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UAW Says Tentative GM Accord Reached on Contract, Medical Fund

UAW Says Tentative GM Accord Reached on Contract, Medical Fund


By Katie Merx and Brad Skillman

May 21 (Bloomberg) — The United Auto Workers said it reached a tentative agreement with General Motors Corp. and the U.S. Treasury to modify the automaker’s 2007 labor contract and a health-care trust for union retirees.

The union said it is withholding details until it conducts explanatory and ratification meetings for UAW members, which are being scheduled. GM faces a probable bankruptcy filing by June 1, the government’s deadline for the company to restructure outside of court.

GM, surviving on $15.4 billion in U.S. loans, had proposed that the union let it swap a $20 billion cash obligation to the union-retiree health fund, known as a voluntary employee beneficiary association, with $10 billion in cash paid over time and equity equal to 39 percent of a restructured GM.

UAW members who attended meetings in Cleveland earlier this month said the deal is expected to include an hourly buyout and retirement-incentive program to help the largest U.S. automaker trim its hourly employment to 40,000 in 2010 from about 61,000 last year. About 7,000 workers left this year under an earlier offer. GM has said it needs to close 16 of its U.S. plants.

GM has about 522,000 union retirees and dependents and 62,000 active UAW members. Only current workers vote on contracts.

Union retirees will have to give up coverage of dentist visits and some prescription drugs such as Pfizer Inc.’s Viagra, people familiar with the talks had said.

Those changes would match reductions that start as soon as July 1 for Chrysler LLC retirees, said the people, who asked not to be identified because the details aren’t public. Cuts in unemployment benefits and work-rule changes at GM also would mimic the Chrysler concessions, the people said.

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