Tension grows as UAW-GM talks seek to avert strike

The Baltimore Sun

DETROIT -- While leaders of the United Auto Workers and General Motors Corp. may essentially agree on the solution to long-term health costs, a contract agreement eluded negotiators last night.

People briefed on the matter indicate the two sides are down to the final multibillion-dollar decisions on matters such as establishing a retiree health care trust - known as a voluntary employee beneficiary association, or VEBA - and job-security issues, including commitments for plant investments in the United States.

Many experts remained optimistic that something could happen at any time.

While work continued last night, a person close to the talks said an agreement appeared to be at least a day away, with significant work remaining.

"I think they are reasonably close," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

On Thursday, the UAW picked GM as its lead negotiating partner, meaning the automaker could face a strike if negotiations break down.

But this is considered preferable to having to work with a contract that is better suited to Ford Motor Co. or Chrysler LLC.

Difficult sell

Cole said he thinks there is an agreement in principle and that the UAW does not want to strike but that the major changes at stake in the new contract will be difficult to sell to the UAW rank-and-file.

"The one question is: How do you optimize this from the drama standpoint to get the return?" Cole said. "This is not a conventional, easy-to-ratify agreement that they are going to come up with."

Harley Shaiken, a labor expert at the University of California at Berkeley, disagreed with the idea that concerns about ratification are slowing down the talks.

The union leadership is focused simply on getting the best deal possible for members, he said.

"The mood has clearly gone sour. ... A lot of the friction is whether or not there will be adequate job guarantees coming out of this," Shaiken said. "It has bogged down just by the time it has taken in a way that both sides would have preferred to avoid."

People familiar with the talks say the parties are negotiating the size of GM's retiree health care obligation, what percentage of that obligation GM would pay into a trust, what assets it would use to support the trust, over what period the company would contribute assets and whether the automaker would provide further financing if health care costs grew faster than expected.

They're also bargaining over what other commitments - for such things as job security and active worker benefits - the company would grant in exchange.

And in the end, it's not enough for the two parties' leaders to agree: The UAW must win approval from a majority of its members to ratify the contract.

"If they don't have something they can get ratified, this whole thing is pretty academic," Cole said.

The new GM contract would cover about 73,000 active UAW members and affect an additional 340,000 retirees and surviving spouses.

It also would likely be used as a guide for new contracts for UAW workers at Chrysler and Ford, where talks continue, though on a more subdued scale.

The UAW chose to extend its contracts with Ford and Chrysler indefinitely while it pursues a new deal with GM.

Either party can cancel the extensions with three days' notice.

The GM contract, on the other hand, is being extended hour-by-hour as the parties work to reach a tentative agreement.

Union members say they expect an agreement to include the risky proposition of the union taking responsibility for health costs for retirees. The trade-off might be a stake in the company and larger than usual signing bonuses for workers.

Five-figure bonuses

Rumors on plant floors run rampant, with hope of five-figure signing bonuses.

One local leader said the negotiators also are bargaining for a cap on active worker health cost contributions and a provision through which GM would contribute more to the trust if health costs rise higher than projected.

"This is a new concept," Richard Block, a professor of labor relations at Michigan State University, said of the trust. "It's an awful lot to do in a short amount of time."

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