Related News

Home » Business » Auto

GM, UAW talks resume as deadline looms

TALKS between General Motors Corp and the United Auto Workers resumed yesterday, just two days before a deadline for the struggling automaker to submit a new restructuring plan to the US government.

Union negotiators in Detroit walked away from the bargaining table on Friday over differences with GM over the central issue of how to fund retiree health-care costs.

Negotiating teams met on Sunday, according to a person briefed on the situation, although it was unclear if any agreement could be reached by the deadline.

Meanwhile, GM and a committee of its bondholders were locked in high-stake talks aimed at reducing debt at the struggling automaker by about US$18 billion.

GM spokesman Steve Harris said the automaker's board would convene on a conference call on Monday to review a draft of the restructuring plan although work on it was likely to continue right up until the deadline for submission.

If GM cannot win deals to cut its debt and costs, the automaker would be left reliant on an expanded bailout from the Obama administration or forced to consider bankruptcy.

GM and Chrysler LLC, are required to submit new turnaround plans by Tuesday showing how they can be made viable after receiving US$13.4 billion in emergency aid.

Both automakers say they expect to meet cost-cutting targets set out under the bailout, which include making blue-collar labor costs competitive with Japanese automakers that operate factories in the Untied States.

UAW representatives could not be reached for comment.

A senior White House adviser said on Sunday that sweeping and shared sacrifices were needed to save the automakers. "That's going to involve concessions on the part of everyone, not just the auto workers, but shareholders, creditors and, of course, the executives," President Barack Obama's senior adviser David Axelrod said on "Fox News Sunday." nN15276001

A parallel set of talks between Chrysler LLC and the UAW was also underway on Sunday. "The company is working diligently on its viability plan and will submit it by its deadline," the automaker said in a statement.

GM debtholders on a 10-member committee, including Franklin Templeton Investments, Fidelity Investment and Loomis Sayles & Co, also remained in talks spurred by a requirement that the automaker reduce US$27.5 billion in debt to about US$9 billion by exchanging the debt for equity.

A person involved in those discussions said they were likely to run to the brink of the deadline as creditors press for more favorable terms. Any breakdown in the union talks would almost surely scuttle other debt talks. nN15276785

GM has received US$9.4 billion from the US Treasury and has been promised another US$4 billion more if it can demonstrate that it can be made viable by slashing costs and debt.

Like bondholders, the UAW is being pressed to accept stock in a recapitalized GM in exchange for debt. The UAW is owed some US$20 billion from GM for a health-care fund. It faces pressure to take half of that in equity in a recapitalized GM.

GM and the UAW agreed to create the retiree health-care fund as part of a landmark 2007 labor agreement. But the steep slide in auto sales in 2008 left GM unable to survive without federal loans and unable to fund its commitment to the union.


Other aspects of the GM plan are expected to detail how it can lower its break-even point in a market expected to slump through 2009 with an only limited recovery beyond that.

GM will also discuss its relations with suppliers and has been in talks with its former subsidiary Delphi Corp about buying back some of its plants, according to a person involved in those talks.

Delphi, one of GM's largest suppliers, has been struggling in bankruptcy since 2005. By buying up some Delphi factories, GM could clear the way for the supplier to sell other assets and end a long-running drag on GM's finances, the person said.

In recent weeks, GM's leaders have become more open to a bankruptcy filing if there is some assurance it would not be a protracted process, a person involved in the talks has said.

The US government has already hired advisers to consider how it could fund such a bankruptcy, people involved in that work have said.

A bankruptcy filing would allow GM to rework its contracts with creditors, workers, dealers and its suppliers. But it would also mean even steeper job losses. GM, Chrysler and Ford Motor Co have cut 250,000 jobs since the start of the decade and are looking to cut more.

The UAW campaigned for Obama and some autoworkers said they hoped the new administration would soften the auto loan terms imposed by former President George W. Bush.

"Obama brings us hope and that counts for a lot right now," said Anthony Forth, 52, a GM worker. nN13149445

Chrysler has received US$4 billion in federal funding and is seeking another US$3 billion.

Ford Motor Co, which is seeking a US$9 billion line of credit from the Ub.S. government, remains in talks with the UAW intended to secure any concessions granted to its rivals.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend