Pressure on GM goes up for every day auto contract talks drag on
For now.
There are potential benefits for UAW President Ron Gettelfinger and Vice President Cal Rapson in extending these negotiations well beyond the Sept. 14 contract expiration date:
? First, they appear tough and determined to save every possible nickel's worth of the UAW membership's hard-won health benefits by not caving in to GM's demands quickly. Remember, the UAW rank-and-file members must ultimately vote to ratify the next contract.
? And if GM's stock price sputters as Wall Street gets jittery, that puts more pressure on GM to get a deal done, even if it means tossing a few more dollars into the pot for a voluntary employee beneficiary association trust fund to handle retiree health care. In fact, GM's stock has given ground the past couple of days amid concern that the labor talks were bogging down.
The price of GM shares had risen for seven consecutive trading days, from a low of $29.10 on Sept. 7 to a high of $36 early Wednesday, on optimism about a possible labor contract deal. But GM stock dropped to $34.98 by the end of trading Wednesday and fell 51 cents Thursday to $34.47 per share.
If GM and Ford Motor Co. don't get significant relief in reducing their so-called legacy costs for promises made to retirees -- which are far greater than those borne by Asian competitors -- Wall Street investors will surely push their stock values lower. And the private Chrysler LLC also can soar in value for its majority owner, Cerberus Capital Management, if such a deal is struck.
It's therefore in GM's interest to get the retiree health care VEBA back on the table, and probably wasn't in GM's interest to do any leaking about the stumbling blocks to getting a quick deal on that issue.
Did someone in the UAW blab about the alleged impasse, despite the much ballyhooed "news blackout" over contract talks? Maybe, maybe not. But who cares?
Both GM and UAW officials were well aware going in of the potential for lengthy haggling on complex issues like these.
After Delphi Corp.'s Chapter 11 bankruptcy filing on Oct. 8, 2005, made UAW leaders furious, GM Chairman Rick Wagoner agreed at Thanksgiving time that year to play an active role in brokering a deal to defuse the UAW-Delphi crisis.
That deal was finally announced in late June of this year, 19 months after Wagoner's engagement in talks -- and at a cost of more than $7 billion to GM to pay for buyouts and deals for some Delphi workers to flow back into jobs at GM, which spun off Delphi in 1999.
When you've already slogged through 19 months of arduous debate on Delphi, what's the big deal about pausing the VEBA discussion and extending the current 4-year UAW contract for a couple of weeks?
No big deal, that's what.
Let's be happy that GM is apparently not willing to settle for baby steps and is insisting that a new labor contract take big chunks out of its competitive cost gap vs. Toyota and other Asian automakers.
Let's be happy that UAW leaders, even as they bargain doggedly on their members' behalf, are not engaging in a lot of reckless strike talk.
And as far as the blabbing and leaks are concerned, let me state unequivocally that I stand foursquare in favor of them. Free Press readers want to know what's going on.
My contact information, which I encourage reliable leakers and blabbers to use, is in italics below.