GM workers on the job as contract talks resume

By Jui Chakravorty and Kevin Krolicki

DETROIT (Reuters) - Negotiators for the United Auto Workers union and General Motors Corp (GM.N) were back at the bargaining table on Monday after breaking in the early hours of the day, as thousands of GM factory employees went to work without a new contract.

Talks resumed at 11 a.m. EDT.

The UAW agreed to extend its contract with GM on an hour-to-hour basis late Friday, just as it was due to expire.

The outcome of the contract talks is seen as crucial to efforts by the three Detroit-based automakers -- GM, Ford Motor Co (F.N) and Chrysler LLC -- to recover from combined losses of $15 billion last year and sales difficulties that have driven their slice of the U.S. market below 50 percent.

Analysts have seen a strike as a remote risk for GM, with several saying the weekend of nearly nonstop negotiations was a sign the two sides were making progress.

Both parties agreed to a break in talks on Monday at 3 a.m. EDT after a marathon 16-hour bargaining session that raised expectations that the union and the largest U.S. automaker were nearing an agreement.

The sudden adjournment came just hours after several UAW local officials were told that the union's negotiating team intended to remain in talks until it reached a resolution.

Any tentative pact between GM and the UAW would have to be ratified by a majority of GM's 73,000 hourly workers.

A GM spokesperson said all auto plants opened as scheduled on Monday, but declined to comment on the progress of the talks.

GM, Ford and Chrysler are seeking sweeping concessions from the UAW to close a cost gap with Toyota Motor Corp (7203.T) they say amounts to more than $30 per hour for the average factory worker.

DEAL OR NO DEAL?

As the UAW's strike target, GM was expected to be negotiating a contract that would be used as a pattern for the union's talks with Ford and Chrysler.

But the talks, which were under way at a GM building just blocks from its Detroit headquarters, have taken some unexpected turns since last week.

After hitting an apparent snag, the UAW singled out GM as its "strike target" on Thursday -- a term it had avoided in more collegial negotiations in 2003.

Rival automakers Ford and privately held Chrysler quickly signed contract extensions with the UAW, clearing the way for their factories to keep operating.