By Sharon Terlep and Jeff Bennett Of DOW JONES NEWSWIRES DETROIT -(Dow Jones)- General Motors Corp. (GM) said Wednesday it needs to have key elements of a cost-cutting labor deal with the United Auto Workers in place by Feb. 17 to comply with last month's $17.4 billion federal bailout.
GM and Chrysler LLC are required to get their labor costs in line with the U.S. operations of foreign-based competitors under terms of the low-interest loans from the Bush administration to avoid bankruptcy. Ford Motor Co. (F) didn't ask for funding but is expected to push for the same concessions granted to its rivals.
The deadline gives Detroit's auto makers and the union less than six weeks to negotiate changes to the four-year labor agreement reached in 2007 after short strikes against GM and Chrysler.
While the loan deal gives GM and Chrysler until March 31 to finalize changes to the labor contract and get them approved by UAW members, the companies are required to present key elements on Feb. 17.
GM spokesman Tony Sapienza said under the deal the companies at that time must present plans to alter worker severance pay, compensation and work rules that govern the factory floor.
"We are working toward meeting that deadline," he said Wednesday.
Chrysler spokeswoman Mary Beth Halprin declined to comment on the deadline.
"Discussions with our constituents have continued since we submitted our plan to the government on Dec. 2," she said.
The auto companies may be hard-pressed to cut a final deal by Feb. 17, given the complexity of issues involved in negotiations, according to sources familiar with negotiations who asked not to be identified because the talks are private.
In addition to reducing labor costs, the union and auto makers must alter an agreement under which the union is to assume responsibility for retiree medical benefits. Instead of making contributions to the fund in cash, the companies can make the payments half in cash and half in stock.
UAW leaders arrived this week in Detroit and began internal meetings to prepare for negotiations.
But even as top bargaining officials convened on Wednesday, key aspects of the deal remained unclear. Detroit's auto makers and the United Auto Workers are scrambling to decipher the federal mandate requiring labor cost reductions under as the two sides prepare to launch a critical round of labor talks.
The UAW, meantime, wants more clarity as to what it means to be "competitive" with companies such as Toyota Motor Corp. (TM). UAW President Ron Gettelfinger he plans to work with the administration of President-elect Barack Obama, who takes office Jan. 20, to have the wage and benefit demands removed.
Union negotiators met as a group on Tuesday in Detroit and were planning to convene again on Wednesday, according to people familiar with the negotiations said.
GM shares closed Wednesday up 19 cents, or 4.8%, to $4.13 but in recent late trading shares are down to $4.10.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542
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Publié le 07 janvier 2009 Copyright © 2009 Dowjones