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GM, UAW talks break off; Chrysler talks stall

TALKS between the United Auto Workers and General Motors Corp central to a turnaround plan for the struggling automaker have broken down over the issue of retiree healthcare costs, a person briefed on the talks said yesterday.

A parallel set of talks between Chrysler LLC and the UAW over similar concessions were continuing over the weekend but little progress had been made, a person briefed on those negotiations said.

The breakdown of talks at GM and the stalled negotiations at Chrysler come with just three days remaining until both automakers must submit new restructuring plans to the US government as a condition of the US$17.4 billion in federal aid that has kept them both operating since the start of the year.

"It doesn't seem like the stakeholders are really prepared to give a whole lot," said independent auto industry analyst Erich Merkle. "It's a high-stakes game of poker right now."

If GM cannot win agreement from the UAW and creditors to reduce its debt, analysts say the Obama administration will face a politically tough choice: either pump billions of dollars more into the struggling automaker or steer it toward bankruptcy as some critics of the bailout have urged.

UAW negotiators walked away from talks being held near GM's Detroit headquarters on Friday night because of differences over how to pay the health care costs of retirees, the person familiar with the talks said.

Under Chief Executive Rick Wagoner, GM has resisted suggestions that it would be better able to restructure under a court-supervised bankruptcy.

Wagoner and other executives have argued that consumers would shun GM cars and trucks if it were in bankruptcy, sending already weak sales into an irreversible tailspin.

But in recent weeks, senior executives at the automaker have become more open to the prospect of a bankruptcy filing, a person involved in the talks said.

GM declined to comment directly on the state of negotiations with the union. "We are committed to meeting the terms of the bridge loan and executing our restructuring plan," GM spokeswoman Renee Rashid-Merem said.

Chrysler said it was also committed to meeting the terms of the federal bailout, which requires both automakers to reduce labor costs and the amount owed to a UAW-affiliated fund.

"We continue to engage all of our stakeholder groups as we work through this process," Chrysler said in a statement.

UAW representatives were not immediately available.


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