GM, UAW face midnight deadline

By Jui Chakravorty and David Bailey

DETROIT (Reuters) - The United Auto Workers union and General Motors Corp remained locked in negotiations Friday as the largest U.S. automaker headed toward a midnight deadline to either clinch a deal or face a possible strike.

Local UAW leaders were told, in a midday update, to keep the 73,000 members who work at GM ready for a possible strike. Further word from the union's top leaders was expected at 10 p.m. EDT, two hours before the current labor contract was to expire.

GM and UAW declined comment on the progress of the talks.

The UAW on Thursday switched its tactics, singling out GM as its strike target.

Rival automakers Ford Motor Co. (F.N) and privately held Chrysler LLC have signed contract extensions with UAW, clearing the way for their union-represented workers to continue working under the terms of their existing contracts even after the industry-wide deal on wages and benefits expires.

Strike preparations were under way at GM plants across the United States after the UAW's lead negotiator with GM, Cal Rapson, told members on Thursday that the union needs to see some "serious movement soon."

"Unless this happens, a strike might well be unavoidable," he said in a note to UAW members.

A person familiar with the UAW's position said the union was prepared to extend the contract with GM and continue talks into next week if there is progress on the central issue of health-care costs.

The Detroit-based automakers lost more than $15 billion in 2006 and have cut more than 80,000 jobs through buyouts driven by plant closings. Given the industry's weakness, analysts have viewed a strike as unlikely.

RATCHETING UP THE PRESSURE

Wall Street analysts have been optimistic that the automakers will emerge from the talks with a deal that slashes health-care costs, but the UAW's threat to strike has injected a new tone of uncertainty.

The UAW, one of the most powerful unions in a U.S. economy where less than 10 percent of all private workers remain unionized, typically negotiates an agreement with the lead company first and then applies that deal as a pattern for the other two automakers.

The contract talks between the UAW and GM have been dominated by complex negotiations over the idea of cutting billions of dollars in GM's health-care expenses by funding a new stand-alone trust fund to pay for retiree care.

The two sides continue to spar over how many billions of dollars the automaker would offer for such a fund -- known as a voluntary employee beneficiary association, or VEBA -- and how large a discount the UAW would accept.

The person familiar with the UAW's stance said the union was seeking a job security guarantee in exchange for accepting a VEBA and could agree to funding of 65 percent to 67 percent of liabilities.