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GM, Canadian Worker Deal Unlikely Today, Union Says

GM, Canadian Worker Deal Unlikely Today, Union Says (Update1)


By Frederic Tomesco

May 17 (Bloomberg) — General Motors Corp. and the Canadian Auto Workers probably will have to wait at least another day before agreeing on a new labor contract, union President Ken Lewenza said.

Canada’s federal government and its Ontario counterpart had given GM and the CAW until midnight New York time Friday to reach a deal that would cut costs and lower the risk of liquidation of the automaker’s operations in Canada. Lewenza said today government officials have told both sides they would be willing to wait a few more days for an accord as long as the negotiations progress.

“I have a gut feeling that there doesn’t seem to be a sense of urgency to get a deal done today,” Lewenza said in a telephone interview from Toronto. “It’s a complicated process. We are just not talking about the needs of two parties.”

GM’s Canadian negotiations take place as the company operates on $15.4 billion in U.S. Treasury funds. The carmaker is working to shave operating costs and shrink debt and union- retiree obligations by $44 billion in advance of a U.S. government-imposed June 1 bankruptcy deadline.

Talks between GM and the CAW started up again at a downtown Toronto hotel around 8 a.m. local time today after breaking off around 1 a.m., Lewenza said. Pensions, health-care costs and benefits are the main stumbling blocks, he said.

Pension Shortfall

GM Canada spokesman Stew Low didn’t return calls seeking comment on the talks yesterday and today.

Government officials have taken part in three conference calls with GM and CAW negotiators since May 15, Lewenza said.

Hurdles on the road to an agreement include the financial health of GM’s Canadian pension plan. GM’s Canadian unit faces a pension shortfall of C$7 billion ($5.9 billion), the Globe and Mail newspaper reported May 13.

“It’s going to be difficult” to reach an agreement, Charlotte Yates, a labor studies professor at McMaster University in Hamilton, Ontario, told CTV Newsnet in an interview today.

“The biggest problem will be trying to find a solution to the pension issue, and that’s one I don’t think can be solved at the bargaining table,” she said. “It’s too large, it involves too much money and it’s too complex.”

GM has about 12,000 employees and 25,000 retirees in Canada. GM and the CAW ratified an agreement in March that reduced worker costs by $7 per hour. A later contract between Chrysler LLC and the union cut hourly labor costs by $19 an hour.

Canada ordered GM and the union to return to the bargaining table a week ago to craft a better offer in order for GM to secure the $6 billion in financial assistance that the company’s Canadian unit requested.

Without a pact, the company’s Canadian assets could be liquidated.

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