GM Shares Stall as Labor Deadline Looms
Investors weren't willing to make any more big bets on
General Motors
(GM) - Get Report
Friday as Detroit's labor contract talks entered a critical juncture.
After a big rallly Thursday, GM's stock recently was flat at $33.29 amid news that the United Auto Workers union chose the auto giant as the lead negotiator in the talks.
Leading the talks is considered a positive move for GM because it makes it easier for the company to push its plan for a union-controlled trust -- called a voluntary employees' beneficiary association, or VEBA -- that will allow it significantly cut its health care obligations.
A report that the UAW is willing to consider a VEBA sent shares of GM soaring 10% on Thursday.
GM, though, has until midnight Friday to reach a deal or ask for an extension, or it will face a union strike. Detroit's other big automakers,
TheStreet Recommends
Ford
(F) - Get Report
and
Chrysler
, have received extensions of their contracts, according to the
Associated Press
.
If the sides agree on establishing a trust, the Big Three are expected to cut $95 billion from their retiree costs. They would make large one-time payments to fund trust.
In return, they would be freed from the liabilities that have increased their borrowing costs and weighed on their ability to compete with low-cost, foreign-based competitors that have been stealing market share from domestic manufacturers in North America.
