Exclusive: GM, UAW chiefs meet, talks heat up

DETROIT Wed Sep 7, 2011 7:48pm EDT

DETROIT (Reuters) - Contract talks between General Motors Co (GM.N) and the United Auto Workers union have intensified and shifted to consideration of the scope and terms of a profit-sharing deal for some 49,000 workers at the top American automaker, people with knowledge of the talks said.

In a sign of progress, GM Chief Executive Dan Akerson met on Tuesday with UAW President Bob King for over an hour at the union's Detroit headquarters known as Solidarity House, the sources said.

GM Vice Chairman Steve Girsky and UAW Vice President Joe Ashton, who is heading up contract talks with GM, also joined that meeting, which came with just over a week remaining in the current four-year deal with the union on wages and benefits.

GM has emerged as the focus of UAW's negotiating efforts in Detroit although parallel talks have continued with Chrysler Group LLC. Chrysler, now controlled by Fiat Spa (FIA.MI), was put through a U.S. government-funded bankruptcy like GM.

Talks on Tuesday between the main bargaining teams at the UAW and GM ran late into the evening and were expected to continue into the evening for the duration of negotiations, one person said.

The sources asked not to be named because the contract talks remain private.

Girsky declined to discuss the status of the automaker's talks with the UAW on Wednesday, telling a meeting with financial analysts in New York that there was "zero upside" to talking about negotiations "given where we are in the labor discussions."

UAW local presidents who represent workers at GM's U.S. plants expect to be summoned in Detroit for a briefing on the terms of a contract settlement within the next week although major issues remain unresolved, three union officials said.

The framework of a GM deal could provide a template for negotiations at Chrysler on the central issue of profit sharing, although key issues remain unresolved, one of the sources said.

Meanwhile, negotiations at Ford Motor Co (F.N) have made slower progress, two other people close to those talks said.

Ford is the only U.S. automaker to have avoided bankruptcy and is the only one of the Detroit Three that the UAW has the power to strike.

GM and Chrysler workers lost the right to strike when the companies emerged from bankruptcy in 2009.

UAW leaders appear to believe it has a better chance to win quick deals at GM and Chrysler before turning to Ford where talks are complicated by an ongoing grievance over bonuses paid out to white-collar workers.

All three U.S. automakers face an expiration of their current contracts with the UAW on September 14.

TALKS PROGRESSING

GM said talks with the union were progressing.

"We are continuing to talk with the UAW about a variety of issues that are important to our employees and our company," Jordana Strosberg said.

Chrysler spokeswoman Jodi Tinson said, "We're optimistic, but there's still lots of issues to work through."

Ford and the UAW had no immediate comment.

King, who took over leadership of the UAW in 2010, has said he was upbeat about reaching a settlement with the U.S. automakers that would reward workers with bonus-type payments without saddling the companies with a fixed cost that would hurt them compared with Japanese and Korean rivals.

The key question in the talks at GM and Chrysler has been how to structure a profit sharing deal for workers, sources have said. Some formulas under consideration would link worker pay to both profitability and measures of quality, sources said.

GM has also sought ways to offset that additional cost.

One proposal under discussion would allow GM to offer targeted buyouts to skilled trades workers such as electricians and pipe fitters at U.S. plants where it judges that it has a wide surplus of those more costly workers, people involved in the discussions have said.

In addition to a discussion of bonus payments, the UAW has been seeking an agreement that would guarantee increases in base wages over time to newly-hired production workers.

At GM, entry level workers start at about $15 per hour compared with about $28 for veteran workers.

About 5 percent of GM's current production workforce is now at that lower wage level, compared with about 12 percent at Chrysler.

The contract talks are the first between the two sides since the 2009 restructuring of GM and Chrysler in bankruptcies financed by the Obama administration.

The UAW has agreed to submit any unresolved contract differences at GM and Chrysler to binding arbitration, a provision read as ruling out strikes at the two companies.

The UAW authorized a strike at Ford through votes in August at union locals. However, union officials say that step was a routine part of negotiations. King said last week he would view a strike or arbitration at any of the companies as a personal failure.

Labor costs, including wages and benefits, for GM workers average about $56 to $57 per hour, compared with about $58 per hour for Ford and $50 for Chrysler, according to estimates by the Center for Automotive Research.

Toyota Motor Corp (7203.T) labor costs are about $55 per hour at U.S. plants and they are about $50 to $51 per hour for Honda Motor Co (7267.T).

(Reporting by Bernie Woodall and Deepa Seetharaman; editing by Carol Bishopric)

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