GM, UAW to Continue Negotiations on New Contract

Negotiators for the United Auto Workers union and General Motors were scheduled to resume discussions later on Tuesday as GM factory employees went to work as usual on the fourth day without a new contact.

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

Both GM and the UAW were making progress in the negotiations, but a lot of difficult issues remained to be resolved, a person familiar with the talks said on Tuesday, suggesting that negotiators appeared to be moving toward a few more days of bargaining.

GM and the UAW adjourned around 9 p.m. on Monday after about 10 hours of talking.

Bargaining appeared to have taken a cautious note with negotiators on both sides taking their time on issues. One local UAW official said talks were very complex this time around.

"The issues are so complex," said Eldon Renaud, president of UAW Local 2164 in Bowling Green, Kentucky, who gets intermittent updates on the ongoing negotiations. "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 Commerce Department summit on competitiveness, a GM spokesman said on Tuesday.

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

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 percent.

"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.

A UAW spokesman could not immediately be reached while representatives of GM declined to comment on the content of the private talks that began eight weeks ago and kicked into high gear on Friday.

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 Vice President Cal 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 between GM and the UAW would have to be ratified by a majority of GM's 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 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.

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.

Shares of GM have rallied 20% since Sept. 10, on expectations for a cost-saving labor deal.