UPDATE 2-GM, UAW make progress, union shuns strike


(Recasts throughout; updates with comments from UAW President, union dissident, detail from union locals; changes byline)

By Kevin Krolicki

DETROIT, Sept 21 (Reuters) - Negotiations between General Motors Corp and the United Auto Workers union were making progress on Friday, UAW President Ron Gettelfinger said, adding that the union wanted to see faster progress and a resolution without a disruptive strike.

"We are continuing to make progress; however, we are pushing to accelerate the negotiating pace at all levels," Gettelfinger said in an e-mail to local union leaders sent Friday afternoon.

"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," Gettelfinger said.

Gettelfinger and his chief deputy for GM negotiations, Cal Rapson, have shunned the media as contract talks with GM continue a week past the expiration of the union's contract for some 73,000 workers at the top U.S. automaker.

The last update from Gettelfinger and Rapson on the closely watched contract talks had been on Monday, when the union leaders said the UAW could be forced to set a deadline for the talks to conclude if progress in negotiations stalled.

In Friday's email, which was posted as an update to union members by a UAW local in Oklahoma, Gettelfinger said the UAW was still weighing its options on an "hour-by-hour basis."

"We want you to know ... that we do not take your patience for granted, and GM should know not to take the patience of our bargaining committee for granted either," he said.

In contrast to the tense mood of a week earlier, when UAW halls were jammed with workers ready to begin picketing GM factories at a moment's notice, many union locals closed for the evening on Friday as talks in Detroit rolled on.

High level GM and UAW officials have been in contract talks for 18 days straight. The talks kicked into high gear a week ago when the union named GM as its strike target just before a 4-year deal on wages and benefits was set to expire.


The outcome of the contract talks is seen as crucial to efforts by the three Detroit-based automakers -- GM, Ford Motor Co and Chrysler LLC -- 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 percent.

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.

Despite reports through the week that the contract talks were stalling or on the verge of a breakdown, both sides have remained at the bargaining table.

"In any negotiations, things change from one day to the next," Gettelfinger said in his email to UAW local leaders, adding that the fluid nature of the talks meant that it was hard to provide frequent updates.

As of Thursday, the talks had failed to reach a breakthrough on the thorny issue of health-care costs and seemed set to continue into next week, people briefed on the progress of the negotiations said Thursday night.

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 talks.

Representatives from the UAW and GM have declined to comment on the content of the talks under standing orders from both negotiating teams.

GM spent some $4.8 billion on health care last year. Wall Street analysts have been optimistic that GM will emerge from the contract talks with a deal that could cut some $3 billion in such costs annually by shifting responsibility for retiree health care to a UAW-aligned VEBA.

Shares of GM rose 47 cents, or 1.4 percent, to close at $34.94 on Friday. The stock has gained almost 20 percent since Sept. 10 on expectations that the UAW talks will produce deep savings for GM as it restructures and attempts to make its U.S. operations profitable again.

GM, Ford and Chrysler are seeking sweeping concessions from the UAW to close a labor cost gap with Toyota Motor Corp and other Japanese automakers operating in the United States that they say amounts to more than $30 per hour for the average factory worker.

Without such concessions from the UAW, the automakers have said they would have to close more U.S. factories and shift more production to lower-cost economies.

(Additional reporting by Poornima Gupta)



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