Negotiators for the United Auto Workers union and General Motors Corp have resumed bargaining on Tuesday while more than 73,000 factory workers participated in the second day of the first national strike against the automaker in more than 30 years.
GM workers walked off the job on Monday after 10 weeks of contract talks seen as crucial to GM's survival as it restructures money-losing U.S. operations and tries to free itself from a health-care obligation of more than $50 billion.
A GM spokeswoman said the two sides began talking around mid-morning. Meantime, workers at a GM facility in Warren, Michigan, could be seen picketing early on Tuesday with signs reading UAW on Strike.
Many analysts predicted that a protracted strike against the largest U.S. automaker was unlikely and the two sides could still settle on a deal on wages and benefits that delivers many of the sweeping concessions GM has sought.
The action is designed to allow UAW leaders to look vigilant in fighting to preserve benefits, members to feel concessions are not being given gratuitously, and GM management to appear to be maximizing shareholder value, Goldman Sachs analyst Robert Barry said on Tuesday.
He added that a short strike could help GM trim bloated inventories.
UAW President Ron Gettelfinger said on Monday, soon after GM workers walked out, that the automaker had pushed the union into striking by not showing a willingness to meet it half way on crucial issues such as job security.
He cautioned that the UAW had no intention of suspending the strike before an agreement was reached with GM.
Barclays Capital Research analysts said the strike was unlikely to go beyond two weeks.
Both the UAW and GM are aware of the fact that the longer the strike goes on, the more significant the cash burn, cash that could have been used for pre-funding (retiree benefits) for hourly workers and for signing bonuses, Barclays analysts Chester Luy, Patrick Look and Julie Schultz said in a note to clients.
GM stock, which had traded sharply higher before the strike began on Monday, was down 7 cents at $34.67 on the New York Stock Exchange on Tuesday.
Workers walked out at more than 80 GM facilities in the United States and could cause shutdowns in Canada and Mexico due to parts shortages.
GM, Ford and Chrysler are seeking concessions from the UAW to close a labor cost gap with Toyota Motor Corp and other Japanese automakers operating in the United States they say amounts to more than $30 per hour for the average worker.
Negotiations between GM and the UAW included a GM proposal to cut health-care costs by establishing a trust fund for retiree-related costs.
Under that plan, GM would shift responsibility for retiree health care to a new UAW-aligned trust fund known as a voluntary employee beneficiary association, or VEBA. Wall Street analysts have said establishing a VEBA could cut GM's annual costs by $3 billion in exchange for a one-off payment expected to top $30 billion.
Expectations for a cost-cutting labor deal drove GM shares up almost 14 percent this month before Monday's trading.
The outcome of this round of talks is seen as crucial to efforts by the three Detroit-based automakers -- GM, Ford Motor Co and Chrysler LLC -- to recover from combined losses of $15 billion last year and sales difficulties that have driven their share of the U.S. market below 50 percent.
The UAW has not called a national strike during contract negotiations since 1976. The last national strike against GM was in 1970 when the union won a pension guarantee for workers with 30 years of seniority.
(Additional reporting by Nick Carey)