GM, UAW Resumption of Talks May Signal Short Strike

The United Auto Workers' return to bargaining with General Motors Corp. within hours of calling the first national strike against the automaker in 37 years may signal the union's desire for a quick end to the walkout.

``I'm looking for a short strike, possibly three days to an eight- or nine-day time frame,'' Craig Fitzgerald, an auto analyst at Plante & Moran PLC in Southfield, Michigan, said in an interview today.

Talks resumed today in Detroit after an overnight break. The strike that began at 11 a.m. yesterday followed almost 25 hours of continuous bargaining. By early afternoon, negotiators returned for a session that lasted until about 8 p.m.

The showdown between GM and the UAW, while pivotal to the automaker's future profit and the union's dwindling membership, may not match their battles of the 1930s. Neither side can afford a long strike that cuts GM profit or gives Toyota Motor Corp. a chance to win more U.S. buyers and force the closing of even more UAW plants.

``If it goes more than a couple of weeks, I would get very worried about it extracting a price that will be hard to recover from for either side,'' Fitzgerald said.

In other strikes, some unions have cut off talks before returning to negotiations, extending the walkout, said Jules Crystal, a labor lawyer at Bryan Cave LLP in Chicago, who has negotiated more than 260 contracts with the UAW and other unions for auto-parts suppliers.

`Call Us When You're Ready'

The immediate return to bargaining ``shows that the union leadership does in fact want to reach an agreement,'' Crystal said. ``In many cases, the union would walk out in a huff and say, `Call us when you're ready to talk.'''

GM fell 6 cents to $34.68 at 11:07 a.m. in New York Stock Exchange composite trading. The shares rose 13 percent this year before today.

The strike idled GM workers at more than 80 GM auto- assembly and parts operations in the U.S. and may cause shutdowns throughout Canada and Mexico as well. A prolonged walkout threatens supplies of such vehicles as the Buick Enclave, the automaker's hopes for ending seven straight years of U.S. sales declines.

``Toyota is probably just waiting to pounce, to take more market share,'' said Crystal, referring to Toyota's claim to 16.2 percent of the U.S. market so far this year, from 9.3 percent in 2000. GM's share in that span fell to 23.6 percent from 28.1 percent.

Cost Estimate

The strike may cost GM $880 million a week, Rod Lache, a Deutsche Bank analyst in New York, wrote in a report to investors today.

The dispute highlighted the conflicting goals of GM's Rick Wagoner, 54, in his eighth year as chief executive officer, and the UAW's Ron Gettelfinger, 63, in his second term as president.

Wagoner is using the negotiations to cut labor and health- care costs that contributed to $12.4 billion in losses in 2005 and 2006. Gettelfinger seeks to preserve pay, benefits and jobs, while U.S. automakers GM, Ford Motor Co. and Chrysler LLC shed sales and market share to Toyota and other Japanese rivals.

The expectations that the union established in the 1950s under President Walter Reuther -- such as pensions, health care and regular wage increases -- may need to be satisfied in different ways, said Paul Gerhart, a professor at Case Western Reserve University in Cleveland.

Reuther's Legacy

``It's not really Reuther's underlying goals that are on the table; what's on the table is, `How do you achieve them?''' Gerhart said. ``Reuther himself said a contract is not a dead piece of paper; it's a living document.''

Gettelfinger yesterday said the union supports the central idea of the talks, a plan to transfer an estimated $50 billion in future UAW retiree health-care costs to the union in exchange for a one-time payment from GM to set up a trust fund. Future health-care payments would come from income earned off the investments.

In an interview today on WJR-AM radio in Detroit, Gettelfinger said that plan is ``off the table,'' without saying whether the proposal was tabled permanently or temporarily.

``We want to get it done as quickly as we can,'' Gettelfinger said, referring to the contract negotiations. ``We realize there's risk here. We were pushed into a strike'' by GM, he said. ``I'm very puzzled why we were not able to drive this to an agreement.''

Traditional Issues

The strike is about job security and other traditional issues, not the health-care plan, he told reporters yesterday. Gettelfinger accused GM of being ``one way'' and not serious about reaching an agreement during his midday press conference before saying the UAW negotiating team planned to return to the table after the media briefing.

GM, in a statement yesterday, said it sought an agreement ``as soon as possible.''

``There is the possibility that the union will fight to the death because no offer is acceptable, but I don't think it operates that way,'' said John Casesa, managing partner of New York-based consulting firm Casesa Strategic Advisors LLC. ``The UAW is well informed, and they will work something out.''

The automaker's 8.375 percent bond due July 2033 fell .75 cent to 86.75 cents on the dollar, according to Trace, the bond- price reporting system of the NASD. The yield rose to 9.8 percent.

Investor Confidence

Credit-default swaps tied to GM's bonds rose 10 basis points to 560 basis points, according to Credit Suisse Group, signaling deterioration in investor confidence. The price means it costs $560,000 a year for five years to protect $10 million of GM's bonds.

Practical issues may affect the length of the strike, said Crystal. Many workers will have mortgages and other bills coming due on Oct. 1 and may begin to run out of cash.

Striking workers receive about $200 a week from the union while serving on the picket line, less than one fifth of a traditional weekly paycheck for a UAW assembly worker.

``I was really surprised,'' said Scott Ferguson, 53, a quality inspector at GM's Cadillac plant in Hamtramck, Michigan, with 34 years seniority. ``Unlike some people in there, I'm not living check to check. I've got some money in the bank, but nobody wants to spend it. All you can do is pray on it, and hope the leadership does the right thing for you.''

The stakes rise as the strike drags on. GM will lose output of about 12,200 cars a day for the first 36 hours, and the toll will increase to 18,100 cars daily after 72 hours as plants in Mexico and Canada run out of U.S.-made parts, CSM Worldwide Inc. analyst Michael Robinet said yesterday. GM could withstand a strike of two or three weeks before dealers face any shortages, he said.

``As long as they're talking there's hope,'' said Sean McAlinden, an analyst at the Center for Automotive Research in Ann Arbor, Michigan. ``If they stop negotiating, things could slip out of control.''
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