After UAW officials walked out of concessions talks Friday night, UAW and GM resumed their talks today, as required by GM’s federal bailout.
The dispute between UAW and GM negotiators centers around GM’s cash payments to a union fund for retirees’ health care. GM wants to swap its infusion of funds and instead provide GM stock to the retiree fund. An unidentified source told the Associated Press that what GM was offering was detrimental to retirees’ health care. GM owes more than $20 billion to the fund and wants to contribute half that value in GM stock. The trust fund begins providing payments for health care to GM retirees on January 1, 2010.
The talks are a last-minute component of a February 17 deadline– two days away– for GM to submit a plan for viability to the federal government as part of the bailout terms. Chrysler LLC is also facing the same time crunch and seeking similar concessions from UAW. If the plan pleases government officials, GM is on the line to receive an additional $4 billion to the $9 billion in loans it’s already received.
The trust came into place in contract talks with UAW in 2007; creating the trust allowed GM to strike more than $45 billion in retiree health care from its books, a bid to make the Detroit company more competitive against Asian car companies. UAW says that a fully-funded trust could provide retiree health care for 80 years. However, the breakdown in auto sales in 2008 left GM unable to fulfill its commitment to fully finance the fund. By swapping stock instead of cash, UAW would become a significant shareholder of GM stock and could even insist on a seat on the board of directors.
GM’s board will convene via conference call on Monday to resume negotiations.
If negotiations fail, experts say that the Obama administration would face a dilemma in the face of no framework on which to confirm GM’s bailout requirements a success.
GM’s European labor unions are recommending that its European brands, Vauxhall and Opel, be spun off into separate companies rather than undergo the strict cost cutting GM headquarters says is necessary to become viable again under what GM insiders call the “Renaissance” project.
“The implementation of the ‘Renaissance’ project in Europe will ultimately lead to a collapse of Opel/Vauxhall. This means scorched earth will be left in Europe with major conflicts all the way to the end.” — statement from GM’s European Employee Forum