DETROIT -- Negotiators for the United Automobile Workers and General Motors have agreed on the framework for a health care trust, GM's key demand in talks on a new contract, people with direct knowledge of the private discussions said yesterday.
But the two sides face a long weekend of bargaining on other matters, such as pay and job guarantees, before negotiations are completed, they added.
GM and the UAW have tentatively sorted out the details for a voluntary employee benefit association. The trust would allow GM to get its $55 billion liability for health care coverage for workers, retirees and their families off its books.
The apparent agreement on the trust came after the two sides had set aside discussions earlier in the week amid disagreements over how it would be financed and how much GM would be willing to invest in it.
But the deliberations resumed after the union summoned senior financial advisers from Lazard Ltd. in New York on Wednesday. They spent hours in meetings with GM officials and with union leaders, mapping out ways the trust could be structured.
The proposed trust would be financed primarily with cash and some GM stock, these people said. But it is not likely to contain contributions from GM's pension plan, even though it is overfunded, they added.
The total amount, expected to be in the tens of billions of dollars, will be calculated after bargaining on other issues is finished, these people said.
"Every little percentage, every dollar is really more meaningful, because they're really very close," said Gary N. Chaison, a professor of industrial relations at Clark University in Worcester, Mass.
Such voluntary trusts are financed at a discount to the liability, with investments generally ranging between 50 percent and 70 percent. The greater the funding, the less risk the union faces.
UAW President Ron Gettelfinger is said to have been hesitant to agree to finance the trust with stock or pension assets. For one thing, they are riskier than cash, and GM cannot guarantee how its shares or pension investments will perform over decades.
For another, GM workers, whose approval is necessary, might easily balk at the idea of anything that puts a portion of their medical benefits in jeopardy. Some union members have already stressed that point in arguing against the trust.
But a trust would be protected in Chapter 11 bankruptcy, unlike pensions, which can be terminated and replaced with less-expensive plans.
GM's contract with the UAW expired a week ago and has been extended on an hour-by-hour basis while talks continued. That gives the union the leverage to call a strike at a moment's notice, a threat that has been made several times during what has been described as an often-emotional week of bargaining.
Contracts at Ford Motor Co. and Chrysler LLC have been extended indefinitely.