09/15/2011 03:29 EDT | Updated 11/15/2011 05:12 EST

Autoworkers union extends Chrysler, GM labour contracts after missing deadline; talks continue

DETROIT - Negotiations between General Motors, Chrysler and the United Auto Workers union continued Thursday even though bargainers missed a key deadline to agree on a new contract.

The union, which represents 111,000 workers at Detroit's carmakers, agreed to keep working under the old GM and Chrysler contracts, which expired Wednesday at 11:59 p.m.

The talks affect GM and Chrysler employees in the United States. The Canadian Auto Workers, which split off from the UAW into an independent union, hold contract talks next year.

General Motors Co. appeared close to a deal with the UAW on Thursday.

It resumed talks with the union Thursday morning and continued into the afternoon. The automaker has taken the lead on the negotiations and its agreement may be used as a model for Chrysler and Ford.

UAW leaders bargaining with GM issued a a statement early Thursday that said there had been significant progress but "we have not been able to secure a new agreement."

Chrysler Group LLC's negotiations were strained, however. Just before Wednesday's contract expiration, CEO Sergio Marchionne wrote an angry letter to the UAW president saying that he failed to show up to finalize a deal. Chrysler would say only that both sides are still talking.

Talks also continued with Ford Motor Co., but little progress has been made. On Tuesday, the UAW extended its contract with Ford indefinitely.

Negotiations with all three companies, which began earlier this summer, will determine wages and benefits for workers. They will also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands of people. The talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.

The UAW wants bigger profit-sharing cheques instead of pay raises, higher pay for entry-level workers and guarantees of new jobs. Ford and GM want to cut labour costs, while Chrysler wants to hold its costs steady. Health care costs are also an issue.

Once agreements are reached, workers will vote on them.

The fact that bargainers at GM went home early Thursday and returned later is a sign that GM and the UAW are close to a deal, perhaps by the weekend, said Gary Chaison, a professor of labour relations at Clark University in Worcester, Mass.

In past talks, both sides would have stayed up all night trying to pound out an agreement, Chaison said. But this time, bargainers appear more thoughtful and are taking time to digest what they have done, he said.

Until Wednesday's deadline, the negotiations seemed free of the acrimony marking past talks. As part of the bailouts, GM and Chrysler workers agreed not to strike over wages. In the past, workers might have gone on strike.

But the mood of the talks turned tense for Chrysler. Marchionne complained Wednesday that he had been snubbed by UAW President Bob King. That caused the two sides to miss the deadline for the new agreement, he wrote.

"I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant," Marchionne said in the letter, which was obtained by The Associated Press.

King would not comment on the letter when reached by telephone early Thursday.

King spent much of the day Wednesday negotiating with GM, but it was unclear why he didn't appear at Chrysler's Auburn Hills, Mich., headquarters.

Marchionne said a few mainly economic issues separate the two sides. He told King that he will be travelling out of the country on business and wouldn't return until next week. He said he would agree to a weeklong extension of Chrysler's current contract.

"We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done," he wrote.

Chaison said Marchionne made the mistake of injecting personalities into the talks at a critical late stage. That could delay a contract agreement. Marchionne, he said, clearly is miffed that GM is getting more attention from the union than Chrysler.

"He also has to understand that these are not typical negotiations," Chaison said, noting that the talks are being watched by the White House, the public and the labour movement. The U.S. government still owns 26.5 per cent of GM, the remainder of a big stake it got in exchange for bailing out the company.

It's likely, though, that any setback at Chrysler is temporary. The UAW has an interest in reaching a deal because a union-run trust that pays retiree health care bills owns more than 40 per cent of Chrysler. Chrysler has turned a small profit in the first half of the year, excluding a one-time accounting charge for refinancing government bailout debts.

GM nearly ran out of cash and needed $49.5 billion from the government to survive. But it's made billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.

Under terms of both companies' bailouts, unresolved issues can be taken to binding arbitration, and the union's new contracts must keep the companies' labour costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.