GM-UAW Talks Recess For The Evening
Monday, September 17th 2007, 7:45 am
By: News On 6
DETROIT (AP) _ Contract talks between the United Auto Workers and General Motors Corp. recessed Monday night, slowed so much by the complexity of retiree health care and other issues that a deal could be days away.
Talks were to resume Tuesday, GM spokeswoman Katie McBride said.
Both sides reported progress, but a person who was briefed on the talks said it's taking a lot of time to reach agreement on details and large dollar amounts. The person requested anonymity because the talks are private.
``It's billions of dollars and the security of somebody who's put 30 years into the company on an assembly line, so both sides want to get it right,'' said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues. ``So that's going to slow things down a bit.''
McBride said talks recessed at 9 p.m. Monday after bargainers began meeting about 11 a.m.
GM shares, which rose 15 percent last week, continued to rise throughout the day, bucking a downward trend in the markets ahead of the Federal Reserve's Tuesday decision on interest rates. GM shares gained $1.01, or nearly 3 percent, to close at $35.23.
Ford Motor Co. shares, which rose at a more modest pace last week, also were up after Bear Stearns upgraded Ford and said a deal on health care costs could be even better news for the No. 2 automaker than for rival GM. Ford shares rose 25 cents, or 3.1 percent, to close at $8.28.
Chrysler shares no longer trade on the NYSE since the company was taken over by private equity firm Cerberus Capital Management LP last month.
Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co., said investors should be confident because the two sides appear to be moving closer to a settlement that would avoid a strike. The UAW is negotiating an agreement with GM first and will try to persuade Ford and Chrysler LLC to accept the same terms.
``This labor agreement is monumentally important and would be a big step towards completing the turnaround for GM,'' Hastings said. ``I fully expect them to get a deal done. It's in both of their interests to get something in place.''
But the mood in GM's plants was subdued as workers awaited word on the talks. After a weekend of marathon bargaining, GM workers were on the job Monday at the automaker's 82 U.S. facilities, including assembly and parts plants and warehouses. The UAW represents around 73,000 GM auto workers.
Chris ``Tiny'' Sherwood, the president of Local 652 in Lansing, said workers were calling him to see if they should report for work or picket duty.
Emmett Faulkner, 49, a 30-year veteran of GM, said he wasn't worried about his job because he believes his plant, a transmission facility in Warren, is critical to GM. But he's concerned about GM's plan to turn over retiree health care to the UAW.
``This is our livelihood here, you know,'' he said.
A younger co-worker, 24-year-old Adam Decker, said he quit a management job at an outdoors store in May because the pay was better at the Warren plant. He said the marathon bargaining and talk of strikes is nerve-racking.
``It's a scary situation, but stuff's got to be done the way it's got to be done,'' he said. ``I'm just trying to come into work every day and do my job.''
UAW spokesman Roger Kerson declined to comment on the talks.
In part because of the talks, GM Chairman and CEO Rick Wagoner canceled a Tuesday trip to Washington, where he was expected to discuss energy issues at a Commerce Department event and meet with members of Michigan's congressional delegation.
It was unclear whether Wagoner's decision to stay in Detroit was a sign that an agreement is near. Company spokesman Greg Martin said the change ``reflects the demands of his schedule and the ongoing labor talks. No more, no less.''
GM's four-year contract with the UAW was to expire at midnight Friday. The union extended it on an hour-by-hour basis as the two sides talked through the weekend, including a 16-hour bargaining session Sunday. Ford and Chrysler extended their contracts indefinitely.
Local union leaders have said the main outstanding issues in the talks are retiree health care expenses and whether GM will promise to build new vehicles at UAW-represented factories. GM wants the union to take over responsibility for retiree health care costs using a company-funded trust. The UAW was asking for job guarantees in exchange for taking on the costs.
GM, Ford and Chrysler have a combined unfunded retiree health care obligation of more than $90 billion. GM's unfunded obligation alone is $51 billion. The companies want to get those obligations off their books to improve their financial outlook and boost stock prices and credit ratings. They also want to free themselves of the risk of inflation in health costs.
Peter Nesvold of Bear Stearns said Monday that a health care deal will help GM, but Ford may be better positioned to take advantage of the settlement. Ford has $40 billion in cash on hand to fund the trust, while it's unclear whether GM has sufficient liquidity to fund the trust. GM has already sold major assets such as a stake in its GMAC finance unit, Nesvold said, while Ford is still expecting to get more cash from the sale of its Jaguar and Land Rover units later this year.
GM's product cycle also is peaking right now with the introduction of the redesigned Chevrolet Malibu, while Ford's product cycle is in a lull but will be improving in 2008, Nesvold said in a note to investors.
Morgan Stanley analyst Jonathan Steinmetz agreed that while the establishment of a health care trust would be a watershed event, it's not a panacea for GM, which still faces a soft U.S. auto market and the possibility of continuing U.S. market share losses.
``With the health care issue on the sidelines, we believe investors need to focus a lot more attention now on international growth and additional cost-cutting opportunities,'' Steinmetz wrote in a note to investors.