GM faces strike deadline

By Kevin Krolicki and Nick Carey

DETROIT (Reuters) - The United Auto Workers union set a firm Monday morning deadline to reach a contract with General Motors Corp and threatened to send 73,000 GM factory workers on strike if no deal is reached.

The strike deadline raised the stakes in the closely watched labor talks after a weekend of bargaining brought the two sides close to a historic cost-cutting deal for the automaker.

GM shares and bonds both shot higher on Monday morning in premarket trading as investors anticipated the automaker would reach an accord with the UAW and avoid a disruptive work stoppage.

Negotiations between GM and the UAW have hinged on a GM proposal to cut its nearly $5 billion annual health-care bill by establishing a trust fund for retiree-related costs.

But in setting a firm Monday strike deadline, the UAW said it was reacting to GM's reluctance to guarantee to preserve U.S. production jobs as it restructures.

"We're shocked and disappointed that General Motors has failed to recognize and appreciate what our membership has contributed during the past four years," UAW President Ron Gettelfinger said in a statement.

UAW members, Gettelfinger said, had made "extraordinary efforts" to help GM cut costs, including an earlier buyout program that cut more than 34,000 factory jobs from the automaker's payroll.

Chris "Tiny" Sherwood, president of UAW Local 652 in Lansing, Michigan, said the union's leadership had told him to be prepared to meet the pending strike deadline.

"They told me to walk them at 11 a.m. unless I hear otherwise," said Sherwood, whose local represents more than 1,500 GM workers who make three Cadillac models.

Both sides continued to talk in Detroit early Monday morning, extending a session that began on Sunday morning.

"We are fully committed to working with the UAW to develop solutions," GM spokesman Dan Flores said. "We will continue focusing our efforts to reach an agreement as soon as possible."

Harley Shaiken, a labor expert at the University of California-Berkeley, said the union had increased the pressure for a quick settlement with GM.

"This is not an idle threat," he said. "A strike deadline is not meant for show. But it is possible that this will be a long night with a handshake at the end of it."

RETIREE HEALTH PLAN AT ISSUE

GM and UAW negotiators had agreed during the weekend to the broad terms of a deal that would reduce GM's annual health-care bill, people briefed on the talks said.