Detroit Free Press (Michigan), September 22, 2007, Saturday

Copyright 2007 Detroit Free Press
Detroit Free Press (Michigan)

Distributed by McClatchy-Tribune Business News

September 22, 2007 Saturday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: UAW, GM near health deal: Sides make headway in talks, establish general framework

BYLINE: Katie Merx, Detroit Free Press

BODY:
Sep. 22--The UAW and General Motors Corp. reached a general framework Friday on a retiree health care deal, overcoming the key obstacle to reaching agreement on a labor contract that could transform the domestic auto industry, people familiar with the talks said.

The breakthrough came the same day UAW President Ron Gettelfinger and UAW Vice President Cal Rapson ap-peared to soften their tone in a message marking the first public indication from Gettlefinger that strides are being made in the historic, drawn-out negotiations.
"We are pushing to accelerate the negotiating pace at all levels," Gettelfinger and Rapson said in a memo. "It is our desire to reach an agreement without a strike, and we have demonstrated this by staying at the bargaining table up to this point."

Talks on the health care trust known as a voluntary employee beneficiary association, or VEBA, and related eco-nomic issues paused earlier in the week when the UAW called in financial experts to evaluate a GM proposal.

But the logjam apparently broke loose Friday night, leading to what one person familiar with the talks described as a general framework on the VEBA.
Harley Shaiken, a labor expert at the University of California at Berkeley, said it was his understanding that the two sides had reached a "tentative agreement on the VEBA."
"What I've been picking up is that they are close to resolving the VEBA issue but that the final resolution of that is going to depend on what happens in other areas of the contract," Shaiken said.

Those matters include pay, pensions, signing bonus, active employee health care and investment in U.S. factories.

Shaiken said he believes the memo from UAW leaders illustrates a shift in the negotiations.
"What it indicates is there are still a lot of tough issues out there, but there is a constructive tone at the very end of these negotiations," he said.

People close to the talks already were interpreting Thursday's marathon bargaining session -- which ran past mid-night -- as a sign that the pace of bargaining had picked back up.
After sessions that lasted into the early morning hours the first few days after the contract was initially set to expire Sept. 14, talks wrapped up in the late evening earlier this week after GM
made a new VEBA proposal Monday.

On Tuesday, the UAW balked at the proposal and called in experts to evaluate financial aspects of the proposed health care trust. GM is pushing to transfer responsibility for its more than $50 billion in hourly retiree health care obli-gations to an independent retiree health care trust, but it wants to pay significantly less than the full amount to the trust to absolve itself of the obligation. People familiar with the talks have said GM wants to pay no more than 65% of the obligation. A board would run the trust with oversight from the union.

On Wednesday, people close to the talks said bargaining over all substantive financial issues had all but stopped, since those issues hinge on whether the parties agree to a VEBA. Without a VEBA trust, GM would be expected to push for more plant closures, significant workforce reductions and massive cuts to wages and benefits. Wages, benefits, bo-nuses and U.S. manufacturing commitments all hinge on whatever the details of the health care deal the two parties agree.

But the parties returned to the core financial issues late in the week after the UAW's financial advisers completed the bulk of the number crunching the union asked for to consider the latest VEBA proposals, people briefed on negotia-tions said.
Gettelfinger said union negotiators would work hard to the end.

"Our efforts to reach an agreement in this manner should in no way be construed as removing any of our options," he said in the memo.

The UAW is negotiating on behalf of 73,000 members who work for GM and 340,000 retirees and surviving spouses.

Earlier in the day, analysts called it encouraging that Gettelfinger had not named a strike deadline.

"The best thing is that there are no picket lines out front," Arthur Wheaton, a labor expert from Cornell University, said. "They are still at the table. If the UAW was getting nervous, it would post a deadline."

That's significant in a year when GM is asking the UAW to agree to historic changes to retiree health care benefits, Wheaton said.

"If you are talking about $50 billion for this retiree health care issue, for this VEBA, it takes a while to say, 'Gee, is it going to be 60%, 65%, 70%?' Because each percentage is half-a-billion."

And the percentage at which GM would fund a VEBA is just one of the financial details on which the two parties need to reach agreement. They also need to agree on the amount of the liability; how long the automaker would have to pay into the trust; what combination of assets GM can use, and what, if any, future guarantees the parties would agree to in the event health care costs increase faster than expected or the nation adopts a universal health care system.

In extending more than one week with a lead company, known as a strike target, these talks have gone longer with-out a single tentative agreement than any in at least a quarter century.
"Considering the historic nature of these negotiations, this is probably the most important bargaining session the UAW has ever been in and the auto industry has ever been in," said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass. "Some people want to call it transformational, I call it ultra-concessionary. The UAW is really being asked to give a lot."

Contact KATIE MERX at 313-222-8762 or kmerx@freepress.com
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