DETROIT - As bargainers for the United Auto Workers and General Motors Corp. continue to haggle across a table in Detroit, the big issue in the critical contract talks comes down to this: If GM pays the union to take on the company's huge retiree healthcare obligations, can the UAW's investments return more than the rate of healthcare inflation?
GM wants to unload much of its roughly $51 billion in unfunded retiree health costs to a trust that would be administered by the union. The UAW in exchange wants promises that GM will continue building cars at union-represented plants.
It's the key obstacle of the talks, and the complexities are what's dragging them out. The two sides have yet to agree on how much GM will put into the trust, a person who had been briefed on the bargaining said yesterday. The person, who requested anonymity because the negotiations are private, said the talks likely would take several more days to complete.
Yesterday was the fifth day of bargaining since GM's contract with the UAW was scheduled to expire, but the union has extended the pact hour by hour. Negotiators went home for the night about 9 p.m. and were to meet again today, GM spokesman Tom Wickham said.
Whatever GM and the union agree to likely will be copied when it comes to Ford Motor Co. and Chrysler LLC, and experts say other companies with large workforces also could follow.
GM has pushed hard for the union to take on the retiree health costs. All three automakers are interested in paying into a trust fund that the union would administer. The trusts, called voluntary employees beneficiary associations, or VEBAs, would let the companies remove the liabilities from their books and possibly raise their stock prices and credit ratings. In a recent note to investors, Morgan Stanley analyst Jonathan Steinmetz predicted that VEBAs would save $200 per vehicle.