GM, Union Resume Talks, Still Apart on Health Costs


General Motors and the United Auto Workers union resumed negotiations Friday after adjourning talks in the early hours as 73,000 GM workers returned for another day of work without a new contract.

Talks adjourned around 12:45 a.m. ET on Friday, GM spokesman Tom Wickham said, as the two sides concluded a bargaining session of more than 14 hours.

The largest U.S. automaker and its major union have been locked in intensive labor negotiations since Sept. 14, when the UAW's past contract expired.

The talks have failed to reach a breakthrough on the thorny issue of health care costs and could continue into next week, people briefed on the progress of the negotiations told Reuters Thursday night.

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 share of the U.S. market below 50%.

Stephen Roell, incoming chief executive of auto parts supplier Johnson Controls told Reuters on Thursday that cutting labor and benefits cost was "critical to the survival" of the Detroit-based automakers as it would allow them to invest more in developing technologies and vehicles.

Since talks started two months ago, negotiations have hinged on how fully GM should have to fund a special trust -- known as a voluntary employee beneficiary association, or VEBA -- in exchange for clearing an unfunded liability, estimated at about $50 billion, from its balance sheet.

For GM, key issues include cutting health-care costs and establishing a "two-tier" wage system that would allow the automaker to cut wage and pension costs as its aging work force retires, people familiar with the talks have said.

To offset those concessions, the UAW has sought job security guarantees and a substantial signing bonus for the GM workers it represents, according to these sources, who requested anonymity because they were not authorized to discuss the private discussions.

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

UAW President Ron Gettelfinger and Vice President Cal Rapson, who are leading the union negotiations with GM, cautioned earlier this week the union would set a firm deadline for talks to conclude if progress stalled.