UAW sets a strike deadline of 11am

DETROIT (Reuters) - The United Auto Workers union set a firm Monday morning deadline to reach a contract deal with General Motors Corp and threatened to send 73,000 GM factory workers on strike if no deal is reached.

The strike deadline raised the stakes in the closely watched labor talks after a weekend of bargaining had apparently brought the two sides close to a historic cost-cutting deal for the automaker.

A prolonged strike would be a major setback for the car manufacturer's recovery efforts and risk disappointing investors who have sent GM shares higher in the hope of a ground-breaking labor deal.

In a statement posted on its Web site, the UAW said "due to the failure of General Motors to address job security and other mandatory issues of bargaining, the union has set a firm strike deadline" 11 a.m. (1500 GMT) on Monday. The union said it was willing to negotiate continuously up to the deadline.

Chris "Tiny" Sherwood, president of UAW Local 652 in Lansing, Michigan, said the union's leadership had told him to be prepared to meet that deadline.

"They told me to walk them at 11 a.m. unless I hear otherwise," said Sherwood, whose local represents more than 1,500 GM workers who make three Cadillac models.

Both sides continued to talk in Detroit as of early Monday morning, extending a bargaining session that began on Sunday morning. Talks have continued for 21 straight days.

"We are fully committed to working with the UAW to develop solutions together," GM spokesman Dan Flores said. "We will continue focusing our efforts to reach an agreement as soon as possible."

Harley Shaiken, a labor expert at the University of California-Berkeley, said the union had increased the pressure for a quick settlement with GM.

"This is not an idle threat," he said. "A strike deadline is not meant for show. But it is possible that this will be a long night with a handshake at the end of it."

Shaiken said if an agreement is not reached by the Monday morning deadline, the UAW could either extend the strike deadline to try to finish the final details of an agreement or make good on its threat to strike.

RETIREE HEALTH PLAN AT ISSUE

GM and UAW negotiators had agreed during the weekend to the broad terms of a deal that would reduce GM's nearly $5 billion annual health-care bill, people briefed on the talks said.

Under that plan, widely considered the central issue in the complex talks, GM would shift responsibility for retiree health care to a new UAW-aligned trust fund.

Wall Street analysts have said such a step could cut GM's annual costs by $3 billion in exchange for a one-off payment expected to top $30 billion.

Other key issues in the talks include GM's desire to hire new workers at a lower wage rate and the union's request that the automaker commit to maintaining production in the United States over the duration of the coming contract.

The outcome of the contract talks is seen as crucial to efforts by the three Detroit-based automakers -- GM, Ford Motor Co and Chrysler LLC -- to recover from combined losses of $15 billion last year and sales difficulties that have driven their share of the U.S. market below 50 percent.

GM, Ford and Chrysler are seeking concessions from the UAW to close a labor cost gap with Toyota Motor Corp and other Japanese automakers operating in the United States that they say amounts to more than $30 per hour for the average factory worker.

Most analysts have seen a strike as a remote risk because of the weakened position of GM, which has cut 34,000 blue-collar workers from its payrolls and announced plans to shutter a dozen factories by next year.

The union's previous contract expired September 14. The last UAW strike against GM was in 1998. That walkout at two GM parts plants in Flint, Michigan shut down GM production and caused its sales to plummet.

GM's market share never recovered and the automaker responded to the work stoppage by overhauling its labor relations department. GM's U.S. market share had been 31 percent before the strike, but fell to 24 percent last year.

Copyright 2007 Reuters