Thursday, September 20, 2007


DETROIT, Sep. 20, 2007 (AP Online delivered by Newstex) -- United Auto Workers President Ron Gettelfinger has decided to temporarily shelve talk with General Motors Corp. (NYSE:GM) about the union taking over retiree health care, but the issue remains part of the bargaining, a person briefed on the talks said Thursday.

The person, who asked not to be identified by name because the talks are private, said Gettelfinger rejected GM's latest retiree health care proposal on Tuesday night and wanted to move to other issues. GM, the lead company in talks with the union, wants to pay the UAW to set up a trust that would fund future retiree health care costs.

But since the company and union are so far apart on how much GM would pay, Gettelfinger wanted to talk about other issues, the person said.

'It's not off the table. It's just kind of being put off to the side for a while,' the person said.

Now under discussion is a second offer from GM that doesn't include the trust but has larger cost cuts, including a drop in hourly wages, increased health care contributions, fewer guarantees of new work at U.S. factories, reduced vacation time and other items.

GM, as well as Ford Motor Co. (NYSE:F PRS) (NYSE:F PRA) (NYSE:F) and Chrysler LLC, are trying to cut what they say is about a $25 per hour labor cost gap with their Japanese competitors. Industry analysts say the costs must be reduced for the U.S. companies to survive.

The company and union are billions of dollars apart on how much GM would pay into the trust, the person briefed on the talks said. GM has about $51 billion in unfunded retiree health care liabilities, and analysts have said it wants to pay the union about 65 percent of the cost to form the trust, called a Voluntary Employees Beneficiary Association, or VEBA.

GM spokesman Tom Wickham would not comment on the VEBA developments. A message was left for UAW spokesman Roger Kerson.

On Thursday morning, a local union leader who also had been briefed on the talks said the VEBA was discussed by UAW bargainers on Wednesday.

'The VEBA's on the table. They're looking at the numbers right now,' said the official, who also requested anonymity because the talks are private.

Talks recessed on Wednesday evening and were to resume Thursday morning. The union's contract with GM has been extended hour by hour since Friday. With both sides far apart on the trust, the talks likely will take several more days to complete, the person briefed on the talks said.

Newstex ID: AP-0001-19711863


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