The United Auto Workers have set a deadline of 11:00 a.m. EDT Monday for the conclusion of a new contract with General Motors. Talks had been extended past the original Sept. 14 deadline on an hour-by-hour basis. If a deal is not struck by the new deadline, the union says it will strike, although industry watchers believe a strike is unlikely. The sides are said to have reached agreement on a framework for retiree healthcare that could mark a significant change in the UAW's relationship with the automakers. GM has been pushing hard for the union to establish a voluntary employees' beneficiary association, or VEBA, which would take responsibility for members' healthcare benefits. The VEBA would allow GM to erase $55 billion in healthcare liability from its books. The union is expected to favor the proposal, provided retirees don't lose benefits for at least several years. "I think my members would pass an agreement that got us new work, promised no change in retiree health care for at least two contracts and probably some signing bonus," said one UAW-GM local leader. GM, Ford and Chrysler paid $114 billion in healthcare benefits last year, and estimate they pay $25-30 more per hour for American union workers than Toyota or Honda -- which have far fewer retirees and offer fewer benefits -- pay at their U.S. plants.
Sources: Wall Street Journal, New York Times, Bloomberg, Financial Times
Commentary: GM Presses UAW On Central Principles As Negotiations Intensify • Are GM Labor Concessions Built Into The Stock? • GM Closing in on Deal with UAW
Stocks/ETFs to watch: GM. Competitors: F, TM, DAI. ETFs: PRFG, RPV
Earnings call transcript: General Motors Q2 2007
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