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GM, UAW Contract Talks Push on, Key Issues Remain

Negotiators for the United Auto Workers union and General Motors broke off contract talks on Tuesday night and prepared to return to the bargaining table on Wednesday as the union cautioned it could be forced to set a deadline if progress stalled.

A Chevrolet dealership in Loveland, Colorado.
David Zalubowski
A Chevrolet dealership in Loveland, Colorado.

GM and UAW negotiators broke off their talks on Tuesday at around 9 p.m. ET and prepared to return to the bargaining table on Wednesday morning, a person familiar with the talks said.

UAW President Ron Gettelfinger and Vice President Cal Rapson, who are leading the union negotiations with GM, sent letters to their members on Monday that said the union had made progress, but several key issues remained unresolved, sources who have seen the letter told Reuters.

The letter was signed by Gettelfinger, Rapson and other members of the union's bargaining team, said the sources, who requested anonymity.

Since Monday, bargaining has shifted into a deliberative and slower-moving phase as both sides stepped away from the kind of round-the-clock sessions that the automakers and the union have used in the past to hasten a deal.

One person familiar with the talks said a resolution appeared several days away as of Tuesday. That marked a change in tone from Sunday when union local officials expressed hope that the two sides were on the verge of a tentative contract.

But a local UAW official said the talks were far more complicated this time around than they had been in past contract rounds. "The issues are so complex," said Eldon Renaud, president of UAW Local 2164 in Bowling Green, Kentucky, who receives intermittent updates. "They said it's
just the underbrush that's been taken care of, the main issues remain."

GM Chief Executive Rick Wagoner, who has been actively involved in negotiations, canceled an appearance on Tuesday in Washington, D.C., at a U.S. Commerce Department summit on competitiveness, a GM spokesman said.

The UAW agreed to extend its contract with GM on an hour-to-hour basis on Friday just as it was due to expire.

"Progress has been made in many areas, but there are still several major issues that must be resolved by the parties," UAW Local 1853 in Spring Hill, Tennessee, said in a taped message to members.

The outcome of the contract talks is seen as crucial to efforts by the three Detroit-based automakers -- GM , Ford Motor and Chrysler -- to recover from combined losses of $15 billion last year and sales difficulties that have driven their slice of the U.S. market below 50%.

"I really hope they take their time because there are so many issues that affect so many people. I'd like to see them not be too hasty," Renaud added.

That sentiment was echoed by other local UAW presidents on Tuesday, who were visiting the plants to brief members on the international's latest update on the talks.

Representatives from the UAW and GM declined to comment on the content of the private talks.

The union has indicated a willingness to agree to a cost-saving fund for health care and lower wages for new hires, but has insisted it needs job-security provisions in return, a person familiar with the union's stance said on Monday.

UAW's Rapson has told GM that without a commitment to maintain U.S. factory jobs by the top U.S. automaker, he will not be able to get other changes it is seeking ratified by the union's membership, the person said.

Any tentative pact would have to be ratified by a majority of GM's 73,000 union-represented workers.

GM, Ford and Chrysler said before talks began that they were seeking sweeping concessions from the UAW to close a cost gap with Toyota Motor they say amounts to more than $30 per hour for the average factory worker.

Goldman Sachs analyst Robert Barry said it appears likely that GM will get significant concessions out of the UAW talks.

"In particular, a deal to address GM's retiree health-care liability seems to be in the offing," Barry said in a note on clients on Tuesday.

The early stages of the labor talks focused on a 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.

Wall Street analysts have been optimistic GM would clinch a deal to slash health-care costs totaling $4.8 billion in 2006. GM's unfunded liability for such costs has been estimated at more than $50 billion.

GM and UAW had discussed 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.