General Motors Corp. (GM) could trigger a potentially crippling strike by the United Auto Workers (search) union should it push too hard to slash the health-care benefits it provides to UAW members, union officials said on Wednesday.
The UAW has said it is willing to work with GM to cut its health-care costs, which the world's largest automaker sees mushrooming to nearly $6 billion this year.
But GM has also said it wants an agreement by the end of this month, according to a source familiar with the situation, and local UAW officials say any such deadline would be both contentious and unacceptable.
"I think it is impossible," said Oscar Bunch, president of a union local in Toledo, Ohio, when asked about trying to come to an agreement within the next two weeks.
GM Chairman and Chief Executive Rick Wagoner (search) is under pressure to accelerate a turnaround plan after the company's $1.1 billion first-quarter loss, its worst result in more than a decade. And he strongly suggested he was prepared to cut health-care costs with or without the UAW's approval, in a speech at GM's annual meeting last week.
Local union bosses caution against GM making any bold, single-handed moves to restore its financial health at the expense of the people who build its cars and trucks, however.
"I know they have to understand the consequences of trying to take unilateral action. We are not going to stand by it," said Eldon Renaud, president of a UAW local in Bowling Green, Kentucky.
"Unilateral action certainly would ruin relations for a decade," Renaud added, saying he thought some locals were probably already bracing for a strike authorization vote.
The last major UAW work stoppage affecting GM was in 1992, when the company teetered near bankruptcy.
UAW spokesman Paul Krell, when asked about a GM June 30 target for getting a deal with the union, said: "We're not going to comment on GM's internal deadlines."
GM spokesman Ed Snyder said, meanwhile, that talk about an ultimatum or "drop dead deadline" wasn't coming from GM itself.
Asked about the possibility cutting health-care benefits without the UAW's approval, Snyder, quoting from Wagoner's speech at the annual meeting, said only that GM's "very strong preferred approach" was to cut costs in cooperation with the UAW.
At a closed-door meeting with UAW presidents and shop chairmen from GM plants across the country last week, Richard Shoemaker, the UAW vice president in charge of negotiations with the automaker, indicated that cooperation could be slow-going, however.
"Brother Shoemaker stated that he told General Motors their targets were unacceptable and their timetable unachievable," said Joe Buckley and Tony Keen, the president and shop chairman of UAW Local 696 in Dayton, Ohio.
Their comments came in a newsletter posted on the local's Web site.
At the meeting in Detroit last week, Shoemaker also said the traditionally militant UAW won't reopen its current labor contract with GM, union officials said.
Reopening the contract would allow for more sweeping changes in health care and other benefits than those permitted under the confines of the current agreement, which isn't due to expire until September 2007.
Because of the refusal to reopen, analysts have cautioned investors against becoming overly optimistic about cuts in the health-care burden at GM, which is the nation's leading private provider of health care, covering 1.1 million workers, retirees and family members.
"I just hope they keep their hands off the retirees myself," said Dave Peterson, president of a UAW local in Kansas City, Kansas, where GM builds the Chevrolet Malibu. "I would like to think that's where they draw the line in the sand. Leave the retirees alone."
GM has about 2.5 retirees for every active hourly employee.