Negotiators for the United Auto Workers and General Motors Corp. have resumed contract talks, but significant issues remain and a deal wasn’t expected to be reached Saturday, according to a person briefed on the negotiations.
The person, who spoke on condition of anonymity because the talks are private, also confirmed that GM Chairman and CEO Rick Wagoner is actively involved in the talks.
Despite the differences that remain, the two sides appeared to be making progress and at least temporarily avoiding a strike by GM’s 73,000 U.S. auto workers. Various union subcommittees — which deal with issues such as pensions, benefits and job security — have wrapped up negotiations, according to the person.
On Friday night, factories across the country were mobilized for a possible strike starting at midnight, when the UAW’s contract with GM expired.
But local union leaders said a call from UAW leadership telling them to walk off their jobs never came.
Instead, negotiators agreed to bargain hour-by-hour as the workers stood by and a midnight contract expiration deadline passed. By early Saturday, local leaders said they were told to go home and wait for updates from Detroit.
The talks restarted about 11 a.m. Saturday after breaking off for the night at 4:30 a.m., GM spokesman Dan Flores said.
Crucial to GM's survival
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.
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 to restructure by shedding workers and closing factories.
The central issue in this year’s talks 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.
Automakers want to pay billions into a union-run trust that would pay retiree health care bills, and both sides have been wrangling over how much the automakers would contribute to the trust, according to people who have been briefed on the talks.
A local UAW leader said early Saturday the union also was seeking guarantees for future work at U.S. plants in exchange for taking over health care. The local leader and the other people who were briefed on the talks spoke on condition of anonymity because the talks are private.
Potential impact on stock prices
If the union takes on the health care costs, the companies could remove a huge liability from their books — potentially improving their credit ratings and stock prices.
Industry analysts have said they expect GM to offer the union 65 to 70 percent of the retiree health care obligation.
The UAW chose GM as its lead company and possible strike target Thursday. Typically, the union negotiates a contract with the lead company and then presses the other two to accept the same terms. Ford and Chrysler have extended their contracts indefinitely, although talks were continuing and either side could break off the contract extension with three days’ notice.
Ahead of the deadline, some workers prepared picket signs, while others watched late-night television or just chatted.
“I’m waiting patiently. We’re in it for the long haul,” said Douglas Rademacher, president of UAW Local 602 near Lansing. “We’re planning for the worst, hoping for the best. We support the international union 100 percent.”
The UAW still could strike GM, or the two sides could continue negotiating and workers would be covered by the terms of the old four-year contract.