UAW sees progress at GM, expects contract deal

DETROIT Wed Sep 14, 2011 12:57pm EDT

A United Auto Workers union member uses an ergonomic-arm to install a front seat in a Chevrolet Volt electric vehicle at General Motors Detroit-Hamtramck assembly plant in Hamtramck, Michigan July 27, 2011. REUTERS/Rebecca Cook

A United Auto Workers union member uses an ergonomic-arm to install a front seat in a Chevrolet Volt electric vehicle at General Motors Detroit-Hamtramck assembly plant in Hamtramck, Michigan July 27, 2011.

Credit: Reuters/Rebecca Cook

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DETROIT (Reuters) - The United Auto Workers union has made "much progress" toward a new contract with General Motors Co to replace the current deal on wages and benefits that expires just before midnight on Wednesday, a senior union official said.

"We are confident that we can reach an agreement that will meet many of the goals we set at the beginning of negotiations," UAW Vice President Joe Ashton said in an electronic update on negotiations for the 49,000 union-represented workers at the top U.S. automaker.

The union resumed talks with GM and Chrysler on Wednesday morning amid signs that the current contracts would be extended beyond their Wednesday night expirations.

The comments from Ashton represented the most upbeat assessment from the union since negotiations entered a more intensive phase over the past week.

Ashton said the union's goal was to reach a tentative contract deal with GM, rather than face arbitration.

Steve Girsky, GM's vice chairman who also represents the UAW's interest on the GM board, was in Germany on Wednesday where he declined to comment on the talks. Girsky and GM Chief Executive Dan Akerson have been involved in the GM talks over the past week, people with knowledge of the proceedings have said.

GM local union officials who are generally given a day's travel time to attend a council meeting once a tentative national deal has been reached by midday Wednesday had not yet been summoned.

Also, some observers expect the talks at GM, seen as the lead company among the three Detroit automakers in negotiations, to extend beyond the deadline.

"We believe that the negotiations will overshoot the deadline without going into arbitration or having a significant hindrance to production," Goldman Sachs wrote in a research note on Wednesday. "In our opinion, UAW has no incentive to sign the contract ahead of the deadline as has been the case in almost all negotiations in the past."

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The union was barred from calling a strike at GM under the terms of the automaker's restructuring in its 2009 bankruptcy funded by the Obama administration.

"Our negotiations with management have reached a critical stage as we near the expiration of the national agreement," Ashton said.

A day earlier, Ford Motor Co and the UAW agreed to extend their contract to allow for the union to reach an initial deal with GM or Chrysler Group LLC.

Negotiations in Detroit between GM and Ashton's UAW team broke off around 11 p.m. on Tuesday night, a person familiar with the talks said.

Talks continued at Chrysler late into the night on Tuesday. The union's Chrysler negotiating team said it was working "tirelessly" to reach a deal in an update on its Facebook page.

In these talks, which will set wages and benefits for about 113,000 workers for the next four years, the companies are focused on keeping labor costs down. The UAW is angling for more auto production jobs in the United States as well as one-time bonuses because of the industry's improved profits.

The talks are taking place against a backdrop of growing uncertainty for the auto industry in 2012 and prospects of renewed U.S. recession. Since the negotiations began in late July, analysts and automakers have slightly lowered sales expectations for next year.

The negotiations are being watched by investors as an indication of how much Detroit has changed since the steep downturn and sharply tighter financing that almost forced GM and Chrysler out of business in late 2008 and threatened Ford.

Chrysler Chief Executive Sergio Marchionne left the Frankfurt auto show on Tuesday night to return to Detroit, a source said.

If the deadline is not met, the union and the company teams would have to agree to extend the current contracts, which is seen as a routine matter, analysts have said.

Ford has about 41,000 UAW-represented workers, and Chrysler, controlled by Italy's Fiat SpA, has about 23,150.

GM shares were up 0.2 percent at $22.05 and Ford shares were up nearly 1 percent at $10.26 on Wednesday afternoon.

(Additional reporting by Kevin Krolicki in Detroit and Ben Klayman and Silvia Aloisi in Frankfurt; Editing by Hans-Juergen Peters, Derek Caney and Matthew Lewis)

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