DETROIT - More progress was reported yesterday as negotiators for
Two people who have been briefed on the talks said yesterday that bargainers were getting closer to reaching a deal on the company funding a union-run trust that would take over much of GM's $51 billion unfunded obligation to pay healthcare costs for retirees and workers after they retire.
The people, who requested anonymity because the talks are private, said they were told negotiators are optimistic a tentative deal could be reached as early as today or tomorrow. Any agreement would have to be ratified by GM's 73,000 UAW members.
The UAW has picked GM as the lead company and potential strike target, so
One of the people briefed on the talks said the two sides were negotiating how much GM would have to kick into the trust, called a Voluntary Employees Beneficiary Association.
Erich Merkle, vice president of auto industry forecasting for consulting company IRN Inc. in Grand Rapids, said the trust fund is important to closing the US automakers' labor cost gap with Japanese competitors. The Detroit Three say the gap is about $25 per hour including wages, benefits, and retiree healthcare costs.
But an agreement on the trust alone isn't enough for the company because competitive disparities remain in areas other than retiree healthcare, Merkle said.
The US companies still pay workers most of their salaries when they are laid off, and companies still in many cases pay UAW wages and benefits for janitorial, landscaping, and cafeteria workers, items that Japanese automakers contract out for less money, Merkle said.
"The market just isn't going to support inefficiencies. Either the UAW, they can pick up healthcare and they can help GM out here, or they can let the market take care of things later," Merkle said. "When the market corrects the situation, it's going to be brutal. It's a bankruptcy situation."