Tuesday, May 19, 2009

GM, union resume negotiations

General Motors and the Canadian Auto Workers Union resumed their talks Monday in an effort to meet conditions that would qualify the company for government aid.

Union president Ken Lewenza described the mood as near despair Monday — three days after a government-imposed deadline for a deal had officially passed — because of the difficulties of meeting the conditions of so many stakeholders, including the federal, Ontario and U.S. governments.

The federal and provincial governments have been asked by General Motors for a $6-billion loan to proportionately match a loan request to the U.S. government.

However, both levels of Canadian government said they would only provide the loan if General Motors cut its costs to bureaucrats' satisfaction.

Lewenza said negotiations have so far cut costs by more than $19 per hour per worker. That is the amount that Chrysler cut its labour costs in a deal with the union last month.

However, General Motors needs to cut its costs even more because of an estimated $7-billion pension deficit.

A deal reached between General Motors and the union in March had cut costs by about $7 per hour per worker, but had been rejected by the government as insufficient.

The official deadline to meet new cost-cutting conditions was Friday at midnight, but Lewenza said the federal and Ontario governments allowed the two sides to continue for a few more days, provided they made progress.

He added that he hopes that federal Industry Minister Tony Clement will add pressure with his visit to Washington, D.C., on Tuesday to discuss General Motors' restructuring efforts with the administration of President Barack Obama.

The union and General Motors called a break late Sunday after coming close but failing to reach a deal after days of non-stop negotiations. They resumed talks Monday.

General Motors must present its restructuring plans to the U.S. government by June 1.

Meanwhile, both Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty have insisted that labour, management, bondholders and financial institutions must all make concessions that are significant enough to ensure the company's long-term viability. Otherwise, they say, there will be no more government financial support.