GM To UAW: Compact Car Plan On Hold As Cost-Cut Talks Stall

April 24, 2007: 02:53 PM EST


DETROIT -(Dow Jones)- General Motors Corp. (GM) on Tuesday informed United Auto Worker employees that plans to develop a compact car for 2009 have been put on hold even as the auto maker is locked in negotiations with the UAW over the future of GM's only compact-car factory in the U.S., according to sources familiar with the program.

The UAW wants the 2009 compact car to be built by its unionized employees at the existing small-car plant in Lordstown, Ohio, rather than see production of the future vehicle outsourced to a foreign country. Lordstown's current product, the Chevrolet Cobalt and its derivatives, will only be produced through 2009.

GM has been pushing since February for cost-cutting commitments, or a Competitive Operating Agreement, at the plant before making a final decision on Lordstown beyond 2009. Negotiations have been slow-going due to disagreements voiced by the UAW's uppermost leadership related to the extent of GM's proposed cuts.

Now, GM has seemingly thrown negotiations an unexpected curve ball by telling the UAW that it has put its entire plans for the future compact car - known internally as "Delta" - on hold. A source at the Lordstown plant said it may be impossible to get UAW workers to agree to additional buyouts or other changes in work rules if there is no promise of a future product.

UAW officials at the union's headquarters could not immediately be reached for comment.

GM spokesman Dan Flores said the company will "not describe or characterize the status of activities at the plant," and he insisted the auto maker and the union's local leadership "continue to focus on putting the plant in a position to secure a future product."

Flores said GM has to do whatever it takes to make the plant more competitive, but declined to provide a timeline on discussions related to the Competitive Operating Agreement. "The business case is still being developed," Flores said.

There has been some speculation that GM will build compact cars, which are generally considered to be less profitable than trucks and SUVs, in Mexico or Asia if it fails to win reforms at the Lordstown plant. A source familiar with the company's plans, however, said GM is interested in keeping compact-car production in the U.S. and characterized the decision to tell workers the Delta program is on hold as potential political posturing.

The auto maker is trying to get Lordstown officials and the UAW to agree to allow GM to offer about 1,000 additional buyouts at the plant, according to a source close to the negotiations.

One of the issues is that GM is no longer willing to pay UAW wages and benefits to janitorial-type employees not working on the assembly line, according to that person. GM loses upward of $2,000 per car built at Lordstown due in part to the wage and benefit guarantees it provides to UAW workers.

http://money.cnn.com/news/newsfeeds/...4_FORTUNE5.htm

 

repost

 

pfft...figured...didnt see it