UAW Says It Has Reached Deal With GM, Government
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Thursday, May 21, 2009; 2:32 PM
The Treasury Department and General Motors have reached a "tentative agreement" with the United Auto Workers that would reduce the ailing automaker's labor and health-care costs.
Details of the agreement were being withheld pending ratification by union members, an announcement from the union said.
Negotiators from GM are racing to complete a restructuring of the manufacturing icon before an end-of-the-month deadline set by the Obama administration.
A similar agreement with Chrysler allowed the company to move through bankruptcy more quickly.
GM union members previously had said they were willing to make concessions, but they expressed frustration earlier this week that a portion of the new jobs planned for the restructured GM would not be created in the United States, but in relatively low-wage countries. There was no indication whether their concerns had been addressed in the agreement.
The agreement also alters the way that the company will fund its $20 billion obligation to a union retiree health-care fund.
But even if the company can finalize its agreement with the union, it must still win concessions from its bondholders to stave off bankruptcy. The investors have been asked to trade their $27 billion in bonds for a small equity stake in the restructured GM.
