Talks with union leave GM upbeat

Optimism grew over the weekend that General Motors and the United Auto Workers union were nearing agreement on a landmark labour contract that would help make the Detroit carmaker more competitive with its Asian rivals.

The two sides have met every day, including weekends, since the UAW’s contract with GM and the other two Detroit-based companies, Ford Motor and Chrysler, expired on September 14. The negotiations cover about 80,000 workers and 432,000 retirees. Union branches were told to prepare for a strike at the time the contract expired, but such talk has since died down.

The UAW’s president, Ron Gettelfinger,and its chief GM negotiator Cal Rapson said in a message to members on Friday afternoon: “We are continuing to make progress . . . however, we are pushing to accelerate the negotiating pace at all levels.

“It is our desire to reach an agreement without a strike and we have demonstrated this by staying at the bargaining table up to this point. We do not take your patience for granted, and GM should know not to take the patience of your bargaining committee for granted either.”

The two sides had reportedly agreed by Saturday evening on the framework for a vast union-managed fund, known as a Veba (Voluntary Employees’ Beneficiary Association), that would take over most, if not all, of GM’s $55bn in healthcare liabilities. Talks were continuing Monday.

The fund would insulate GM from spiralling healthcare costs, especially for retirees. Retiree benefits make up more than half of the $20 per hour gap between wages and benefits paid by the Detroit carmakers and their foreign rivals.

Analysts have estimated that GM could contribute $30bn-$35bn to the fund, financed by a combination of cash, equity and surplus pension-fund assets.

But union leaders are in a difficult position. While they recognise the Detroit industry’s financial troubles, making concessions risks a backlash among members, who must ratify the new contracts.

Talks with Ford and Chrysler are on hold pending the outcome of negotiations with GM. The union is likely to use a settlement at GM to extract similar concessions from the other two.

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