UAW, GM near deal on health-care trust in talks, sources say

The trust would transfer
oversight for health care from GM to the union.

DETROIT FREE PRESS

DETROIT — General Motors Corp. and the UAW appear to be inching closer to a deal that would transfer tens of billions of dollars of retiree health-care obligations from the automaker to the UAW, but a tentative agreement on the overarching contract is likely “days away,” people familiar with the talks said Wednesday.

Other people familiar with the talks indicated that GM made a significant proposal to the UAW on Monday before bargaining recessed for the night.

If so, it would explain why outside financial experts were asked Tuesday to evaluate the assumptions and financial expectations.

“They are making some progress but the negotiations are moving real slow. ... The financial consultants will be going over the finances for a while,” UAW Local 276, based near Arlington, Texas, said in a posting on its Web site. The local said it had been briefed by the international union.

A person briefed on the health-care situation characterized the sides as “very close” on the issue. But the overall talks could easily drag on, people familiar with them said, even spilling into next week. The people requested anonymity because the negotiations are private.

VEBA trust

The details of the offer and the UAW’s response were unclear, but those familiar with the proposal said it was related to bargaining over the controversial retiree health-care trust — known as a Voluntary Employee Beneficiary Association — that GM is so desperate to win in its talks.

“They’ve been discussing it for so long that unless they thought there was some possibility of closing on it, you would just essentially halt the discussions,” said Harley Shaiken, a labor expert from the University of California, Berkeley. “They could be there, but the VEBA does not stand alone. ... The issue of job security could be as difficult as the VEBA.

“The resolution of the VEBA, in and of itself, does not necessarily mean the resolution of the talks.”

As with any talks, analysts said, bargaining can go well one day only to stall the next.

And a VEBA trust would represent a major change for UAW-Detroit automaker labor agreements, potentially freeing GM from more than $50 billion in long-term health-care obligations and putting the oversight of hourly workers’ health care under the union’s auspices.

The automakers and analysts argue that the creation of a VEBA would benefit UAW retirees by ensuring their health benefits even if one or more automakers were to go broke. But many workers remain skeptical that the union would be able to make the fund last.

GM has proposed paying no more than 65 percent of the liability to establish the trust, people familiar with the talks said. The union could try to close the gap with outstanding investments or trim benefits to the money available.

Concerns

But workers worry that such a plan could easily go south, allowing the fund to go dry before it provided the promised health benefits, as happened at Caterpillar in 2005.

“It’s a big undertaking,” said Claudia Perkins, a worker at GM’s Lansing Delta Township Assembly plant. “People are just afraid that once the UAW takes it over, not that they couldn’t manage it, but that the costs could get out of hand ... and then the company is off the hook.”

Ford Motor Co. and Chrysler LLC also are said to be interested in the formation of a VEBA.