UAW ‘Close to a Framework’ for GM Agreement, Official Says

The United Auto Workers union, having extended its contract with General Motors Co. (GM) by two days, said it is “very close” to completing negotiations with the automaker on a new accord.

“We are getting very close to a framework for an agreement that will bring our negotiations to a successful conclusion,” Joe Ashton, vice president of the union’s GM department, said today in a memo to members. “I am very optimistic that the negotiations process is entering its final stage.”

GM and Chrysler Group LLC each failed to reach a new labor agreement before their UAW contracts were set to expire at 11:59 p.m. Sept. 14. The UAW, which began formal talks with the U.S. automakers in July, extended contracts at GM and Chrysler and continued negotiations yesterday. The union on Sept. 13 extended its contract with Ford Motor Co. (F)

“We’re making good progress,” Jordana Strosberg, a GM spokeswoman, said today in an e-mail.

The UAW may use a settlement with GM to set the pattern for wages and benefits with Chrysler and Ford. Typically, the Detroit-based union selects a lead company and uses an accord there as the template for the other two automakers.

“They’ll wind up at Chrysler next because trying to apply a GM-Ford pattern on Chrysler makes no sense,” said Arthur Schwartz, president of Labor & Economics Associates, a consulting firm in Ann Arbor, Michigan. “Chrysler is the weaker company financially. They don’t have the cash.”

Binding Arbitration

The UAW represents 113,000 production employees at Detroit- based GM, Ford and Fiat SpA-controlled Chrysler. The U.S. Treasury Department bailed out GM and Chrysler in 2009. As part of the bailouts, the union agreed not to strike either company in this year’s talks. Unresolved differences are subject to binding arbitration.

Ford, based in Dearborn, Michigan, is not planning to bargain over the weekend and has sent some union negotiators home until Sept. 20, said two people familiar with the schedule. Ford and the union will conduct some meetings Sept. 19 without the full bargaining teams, said one of the people, who asked not to be identified because the plans are private.

Ford didn’t receive a bailout. UAW members there rejected a strike ban and arbitration.

GM and the UAW haven’t set a new deadline for an agreement or turning to binding arbitration since their previous contract expired. Chrysler Chief Executive Officer Sergio Marchionne offered in a Sept. 14 letter to UAW President Bob King to let teams negotiate for one more week.

Can’t ‘Drag Out’

“There’s a certain point in which they can’t let it continue to drag out as one side might get sufficiently frustrated as to call for arbitration,” Joel Cutcher- Gershenfeld, dean of the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign, said in a phone interview yesterday. “It’s quite a few more days of bargaining before anything like that might happen.”

GM fell 9 cents to $22.61 at 4:03 p.m. in New York Stock Exchange composite trading. The shares have dropped 39 percent this year.

Key issues in the talks include signing bonuses, increasing wages for new hires and investments to secure future work at U.S. plants. GM executives have said that they want to tie compensation to company performance targets, which the union has traditionally opposed.

Signing Bonuses

The UAW proposed signing bonuses of $8,000 to $10,000 for each member, four people familiar with the discussions said last week. Michele Martin, a spokeswoman for the UAW, has denied that the union is seeking bonuses of that size.

GM may pay workers a signing bonus of as much as $7,500, Schwartz estimated. At Ford, workers may require at least $1,000 more than that in a signing bonus in order to get them to vote in favor of the contract, he said today in a phone interview.

“King needs to figure out how to get this ratified at Ford because they’re expecting more,” Schwartz, a former labor negotiator for GM, said of the UAW president.

To contact the reporters on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net; David Welch in Southfield, Michigan, at dwelch12@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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