UAW says it has reached deal with GM, government

5/21/2009

DETROIT The United Auto Workers union has reached a tentative deal with the government and General Motors Corp. that offers to cut labor costs and fund a union-run trust that will take over retiree health care costs next year.

The union announced the deal in a short statement issued Thursday that gave no details, which were withheld pending meetings with members to explain the terms.

The move is a key step toward GM s efforts to restructure outside of bankruptcy court. The company, which has received $15.4 billion in federal loans, faces a June 1 government-imposed deadline to restructure or be forced into bankruptcy protection.

Union members still have to vote on the deal, according to the statement. It makes no mention of factory closures or production of vehicles outside the U.S., items that the union has protested in Detroit and Washington as the deadline approaches.

GM plans to close 16 more factories, costing 21,000 hourly workers their jobs, as it tries to cut labor costs and shrink its manufacturing footprint to match lower demand for its products.

The Treasury Department, which has been overseeing GM s restructuring efforts, had no immediate comment.

GM has about 61,000 hourly workers in the U.S., but plans to take that number down to 40,000 by 2010.