much the automakers would contribute to the trust. In a note to investors Friday, Lehman Brothers analyst Brian Johnson said the automakers want to fund the trust at 65 to 67 percent of their total health care obligation. But Johnson said he believes automakers will agree to 75 percent because they don't want strikes.

Johnson also said he expects the union to compromise and accept a two-tier wage system that pays newer employees less money in order to ensure continuing membership and work at U.S. plants.

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