UAW picks GM as lead in auto labor talks

DETROIT (AP) - The United Auto Workers union has picked General Motors Corp. (NYSE:GM) as the lead company and potential strike target in contract negotiations with the Detroit Three, two local union officials said Thursday.

The officials, who requested anonymity because the talks are private, said their locals received notice Thursday afternoon that GM would be the lead.

Contracts between the UAW and GM, Chrysler LLC and Ford Motor Co. (NYSE:F PRS) (NYSE:F PRA) (NYSE:F) were to expire at midnight Friday.

Normally, the union negotiates an agreement with the lead company, which becomes the pattern for the other two. Industry analysts consider GM's financial condition to be the strongest of the three.

Spokeswomen at Ford and Chrysler confirmed Thursday that those companies have agreed to indefinite contract extensions with the union. The extensions can be canceled by either side with three days' notice.

Chrysler spokeswoman Michele Tinson wouldn't speculate on when an agreement will be reached but said both sides are 'making constructive progress.' Ford spokeswoman Marcey Evans also wouldn't comment on the timing of any agreement.

'We're going to continue to work together,' Evans said.

Bargaining has been under way for months, formally beginning in July. Until Thursday, talks appeared to be progressing, but several local union leaders at GM plants said they had been told to begin preparations in case of a strike.

Although such preparations are standard in the days before the contracts expire, several local union officials said Thursday that there may have been a snag in the talks overnight Wednesday.

Workers at a Cadillac assembly and stamping complex in Lansing were readying their union hall to be the area's strike headquarters and putting together picket signs, said Chris 'Tiny' Sherwood, president of UAW Local 652.

Sherwood, who has been in touch with a member of the union's national bargaining committee, said he was told the talks took a turn for the worse Wednesday night.

'Apparently from last night until this morning, everything's changed,' Sherwood said. 'I've never been asked to get my hall ready for a strike in the last four contracts.'
Union officials at several other plants who asked not to be identified because they are not authorized to speak about the talks said they, too, were holding strike meetings and getting their membership ready in case the international union calls for a walkout.

Sherwood said his talks with union officials in Detroit give him the impression that this is more serious than usual.

'If it's window dressing, they're sure not acting like it,' he said.

UAW international spokesman Roger Kerson would not comment Thursday afternoon, nor would GM spokesman Tom Wickham.

It's difficult to tell whether the strike preparation talk is just union drama before the deadline or it's actually serious strike talk, said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.

'There's a fine line between theater and substance in negotiations,' Shaiken said. 'Given the stakes, given the complexity, given the tension, you've got a temporary derailment. It's unclear whether it's more serious than that.'
David Cole, chairman of the Center for Automotive Research in Ann Arbor, said he still does not think either side has the stomach for a strike.

'I would expect some tension down near the end. At some point in any of these negotiations you get to a point where there's some tough talk. It just normally arrives a lot earlier than this,' he said.

Despite the choice of GM as the lead company, talks with the nation's largest automaker were continuing into the night Thursday, said a person who was briefed on the negotiations. The person requested anonymity because the talks are private.

GM likely was picked because its finances are the healthiest of the three, said David Healy, an analyst with Burnham Securities.

'Historically, the union picked the strongest company financially and operationally so that they could extract a rich contract out of the more prosperous one and go about imposing it on the weaker companies,' Healy said.

New contracts were reached with the auto companies without strikes in 1999 and 2003. There were strikes at individual GM plants during contract talks in 1996, but there hasn't been a nationwide strike during negotiations since 1976, when Ford plants were shut down.

In 2003, the union settled with all three companies without choosing a strike target. But in 1998, workers at two GM parts plants walked out for 54 days, costing the automaker $2.2 billion. That strike, which occurred between years when national negotiations were held, was over work rules and GM's plans to eliminate jobs.

This year's talks are considered critical to the struggling Detroit automakers, which last year lost a combined $15 billion. All have seen sales losses as high gasoline prices sent car buyers away from their trucks and sport utility vehicles. They have cut thousands of jobs and shuttered plants in an effort to compete with Japanese automakers.

Talks had centered on the companies' request to pay the union to take over their unfunded long-term retiree health care liability, estimated at a combined $90 billion. The companies want the union to take part of the obligation and form a trust fund that would pay retirees' health care bills in the future.

Negotiators were discussing how much the companies will put into the fund and what the union will get in exchange for taking on the liability. The companies expected a counter proposal from the union that involves guarantees of new products and jobs at several UAW-represented plants.

News that the union was receptive to the trust fund was applauded by Wall Street on Thursday. GM shares rose $3.04, or 10.1 percent, to $33.29. Ford also rose on the news, closing up 42 cents, or 5.6 percent, at $7.92.

In Lansing, Sherwood said workers will find out if this year's strike threat is for real sometime Friday night.

In the meantime, local union officials are awaiting further instructions.

'Anything can happen at this point. I would be foolish not to be prepared in the event of a strike,' said David Green, president of UAW Local 1714, one of two locals at a GM complex in Lordstown, Ohio. 'We're all very pins and needles. We're anticipating anything at this point.'